The influencer industry is growing rapidly and significant sums can be made by influencers from posting a picture with products or services or creating a video story on their Instagram account….. and of course, the retailers are profiting too from having their products plugged. But, with such profits comes responsibility and liability.
Retailers are increasingly keen for the adverts not to look like an advert often gifting goods or, having influencers post a video about how much they like certain products subtle form of marketing. It seems that this type of marketing is effective for growing brands and product recognition as it is quick, engaging and more authentic. This subtle marketing however, is not always compliant with the transparency the regulators require.
This can be bad news for both the blogger and retailer, you may have seen the recent press surrounding Sophie Hinchcliffe “Mrs Hinch” (mrshinchhome) who is allegedly being investigated by the Advertising Standards Authority (ASA).
In this blog, we set out what it is influencers and retailers ought to be doing to stay on the right side of the law.
Who needs to comply?
Both the influencer and the retailer. Recently, the ASA ruled that any influencer with over 30,000 followers is deemed a “celebrity” i.e. they have enough of a following to be deemed influential. Although, this does not mean influencers with less than 30,000 can escape the rules as the ASA will still consider all claims on a case by case basis.
What do I need to comply with? What does all this “#gifted”, “#ad” really mean?
These hashtags are required to keep followers and potential followers (yes, including any randoms that may click on a page) of influencers happy and also the ASA and Competition and Markets Authority (CMA).
The ASA monitors all adverts on TV, social media etc. The ASA requires the following:
- On any posts, video stories etc. it must be clear that it is an advert; and
- There can be no misleading of customers or followers.
Even if an influencer has been asked to talk about a product in a positive light, (i.e. not directly), they still need to comply with the ASA requirements. It does not matter that regular followers will be aware of the brand partnership, each post will need to be compliant and be clear it is a marketing communication. The follower is entitled to know that there is a business arrangement influencing the post.
The (The UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing) (CAP Code) states that all advertisements must be ‘obviously identifiable as such’. This is the most flouted rule. You must make advertised content immediately clear to the average consumer on viewing the post. Adding #ad, #advert or #sponsored in the description is one way, provided it is not hidden in a group of hashtags. Ideally the #ad should be the first hashtag. The CMA has said that using “#spon” or “#gifted” is simply not clear enough.
Using a hashtag is not the only way to make sponsored or paid for content obvious. Influencers and retailers should consider how they communicate with their followers and adapt their approach.
What qualifies as an ad?
Under the CAP Code if you work with a brand to create content to post on your social media channel this is an ad if:
- You have been paid in some form (including freebies, gifts, travel or hotels); and
- You have had some editorial “control” over the content (this might just be final approval).
Generally, if an influencer is not completely free to do and say what they want, there could be an element of control.
The CMA may still apply some legislation if there has simply been a payment without control and be enforced by the Competition and Markets Authority. Therefore, by recommending or taking over a retailer’s social media channel an influencer can be exposed to liability.
Full transparency is the key.
Why do I need to comply?
As quickly as influencers can rise they can fall.The influencer Olivia Buckland has had the ASA find against her.
Damages. Damages (i.e. money) can be due to the end customer. If for example, a follower reasonably relies on an influencer’s recommendation and suffers harm because of negligence or an intentional act such as fraud by the retailer, then the victim can potentially pursue a claim against the influencer. Most consumers will go after the retailer of a defective or unsafe product, nonetheless there can be a claim against the influencer too.
Name and Shame. The ASA can take action if it receives just one complaint. If it finds content that it decides should be labelled as an advert but isn’t, it can publish a ruling on its website (i.e. its wall of shame) and request the advert be removed. Clearly, if you have been asked to remove a post you have been paid to put up, you will probably run into trouble with the retailer. This is a real threat, the ASA is reportedly spending more time investigating influencer activity than any other form of advertising.
Prison. The CMA has stronger powers to fine and even put in imprison those who repeatedly breach the rules.
Get it right and both the influencer and retailer can benefit from a harmonious and profitable relationship. Get it wrong and the influencer and retailer can lose the trust in their followers and customers.
Ok…so what do I need?
The way in which the majority of the influencing industry is operating is a risk. Often there are no contracts but instead a quick-fire exchange of short-hand messages on Instagram, by email, WhatsApp or text to agree a price and what is to be promoted. The lack of formal terms of business agreed between the influencers and the retailer is creating disputes. For example, retailers may be reluctant to pay out if a post or video story is not as expected or is deemed inadequate. Equally, retailers are not protected if the influencer inadvertently does, says or omits to do something which damages the retailer’s brand. So first thing first, make sure you have a proper contract in place to manage and control expectations and liability.
In your terms we would cover key points such as what is to be promoted and how (i.e. a post, multiple posts, full length shot), approvals – does the post/ad need to be approved, on what basis can the ad be rejected, payment terms – how much, when, upfront/instalments etc., and, ownership of content – who owns the content and how can it be used.
Other Points to Think About
Structure: think about the way your business is set up are you set up as an individual with unlimited liability or as a company with limited liability (i.e. where liability is limited to the amount in the business and the claimant cannot go after you personally).
Insurance: do you have adequate business insurance as protection?
Intellectual Property: many influencers do not take their own photographs, consider who actually owns the photographs in this instance, also, the consequences if the retailer then uses these photographs without permission.
Audience Fakery: you may have come across the term “automated bots” essentially, this is the ability to buy a load of followers. Retailers look at the number of followers and imprints an influencer has before deciding to go with them. The CMA may begin investigating such audience fakery. Having a contract in place can ensure that there is adequate protection for retailers against this.
Restricted Goods: if any of your content includes the promotion of age restricted products such as gambling or alcohol; food or supplements; or if you are running your own prize giveaways, there are additional requirements that may apply.
Agents: If you have an agent acting for you or assisting in the deal ensure there is an agreement to govern your expectations of them and their liability.
- Do your due diligence on the retailer or influencer.
- Do not use automated bots/audience fakery to enhance your following.
- Get a contract with the key terms and protections in place.
If you are a retailer or influencer and would like help with drafting or reviewing a contract please reach out to us at firstname.lastname@example.org or on 023 8001 5135 or message us on Instagram at hartleylaw_uk.