Who: Competition and Markets Authority (CMA), Federal Trade Commission (FTC)
Where: UK and the Untied States
When: 11 August 2016
Law stated as at: 8 September 2016
Back in June 2015, the CMA issued a call for information on online reviews and endorsements and since then, we have reported on action that it has taken against various marketers over fake reviews and undisclosed endorsements.
The CMA is cracking down on misleading online practices and issued an update on 11 August 2016 , providing details of two further investigations it had carried out as part of its work in this area. As a result of one of its investigations, the CMA has secured undertakings from Social Chain Ltd, a UK marketing company that works with celebrities and influencers who post ads for businesses on their social media accounts. Many of these social media posts had not been marked as paid-for advertising and, as a result, Social Chain agreed not to post or arrange undisclosed advertising and to clearly label their posts as such.
Over in the US there has also been a strong focus in this area, which has now attracted the interest of consumer pressure groups. Recently Kim Kardashian’s social media posts (and indeed the posts from the rest of the Kardashian and Jenner family) have been the subject of a complaint to the FTC by a consumer non-profit organisation group for failing to disclose paid-for content. In total, the complaint found over 100 examples of social media posts that had not been correctly labelled as ads or sponsored posts. Whilst the FTC updated its social media guidelines in 2015 to address this problem [we reported on this here, the public are now becoming much more aware of these undisclosed marketing arrangements and examples like this are generating significant media attention, which in turn puts greater pressure on influencers to be transparent in this way.
Why this matters:
In the past few months we have seen these two consumer protection bodies sharpen their focus on undisclosed marketing arrangements by taking positive action to prevent misleading online practices. This shows that this is a high priority for both the FTC and CMA, who are taking the matter seriously.
The FTC has previously brought legal action against brands for deceptive marketing on social media, as was seen with its enforcement action against Lord & Taylor’s design lab back in April (link to our report here). This recent attention has shifted the focus away from brands and towards social influencers and it will be interesting to see if this trend continues and if the CMA continues to follow suit. From another perspective, the rise of influencers using newer platforms like Snapchat and Vine also brings new challenges for ad compliance guidance in both the US and the UK, which does not specifically address these new platforms.