Switching the ring light for the spotlight – CMA publishes guidance on consumer law compliance for social media endorsements

The CMA has recently published guidance for social media platforms, brands, and content creators to try to ensure that paid-for online endorsements can be easily identified. This guidance includes six guiding principles to help social media platforms combat hidden ads on their sites – one in a series of steps the CMA has taken to ensure that tech platforms comply with consumer law. What are the implications for tech platforms, brands, content creators and consumers? And how will the CMA’s bid to grow its consumer protection powers affect these?

Protecting consumers from hidden advertising 

Hidden advertising is illegal in the UK and where celebrities or social media influencers are rewarded for the promotion of certain products or services, consumer law requires that this is clear from the moment a consumer engages with content. In 2018, the CMA launched a consumer enforcement investigation in response to concerns that influencers were not always declaring the benefits they derived from certain social media activities sufficiently clearly in their posts. 

The investigation ultimately resulted in undertakings from 16 influencers to improve disclosures in their social media posts and make it clear when they are paid or otherwise incentivised to endorse a product or service, as well as undertakings from Facebook to tackle hidden advertising on Instagram.

What does this mean for tech platforms?

The CMA, together with the Adverting Standards Agency (ASA) and the Committee of Advertising Practice (CAP), previously published guidance for influencers on how to be transparent in relation to their commercial relationships by ‘making clear that ads are ads’, and thereby comply with consumer law. The CMA’s recently published package of guidance includes guidance for (i) content creators; (ii) businesses who reach out to those content creators to promote their products, brands or services; and (iii) social media platforms.

The CMA makes clear that platforms are also responsible for tackling hidden advertising on their services (including sites in ‘desktop’, ‘mobile’ and ‘app’ based formats). In particular, platforms have a duty to act with professional diligence under regulation 3 of the Consumer Protection from Unfair Trading Regulations 2008.

Whilst the principles do not provide a step-by-step guide in how to implement safeguards on sites, they do provide a steer on what the CMA considers social media platforms should be doing in order to comply with their consumer law obligations, while recognising that each platform is different. The six guiding principles are:  

1. Inform users (especially content creators), through timely, clear, sufficiently detailed and easy to find guidance, that incentivised endorsements are required to be clearly identified as advertising and clearly distinguishable from other content.
   
    
2. Provide content creators with tools so they are easily and effectively able to label any content as advertising such that an advert is clear as soon as a consumer begins to engage with the relevant content. This could include, for example, offering content creators tools which offer one-click categorisation of content as an add.
   
    
3. Take appropriate, proportionate, proactive steps and use available technology to prevent hidden advertising from appearing on social media sites, for example by implementing algorithms to identify unlabelled advertisements, inviting content creators to confirm whether a suspected hidden ad is indeed an advertisement, and conducting regular testing and reviews of platforms’ systems to ensure they remain effective in the face of evolving abuse.
   
    
4. Make it simple for users to report suspected hidden advertising easily and effectively, including by providing a tool or contact address for regulators to report suspected hidden advertising and other concerns, and ensuring platforms have mechanisms in place to quickly address any such concerns.
   
    
5. Facilitate legal compliance by brands, for example by stressing the illegality of hidden advertisements and taking appropriate action when a brand is identified through algorithms or reporting mechanisms.
   
    
6. Enforce the relevant platform’s terms and conditions and take appropriate action when violations occur, for example by removing harmful content promptly, applying proportionate and effective sanctions to content creators who engage in hidden advertisement to deter them from such behaviour (for example, blocking them from posting for a definitive period) and maintaining records of steps taken to deal with hidden advertising.

A continued focus on boosting the CMA’s consumer protection powers

The guidance and enforcement action continue the trend of CMA appetite to use its consumer powers, which will be bolstered when proposed Government reforms are enacted. At present, the CMA does not have administrative fining powers under consumer protection law but can secure undertakings from companies to change the way they operate or take them to court to enforce. Despite this, the CMA has exercised its consumer powers extensively in recent years: addressing concerns in relation to leasehold properties, care homes and online console video gaming, and greenwashing. 

In April 2022, the Government announced wide-ranging reforms which included bolstering the CMA’s consumer law powers, to enable the CMA to determine whether an infringement has occurred, make directions including to bring such infringement to an end, impose fines for non-compliance with consumer protection law and award redress to consumers. Once equipped with such powers, the CMA could independently and more quickly enforce consumer protection measures, including in relation to social media endorsements.