Influencers and undisclosed sponsored activities

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From IPKat:

Suppose that you meet someone who tells you about a great product. That person tells you that the product has fantastic new features that no other product has. Could that recommendation influence your decision to buy the product? Possibly yes, especially if you trust and admire that person. Now suppose the person works for the company that sells the product – or has been paid by the company to praise the product. Would you want to know that when you’re evaluating the endorser’s glowing recommendation? You bet.

The latter seems to be the issue underlying the increasingly extensive debate and concerns around those ‘influencers’ who fail to declare the existence of a commercial relationship with companies whose products they wear and sponsor, including via social media.

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Quite recently, in fact, the FTC adopted a set of guidelines: the Endorsement Guides.

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Among other things, Section 5 in the FTC Act states that the FTC conducts investigations and brings cases involving deceptive advertising made on behalf of an advertiser.

In this regard, the Guides are intended to give an insight into what the FTC thinks about influencers’ undisclosed marketing activities and how Section 5 might apply to the resulting endorsements. The Guides themselves are not legally binding. However, practices inconsistent with the Guides may result in law enforcement actions alleging violations of the FTC Act. Law enforcement actions may prompt a defendant in a case to return any money received as a result of the the violation in question and to abide by various requirements in the future.

Importantly, in its aim to prevent false or misleading advertisement, the FTC requires influencers to disclose any “material connection” between the influencer and the advertisement in a “clear and conspicuous” manner. A “material connection” entails disclosure of business or family relationships, monetary payments and also gifts of free products.

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Growing concerns with influencers and undisclosed sponsored posts can be found also in Europe. For instance, a case of this kind was recently decided in Sweden.

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In late January 2018 the Patent and Market Court in Konsumentombudsmannen v Alexandra Media Sweden & Tourn Media (PMT 11949-16), ruled that famous Swedish blogger and influencer Kissie was responsible for misleading marketing on social media.

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The Court held that expressions like ‘sponsored post’ and ‘collaboration’ are sufficiently clear in communicating that a post is to be regarded as an advertisement. Crucially, such expressions must either be given a particularly clear design or placed in a prominent position in relation to the post. In this particular case, two posts by Kissie were found to have failed to provide a sufficiently clear indication that they were in fact advertisements.

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