influencer taking selfie

When it comes to influencer marketing, there are rules and the CMA has the power to enforce them. What does this mean for businesses and influencers?

The Competition and Markets Authority (CMA) can enforce consumer protection law and regularly investigates companies and influencers who might be in breach of them. This article looks at influencer marketing rules and what happens if they are breached.

What is the CPR 2008?

The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) aim to prevent unfair practices being used by traders and businesses (including influencers/content creators) when dealing with consumers. They include a general duty for businesses to act in a fair and honest way which extends to the way products are marketed – including ad content on social media and, therefore, to any advertisement by influencers or social-media content creators.

What happens if you breach influencer marketing rules?

A breach of the relevant laws may result in you and/or your business being investigated by the CMA, which has statutory powers to investigate such breaches.

This could lead to a case being brought against your business in the civil courts but may also lead to criminal sanctions. It is important that businesses (brands, social media agencies and the influencers themselves) understand these regulations and implement risk-mitigating strategies for online brand promotions (for example via sponsored ads, through influencer partnerships, own brand promotions, or simply sending an influencer a gifted product).

It is also important to note that the Advertising Standard Authority (ASA) also enforce advertising rules in the influencer industry, however this article solely focusses on the powers of the CMA.

For more information on the ASA powers please check out this article.

What are the CMA’s powers?

Under the Enterprise Act 2002, the CMA has the power to investigate if they suspect a breach of the CPR.

In the event that a business or individual does not cooperate with the investigation, the CMA can apply to the court for powers to compel compliance with its request for information and disclosure. If a person (including a company) is compelled to comply with a CMA investigation, they are prohibited from disclosing the investigation and/or their involvement; any such disclosures could, at worst, result in imprisonment.

For example, if a brand provides payment (or payment in-kind, such as a free gift) to an influencer and that influencer posts promotional content about that brand on social media without the correct use of disclosure labelling it is likely to breach consumer protection law. If the CMA suspect a breach of the law, the CMA may investigate by contacting the brand to establish the conditions on which the product or payment was provided to the influencer.

The CMA focuses its enforcement efforts on those practices which are market-wide and harmful to consumers, as well as those which affect a consumer’s ability to make their own choices. The CMA consider it necessary to act in situations where enforcement will deter others from conducting the same harmful practices, or where there is an opportunity to set an example to influencers and brands going forward.

As the world of influencer marketing is a relatively new and rapidly evolving industry, it is likely that, in the event of a business/influencer breaching the CPR, the CMA will be keen to enforce the regulations to set an example for future influencers and businesses.

Omitting or hiding material information

The relevant regulations prohibit any commercial practice which omits or hides material information, or which conveys such information in a way which is unclear or confusing to consumers. For example, using editorial content (i.e. grid posts, reels, stories, videos, etc) on social media to promote a product where a business has paid (including gifted products) for the promotion without making that clear in the content that is advertorial content is a banned practice.

The regulations also prohibit actions and content which misleads the consumer in any way which could cause the consumer to make a purchasing decision. For example, a consumer might make a purchase after reading a review or post about a product – or use a discount code provided by an influencer which has not been disclosed as advertorial content.

Who is responsible for following influencer marketing rules and consumer protection laws?

In the eyes of the CMA, brands, social-media platforms, social media influencer agencies and influencers are equally responsible for ensuring compliance with the CPR.

For platforms, this means providing brands with the tools they need to detect posts and ensure their legality. For influencers it means ensuring they can substantiate any claim they make about a product and labelling the posts clearly as adverts. Our expert lawyers provide training on what constitutes an “AD” and compliant labelling on social media platforms.

Social media / influencer agencies are responsible for ensuring that consumers are not mislead by content that they facilitated. It is therefore important for social media influencer agencies to have fit for purpose contracts in place between its influencers and customers, respectively, to demonstrate due diligence (see below). Having suitable contracts is also important so that usage and licensing image rights are clearly dealt with.

The brand has a responsibility to ensure that all posts promoting them are compliant with consumer protection law. There are also other steps that a brand can take to mitigate its risk and demonstrate due diligence.

The “due diligence” defence

The “due diligence defence” is available in some circumstances where the offending party, be it the brand, influencer and/or social media agency, has taken steps to mitigate the risk of breaking the law, despite there being a law break.

Brands should be mindful of their responsibilities when engaging and/or reaching out to influencers (for example, commissioning posts, gifting products and/or requesting promotional content). There are proactive steps and processes a business can put in place to reduce and mitigate the risk of breaching consumer protection law.

For more information on influencer marketing rules, you can read:

If you would like to discuss this further, please get in touch with our specialist lawyers.