The Digital Markets, Competition and Consumers Bill – How will it impact the influencer industry
The Kings Speech reaffirmed the Government’s commitment to passing the Digital Markets, Competition and Consumers Bill in the 2024 Parliament. The Bill will add another layer of regulation to the ever-evolving digital market and will strengthen the enforcement powers of the Competition and Markets Authority (CMA). In this article we look at the increasingly regulated influencer market, the impact that the Bill will have on influencers and brands, and the CMA’s proposed enforcement powers.
Who is an influencer
Influencers can be any human, animal or virtually produced persona that is active on an online social media platform. Any persona that falls within this definition will be deemed to be an influencer even if they use a different title or descriptor, for example “blogger”, “content creator” or “celebrity”.
Regulation of influencers
Influencers are jointly regulated by the Advertising Standards Agency (ASA) and the CMA. The ASA regulates influencers compliance with the CAP code relating to advertising standards, and the CMA regulates influencers compliance with consumer law, in particular the Consumer Protection from Unfair Trading Regulations 2008 (CPR).
Most regulation of influencers has focused on labelling requirements relating to advertising. Both the ASA and the CMA are clear that any promotion of a brand or product by an influencer needs to be immediately clear to the consumer as an advert.
Content is considered to be advertising where the influencer has received “payment” for it. This is not limited to cash payment but can be any kind of incentive received by the influencer, or any commercial relationship with between the influencer and a brand. This may include being a brand ambassador; receiving a discount or commission; receiving free products, invites or services; holding any position in the company; or collaborating with the brand to produce an “edit” or “collaboration”.
Current enforcement powers
A breach of the relevant standards or laws can lead to the influencer or the brand being investigated by the ASA or CMA. The ASA has powers to “name and shame” influencers, whilst the CMA has statutory powers to investigate suspected breaches of the CPR. Currently, if the CMA wants to go enforce the breach it has to go to court to compel compliance from the brand or influencer.
Enforcement powers proposed under the Digital Markets, Competition and Consumers Bill
If it becomes law the Bill will significantly increase the CMA’s enforcement powers in this area. The Bill gives the CMA new powers to:
- Directly investigate any suspected infringements of the CPR as well as any practice which it believes may harm the wider interest of the UK consumer;
- Establish breaches of the law and issue “enforcement notices” without needing court approval. This will make the CMA the only regulator with such powers; and
- Impose significant fines on those who breach the regulations. The proposed fines are styled on fines under the UK GDPR and can be up to £300,000 or 10% of annual global turnover (whichever is higher).
Impact on influencers and brands
Whilst the Bill significantly strengthens the CMA’s enforcement powers it doesn’t impose new compliance obligations on influencers, agencies or brands. Therefore, the obligations relating to advertising labelling requirement are unlikely to change much from where they currently are, and since influencers and brands should already be complying with these requirements the CMA may be quick to take action to clamp down on non-compliant practices once the Bill becomes law.
For influencers this means that they should be aware of their obligations relating to labelling requirement. Influencers should make use of advertising disclosure tools on social media platforms, but should be aware that ultimately they are responsible for ensuring their content is compliant with consumer protection law and simply relying on the disclosure tools available on the platform may not be enough.
For brands this means having clear guidance in place on what is expected from influencers who are promoting their products or services. This is likely to mean issuing policies to influencers which are backed up by clear contractual obligations.
Brands should also be proactively monitoring promotional content relating to their brand. This may require ensuring that staff have been trained and are able to identify non-compliant content. Brands should also have contractual powers to prevent non-compliant content from being posted (for example by ensuring it has the power to approve content before it is posted), or, to require influencers to remove non-compliant content from platforms.
For more information on the Digital Markets, Competition and Consumers Bill, please contact us online.