Influencer Marketing: Protection for Consumers from #sponsored Posts on Social Media
We all know how important advertising is in the business world. Traders use advertisements as marketing tools to inform customers and consumers about their products. With the rise of technology and social media, advertising is now taking diverse forms. Companies are increasingly turning to a more powerful tool, the ‘influencer’, to advertise their products.
This phenomenon is also evident locally. This article purports to analyse what constitutes influencer marketing and the protection afforded to consumers by Maltese law.
What is an ‘influencer’?
Maltese law does not define what an influencer is. However, the Consumer Affairs Act (the ‘Act’) defines a ‘trader’ as any person, whether natural or legal, who acts for purposes relating to his trade, business or profession. Influencers would in many instances therefore constitute a ‘trader’. Moreover, under Directive 2005/29 on unfair business-to-consumer commercial practices (the ‘UCPD’) the definition of ‘trader’ also encompasses anyone acting in the name of or on behalf of a trader. The extension of the definition of a trader to anyone acting on the trader’s behalf would thus arguably include influencers when they act in this manner.
Influencers – whether celebrities, bloggers or anyone with a substantial following on social media – are viewed as the perfect source of what products consumers should use and purchase. What is problematic is that influencers tend to market products without making it sufficiently clear that their posts are sponsored.
Since consumers are considered to be at a weaker position than traders, certain safeguards come into play to ensure that consumers are not prejudiced when choosing to make a purchase. It is, thus, important that influencers do not mislead consumers, more so to avoid the possibility of facing legal action themselves.
Consumer protection under the law
The UCPD and the Act aim to protect consumers from the consequences of unfair commercial practices and to address commercial practices that directly relate to influencing consumers’ transactional decisions. They prohibit traders from creating a false impression of the nature of the products they are selling, and from exploiting their position of power in relation to consumers by applying pressure in a way which significantly limits the consumers’ ability to make an informed purchase.
In terms of the law, influencers are to avoid engaging in commercial practices that are unfair,1 and more specifically aggressive, or misleading2. As a result, they must identify the commercial intent behind their uploaded posts to ensure that consumers are not deceived by hidden adverts.
The business whose products are being advertised would also need to ensure that any influencers it engages acts within the limits of the law, rather than giving them carte blanche, as they too could be liable in the same manner for unfair commercial practices.
In view of the rise of influencer marketing, in July 2023 the European Economic and Social Committee has proposed specific EU regulation to avoid influencer advertising falling through the cracks of ad disclosure. The EESC recognised that legislation in place already regulates influencers however desired a more comprehensive and specific approach.3
In October 2023, the European Commission launched the “Influencer Legal Hub”.4 The Hub itself is a collection of material, including videos, legal memoranda, overviews of applicable legislation and linked to national consumer authorities, aimed primarily at influencers, agencies and brands, but also at consumers, to educate the stakeholders regarding the applicable legislation. As part of the launch, the Commission, together with national consumer authorities have commenced online screening of posts to identify testimonials and endorsements that mislead consumers. The Commission is therefore clearly of the opinion that the current legislative framework is sufficient to protect consumers, and that a more pro-active approach is required to ensure compliance.
How should influencers avoid misleading consumers?
The problem with so-called “disguised advertising”, that is any ‘form of commercial communication that presents itself as non-commercial in a way that blends in with other content published by users’,5 is that consumers might not realise when content is an advert. Besides the potential to cloud consumers’ judgement in making transactional decisions, such posts by influencers could also have health and safety implications.6
It is such circumstances that highlight the weak position consumers are in when compared to traders/influencers, particularly when it comes to older consumers, inexperienced social media users, and young adults.
Although some influencers make use of hashtags across social media to convey the message that their post is sponsored, certain hashtags do not adequately bring that message across and are not considered adequate to clearly describe that the influencer has received compensation for putting up a post.7 Traders and influencers alike should strive to disclose the commercial intentions of their adverts and posts as clearly as possible, keeping in mind vulnerable consumers.
Theoretically, Maltese and EU consumer law do provide adequate measures to protect consumers against non-disclosure or disclosure that is not deemed to adequately show that the content is sponsored. Annex 1 of the UCPD and the First Schedule to the Act lay down that using editorial content in the media to promote a product where the trader has paid for the promotion without making that clearly identifiable in the content is considered as an ispo jure misleading commercial practice.8 The Act also states that anyone who engages in unfair commercial practices is liable to be found guilty of an infringement of consumer protection laws.9
However, it is proper enforcement and the issuance of clear disclosure guidelines that influencers should follow when uploading posts that are required.
Jurisdictions such as the UK, Belgium and France have issued guidelines on influencer marketing. It would be useful should the Malta Competition and Consumer Affairs Authority, the authority that inter alia regulates consumer affairs in Malta, issue a similar set of guidelines to educate the public about potentially hidden sponsored content online. The guidelines should aim to develop a list of disclosure labels to be used by influencers that clearly demonstrate to consumers that the content is sponsored. While targeting influencers and imposing penalties for not disclosing that any of their posts as advertorial acts as a deterrent and would, thereby, reduce disguised advertising, such influencers need to be informed as to what proper disclosure is.
1 The Act considers a commercial practice to be unfair if (i) it is contrary to the requirements or professional diligence and (ii) it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches.
2 The Act list two forms of misleading commercial practices: (i) misleading actions, which comprise those commercial practices that contain false information and are therefore untruthful, and which are likely to cause consumers to make a transactional decision they would have otherwise not made. Influencers have to, thus, clearly demonstrate any commercial motives behind posts they upload when making reference to certain products. This would necessary include demonstrating clearly that the post has been sponsored, and (ii) misleading commercial practices which relate to traders omitting to furnish the consumer with material information that the consumer would need to be able to make an informed decision when purchasing something.
3 https://www.eesc.europa.eu/en/news-media/news/influencer-advertising-eesc-proposes-eu-regulation-draw-red-line accessed 13 November 2023
4 Available at < https://commission.europa.eu/live-work-travel-eu/consumer-rights-and-complaints/influencer-legal-hub_en#:~:text=Influencers%20as%20advertisers,affiliate%20marketing)%20must%20be%20disclosed> accessed 13 November 2023
5 Market Study 
6 See in particular the ‘Flat Tummy Tea’ crack-down. You can read more about it here: https://www.newstatesman.com/politics/business/2017/09/flat-tummy-tea-why-asa-cracking-down-influencers-shilling-detox-drinks
8 Annex 1, Paragraph 11 of both the Consumer Affairs Act and Directive 2005/29
9 Consumer Affairs Act, Article 51F
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr Annalies Muscat and Dr Laura Spiteri
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