It has been a month since the president of the Office of Competition and Consumer Protection published the Recommendations on social media advertising labelling. Now the regulator is back with a collection of FAQs from users concerning the recommendations.
Since the recommendations were published, Poland’s Office of Competition and Consumer Protection (UOKiK) has conducted additional measures to help users understand its guidance on social media advertising. One initiative was a series of webinars on UOKiK’s Instagram page, answering participants’ questions in real time (transcripts of all chats are available on UOKiK’s social media).
Who are influencers, and why is the regulator interested in their activities?
In the practice of the president of UOKiK (e.g. decision of 20 June 2022, no. RBG-3/2021), “influencers” are defined as entities publishing advertising content on social networks (such as Instagram, Facebook, YouTube, TikTok and blogs). The definition is further detailed in the recommendations published by UOKiK, according to which influencers are creators who actively run their own social media, communicate with followers, and can influence followers’ opinions, decisions or behaviour through their publications.
Influencer marketing is one of the fastest-growing areas of marketing. It is estimated that globally the value of this market has already exceeded USD 15 billion annually, and in Poland several hundred million zlotys. The world’s biggest brands and SMEs from every sector all cooperate with influencers. In doing so, businesses are targeting consumers with their products and services. In turn, consumers should have a choice whether they want to deal with advertising when browsing a platform. They should also be aware when the content they are shown does not constitute the influencer’s independent opinion but is advertising.
Risks associated with ad cooperation with influencers
Significantly, the regulator is targeting not only creators themselves, but also advertisers, who may also be held liable for using surreptitious advertising, as the president of UOKiK oversees the activities of influencers and the entities with which they have signed contracts. At the same time, when entering into advertising cooperation with public figures, businesses should be particularly mindful of consumer protection regulations and the previous activities of the regulator regarding the labelling of advertising content published by influencers on social media. Businesses entering into contracts for influencer marketing services should first and foremost pay close attention to the proper framing of the information obligations incumbent on providers of advertising, so that the messages presented are sufficiently transparent and do not mislead consumers.
Regulations and potential sanctions
To this extent, the Act on Combating Unfair Market Practices, which has been in effect since 2007, may apply. But those provisions are quite general and concern not misleading consumers by omitting relevant information that may influence the consumer’s purchasing decision. Furthermore, they provide for a ban on surreptitious advertising consisting of “the use of journalistic content in mass media to promote a product in a situation where a business has paid for that promotion and it is not clear from content, images or audio easily recognisable to the consumer.” Therefore, it is not permitted to hide content of an advertising nature in journalistic materials without clearly marking it. However, there are currently no provisions in Poland explicitly regulating the methods for labelling advertising materials on social media.
As indicated above, improper labelling of advertising posts may constitute an unfair market practice, and the influencer, the ad agency, and the business commissioning the advertising may all be held liable.
The president of UOKiK may also find that a practice by a business engaged in unfair market practices violates the collective interests of consumers. The fine for violating the collective interests of consumers can amount to up to 10% of the enterprise’s turnover in the fiscal year preceding the year when the fine is imposed. Additionally, a number of civil-law consequences associated with the use of unfair market practices can arise, and failure to properly mark advertising materials may infringe not only the interests of consumers, but also those of other businesses, and thus constitute an act of unfair competition.
Key guidance from UOKiK
The UOKiK recommendations include a series of detailed guidelines and specific examples of labelling advertising materials on various social media, designed to facilitate cooperation between businesses and the creators of advertising content, and for influencers, publication of materials (also in the form of podcasts) in a manner that does not infringe consumer rights. The overriding principle is the requirement to label advertising materials in a manner that is clear, unambiguous and understandable to any viewer, so there is no doubt that the content is in the nature of advertising and is based on commercial cooperation.
In the FAQs, UOKiK addresses in detail concerns about self-promotion, barter labelling, network marketing, affiliate links, and the differences between running a brand profile and running an influencer profile. The office also explicitly points out that if the purpose of the influencer’s published content is to sell goods or services for which the influencer receives a material benefit from the provider, the publication should be labelled as advertising, regardless of the form in which the influencer accepts remuneration under the contract, e.g. a percentage of product sales or a discount on services.
The (non-)binding power of recommendations
The recommendations constitute an official clarification of the regulations in force and provide information on how the regulator understands social media ad labelling issues. The recommendations do not create any rights or obligations on the part of third parties, nor can they constitute the basis for the issuance of administrative decisions by the regulator, but they do provide guidance and serve as some indicator of how the regulator will interpret the regulations insofar as they are covered by the recommendations.
What else to look for
In addition to the guidelines contained in the UOKiK recommendations, when working with influencers, businesses should also keep in mind the Advertising Code of Ethics, as well as tax aspects, such as the treatment of remuneration to influencers as a source of revenue (addressed in the judgment of 17 April 2018 of the Province Administrative Court in Gliwice, case no. I SA/Gl 1364/17).
There is no doubt that businesses, creators and advertising agencies should take the recommendations into account at the stage when they are negotiating their contracts. This will further support market transparency in advertising and cut the risks by properly presenting ad content on social media. It should be remembered also that the recommendations were drafted with a view to the conclusions drawn by UOKiK from its analysis of contracts between influencers, ad agencies and advertisers.
The effects of the recommendations and further actions of UOKiK
The influencer marketing initiatives by UOKiK have yielded positive results. There has been an increase in the number of influencers who appropriately tag the advertising content they publish and correct the tagging of content published in the past. This shows that the tools offered by the office are being used in practice. But the proposed solutions also generate many new questions and doubts regarding the classification of different types of influencer/advertiser cooperation.
The regulator indicates that it will monitor social media on an ongoing basis and check whether influencers, agencies and advertisers are following the rules. If the office notices that legal obligations are violated in this respect, it will intervene through soft measures and educational initiatives, but also by pursuing allegations of violations of the law in the course of administrative proceedings, which may result in the imposition of fines. Compliance with these regulations by influencers, advertisers and agencies will be evaluated on a case-by-case basis, taking into account all the relevant circumstances.
At the same time, UOKiK has announced that it is open to dialogue, continues to collect questions from users, and will prepare answers to them in future materials.
Weronika Nalbert, adwokat, Competition & Consumer Protection practice, Wardyński & Partners