Influencer marketing: CMA warns 43 social media stars amid crackdown on undisclosed payments

12/08/2016

The Competition and Markets Authority (CMA) has reprimanded two different firms that have failed to fully disclose payments on social media channels, and has written to 43 top influencers warning them about undeclared paid endorsements.

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In the first case, the CMA has forced influencer marketing agency Social Chain to more clearly label paid-for endorsements as advertising, following an investigation.

The CMA found that between March and July 2015, "Social Chain used its own social media accounts, and arranged for widely followed social media personalities, to promote films, games and takeaway and dating apps, without readers being informed that the content was paid-for advertising", according to a case report.

The Manchester agency, which was founded in November 2014 and claims to be Europe's largest influencer marketing agency, has clients including Just Eat, Spotify, Microsoft, Comedy Central and 20th Century Fox.

The report says that on 19 occasions in that period, tweets or other social posts were published in which it "may have been difficult for readers to distinguish from other posts, conversations and jokes they appeared alongside".

The posts were written in the same style as the celebrity's own voice, and did not contain any indication that they were promoting a commercial partner of the personality.

The CMA has also written to 15 businesses, on whose behalf Social Chain acted, and the 43 social media personalities who published content for Social Chain to warn them that arranging or publishing advertising that is not clearly labelled may result in them breaching consumer protection law.

In a second, separate case, following another investigation, the CMA has secured undertakings from Woolovers Limited, a knitwear retailer, to ensure that it will publish all genuine, relevant and lawful customer reviews on its website, and will not suppress unfavourable reviews.

The CMA’s investigation found that, over the period from December 2014 to November 2015, Woolovers “cherry-picked” more favourable customer reviews for publication on its website. Woolovers staff were instructed to approve only a selection of reviews, and none below 4 stars. This resulted in almost half of the reviews it received during the period going unpublished.
Woolovers Limited underwent a change of ownership in July 2015 and it has engaged constructively with the CMA during this process to improve its practices.

Nisha Arora, CMA Senior Director for Consumer Enforcement, said: “Social media personalities can have an important influence on people’s views, especially young people. It is therefore crucial that when people decide what to buy, they should not be misled by adverts on social media that read like independent opinions. Businesses, marketing companies and authors of online content all need to play their role in ensuring that advertising is clearly labelled as such.”

“It is also important that, when consumers read reviews on a company’s website, they are given the complete picture. Critical reviews must be published as well as those that praise the company’s products and services.”

“Since we published our call for information on online reviews and endorsements in June 2015, the CMA has secured changes from 15 companies and individuals and published wider compliance advice. Online reviews and opinions are an increasingly useful source of information for people in making their buying choices – and so are an important element of effective competition in the market - and businesses must comply with consumer law so that consumers can trust the opinions they read online.”


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