In ground-breaking moves, the apparently Coalition-doomed Office of Fair Trading has been flexing its muscles over lack of transparency in promotional blogs and Twitter plugs. Will celeb plugs on social media be banned? Stephen Groom looks at US solutions.
Topic: Social media
Who: the Office of Fair Trading ("OFT")
When: December 2010/January 2011
Law stated as at: 12 January 2011
Consumer watchdog (for now until the Coalition's axe falls) the Office of Fair Trading has taken action in two areas where social media threatens transparency in advertising.
In the first case it obtained formal undertakings to pull its socks up from Handpicked Media ("HM"), who operated a commercial blogging network. As a service to HM's clients, the network engaged bloggers to provide editorial coverage of various topics including fashion, beauty and music. The coverage made favourable reference to HM's clients or their products and was published on various websites, blogs and social networking sites, such as Twitter.
The OFT was concerned that individuals engaged by HM were publishing online content which promoted the activities of HM's clients without making it sufficiently clear to consumers that the promotions had been paid for.
Offences under "unfair commercial practices" regulations?
The OFT considered that this activity breached Regulations 4 (b) and 6 of the Consumer Protection from Unfair Trading Regulations 2008 ("CPRs") by not disclosing material information (regarding the commercial arrangements behind the "editorial") or only disclosing it in a manner that was unclear, unintelligible, ambiguous or untimely.
In the words of the CPRs the OFT considered that this caused or was likely to cause the average consumer to take a transactional decision they would not otherwise have taken.
Also, the OFT cited "always unfair" commercial practice #11 in the list of such practices at Schedule 1 of the CPRs. The regulator felt that this regulation had also been breached.
"Using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer (advertorial)."
Handpicked Media gave formal undertakings to discontinue the unfair conduct.
In a related development, the OFT also announced that it was generally investigating the practice whereby users and bloggers including celebrities used their online presence to endorse products and companies on blogs and microblogs such as Twitter without clearly stating their relationship with the brand. No announcement has yet been made as to any particular activity that has caught the OFT's eye.
Why this matters: it is interesting that in the context of Handpicked Medi, the OFT did not also suggest that "always unfair" commercial practice #22 at Schedule 1 of the CPRs had been breached.
This refers to:
"Falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer."
Having said this, the OFT releases make it clear that the content in question was "editorial". If so, this was arguably not within "CP#22" since the material was not necessarily being presented as coming from a consumer, but rather as from a journalist.
Looking further afield, naturally the USA has already passed this way. Not only are celebrity Twitter endorsements big business, with Snoop Dogg for example reputedly earning $3,000 a Tweet, but also the Federal Trade Commission has taken action. Late in 2009 it updated its "Guides Concerning the Use of Endorsements and Testimonials in Advertising" to deal with this issue and it has now made clear for example that paid-for Twitter endorsements should contain the words "ad" or "spon" to show the reference has been paid for.
Hot on the FTC's heels, ever ingenious US commerce has come up with at least one answer for online product reviewers and endorsers seeking compliance. It takes the form of specialist software that tracks paid-for online endorsements and adds clarifying disclosures wherever it finds them. Go to http://www.CMP.ly/.
How long before we see similar developments on this side of the Pond?