U.K. Probing Social Media Influencers

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Britain’s Competition and Markets Authority launches a probe into "concerns that social media stars are not properly declaring when they have been paid, or otherwise rewarded, to endorse goods or services."

Britain’s Competition and Markets Authority (CMA) said Thursday that it has launched an investigation into "concerns that social media stars are not properly declaring when they have been paid, or otherwise rewarded, to endorse goods or services."

In cases where influencers are paid or rewarded to promote, review or talk about a product on their social media feeds, U.K. consumer protection law requires that this must be made clear, it highlighted.

"Typically, celebrities and influencers have millions of followers who watch their channels to see where they go on holiday, what they wear, which products they use, the books they read and more," the CMA said. "If they do not label their posts properly, fans or followers may be led to believe that an endorsement represents the star’s own view, rather than a paid-for promotion."

It added: "They are then more likely to place trust in that product, as they think it has been recommended by someone they admire. They might not do so, however, if it was made clear that the brands featured have paid, or in some other way rewarded, the celebrity in return for endorsement."

As part of its probe, the CMA said it has written to a range of unnamed celebrities and social media influencers "to gather more information about their posts and the nature of the business agreements they have in place with brands."

If the CMA finds practices that are not in line with consumer protection law, it can take enforcement action. It expects to have an update on the investigation at the end of the year.

The new review follows another CMA probe in 2016 of online reviews and endorsements. Back then, the CMA accepted so-called undertakings from four companies "to ensure that online advertising is clearly labeled or otherwise identified so that it is distinguishable from the opinions of bloggers or journalists."

Under Britain's Consumer Protection from Unfair Trading Regulations of 2008, the use of editorial content in the media "to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable to the consumer" is banned.

"Social media stars can have a big influence on what their followers do and buy,” said George Lusty, the CMA’s senior director for consumer protection. “If people see clothes, cosmetics, a car, or a holiday being plugged by someone they admire, they might be swayed into buying it. So, it’s really important they are clearly told whether a celebrity is promoting a product because they have bought it themselves, or because they have been paid or thanked in some way by the brand."

In the U.S., the Federal Trade Commission last year also started a crackdown on social media influencers. The FTC early in the year sent 90 warning letters to individuals and brands, including actress Ashley Benson, singer Ciara and model Amber Rose, following that up with a second letter to 21 of those influencers later in 2017. It asked them to disclose any "material connection" with companies and, if one exists, detail what they plan to do to ensure their fans understand that relationship.