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Social Media Influencer Marketing: How To Avoid Legal Pitfalls

Davide Palazzo

December 3, 2019

Social media influencer marketing is a trending phenomenon nowadays, with Brands looking for influencers to advertising their products or services on Facebook, Instagram, LinkedIn, and any other suitable social media platform. The reason is evident: generating more sales by increasing the number of followers and consolidating their brand awareness across the web. Likewise, influencers are attracted by the possibility of assuming a strategic marketing role for Brands, which, in certain circumstances, may turn into a proper partnership.

But, have brands and influencers ever considered the legal implications that may arise out of their business relationship? Should they regulate such a relationship with a bespoke written contract? And foremost, are they aware of their obligations when they advertise products or services?

Let’s look at some important legal aspects that are relevant to both brands and influencers.

Connect Influencers with Brands. What You Should Know About Using Influencers For Marketing

Advertising through social media influencers is officially taking over as the fastest growing method to boost businesses online. So, there is no surprise that several advertising authorities worldwide have already started to regulate the sector, imposing rules on both brands and influencers as to their paid adverting activities. The scope is to protect the general public from misleading content. We all should be able to precisely understand whether and when a product or service is advertised or not. Why? You would not admit it, but a large percentage of us buy a product or service just because it appears in a post with a celebrity/blogger/influencer.

So, when content can be qualified as an advertisement? And how should it be advertised? The answers depend on the country that the influencer and brand operate within as several laws and regulations may apply.

Social media influencer marketing in the UK

According to the Advertising Standards Agency (ASA), content is qualified as an advertisement when the following two conditions are met:

Influencers receive some type of remuneration (not necessary money) to advertise a product or service. As an example, they might receive trips, gadgets, free dinners, and so on.
Brand exercise some kind of control over the content. In other words, they set some specific guidelines as to their products or services should be advertised.

In such a case, the regulation authorities state that an advertisement must be identifiable as such with ease. In other words, influencers are required by law to include a prominent label that makes clear that advertisements are advertisements. No exceptions. And such labels, according to the Advertising Standards Agency’s influencer guidelines, should be referred to as “Ad”, “Advert”, “Advertising” and “Advertisement”. Unlike, labels such as “thanks to (brand)” and “in association with”, are not recommended. For further information, see the CPUT and CAP code, respectively named as the Consumer Protection from Unfair Trading Regulations 2008 and the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing.

Paid influencer marketing in Italy

When comments or opinions expressed by a celebrity, influencer or blogger about a product or brand have the characteristics of marketing communication, they are subject to the Advertising Self-Regulatory Code application, as issued by the IAP. The Instituto dell’Autodisciplina Pubblicitaria (IAP) aims to protect consumers and businesses and ensure that marketing communications are increasingly “honest, truthful and correct”.

Under the IAP Digital Chart, when an influencer enters into an agreement with an advertiser (or with a third party representing an advertiser) to promote a product or a brand, his or her post constitutes a marketing communication. And as such, it should be labelled as follows:

“Pubblicità” (“Advertising”), or “Promosso da …” (“Promoted by…”) or “Sponsorizzato da…” (“Sponsored by…brand”) or “in collaborazione con …” (“in partnership with the …”); And/or within the first three hashtags (#) use one of the following terms: “#Pubblicità” (“#Advertising”), “#Sponsorizzato da … “ (“#Sponsored by the …”) or “#ad”unitamente a “#brand””

As opposed, the above labels are not necessary in case the relationship between brands and influencers is limited to the brands occasionally sending their products free or in exchange for a modest sum, and the influencer names these products use them or displays them in their posts. A disclaimer, such as “product sent by the …brand”, would suffice in these circumstances.

What are the consequences for influencers who fall out of the social media influencer marketing regulations?

In the UK, breaching the CPTU could lead to some necessary actions being taken against both influencers and brands. In some circumstances, these could lead to fines; imprisonment for up to 2 years; or both. However, it should be noted that most advertisers prefer to resolve the matter directly with ASA, whose mission is to work with them to help them stick to the Advertising Codes rather than punish them.

A recent case involved Influencer Jemma Lucy, who promoted weight loss products. On 5 May 2019 Influencer wrote “I’ve been staying in shape with my go to @skinnycaffe products. I love the Coffee’s [sic], Hot Chocolate’s [sic] and the Thermosyn capsules are amazing! I love to use them as me and some of the girls have been seeing great results and they work with or without exercise. You can lose up to 7lbs in 7 days with Thermosyn. Right now you can claim your first packet of Thermosyn free by clicking here” and linked to the theskinnycaffe.com website. The Advertising Standards Authority (ASA) found that this breached the CAP Code because it was not clear that it was an advert.

Similarly, it may be said that breaching the IAP Digital Charter may lead to significant fines by the Italian Competition Authority for both influencers and brands, which are jointly liable.

On 26 June 2018, the Italian Advertising Authority (IAP) ruled against Fedez, a famous Italian singer, as to some Instagram stories and a picture that the latter published on the occasion of the International Tennis Cup. The posts and Instagrams stories portrayed some cars and emphasized some of their functions, but did not make evident their promotional nature.

Nevertheless, it should be noted that not all communications are qualifiable as a marketing communication and are subject to the IAP Digital Charts. Spontaneous comments, opinions or preferences expressed by an individual regarding a specific product or service, as an example, do not fall within the definition of marketing communication.

Do influencers and brands need to seek legal advice for their campaigns?

It is undoubtedly the beginning of a new era in digital marketing and as such, influencers and brands should pay great attention to the relevant social media influencer marketing laws, regulations, and guidelines. Noncompliance might lead to significant legal consequences. Influencers and brands should understand what’s expected of them. And they should regulate their business relationship with a well-written social media influencer agreement. The agreement should set out:

A paid agreement exists between the brand and the influencer for the latter to endorse the brand’s products or services for a specific period or a particular number of posts
Exclusivity rights.
The length of a post.
The period of paid amplification.
Confidentiality undertakings
The specific type of content — whether it’s a video or Instagram Story, for example.
Payment terms. How and when influencers get paid, whether or not based on the reaching of a specific threshold (as an example, the number of new followers, views, etc).
The amount of content.

If you are an influencer or brand looking for help, we would love to hear from you. Please free to contact us, and we will be glad to be of assistance.

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