In the May 2017 special edition of Law à la Mode
(Issue 23), we set out five tips for navigating native
advertising with a view to FTC compliance under
US law. In this edition, we reconsider the issue from
the angle of EU law, where it is commonly known as
“hidden advertising”.
Hidden advertising is often present on social media
platforms such as Instagram, Facebook and Twitter,
where users and pages which have garnered a large
following (so-called ‘influencers’) provide an efficient
way for brands to reach target audiences by way of paid
promotions and strategic product placement. In a time
where consumers are getting more and more savvy at
identifying advertisements, as well as avoiding them, this
kind of cooperation can prove invaluable. Nevertheless,
it is not without its pitfalls.
While no specific legal framework for hidden advertising
exists in EU law, applicable rules may be found at the
confluence of legislation on unfair commercial practices,
including misleading omissions, e-commerce and direct
marketing. Particularly in regards to the legislation on
unfair commercial practices, a robust set of principles can
be discerned aimed at combatting hidden advertising.
In addition the Unfair Commercial Practices EU Directive
provides a black list of prohibited practices in its
Annex 1, which details the practices deemed unfair in all
circumstances and which is replicated in its entirety in all
Member States. That list includes prohibitions on the use
of ‘advertorials’, meaning the use of editorial content in
the media to promote a product without clarifying that
the promotion is paid for. Influencers, on the other hand,
may run afoul of the prohibition by falsely representing
themselves as consumers when they promote products
under the guise of simply being a fan. Aside from these
black-listed practices, hidden advertising may also constitute
a misleading omission where material information is omitted
that prompts the consumer to take a transactional decision
he or she would not have made otherwise.
The crux of the remaining specific legislation, as well as the
general rules of the unfair commercial practices legislation, is
that any potential non-compliance can be avoided as long as
the consumer has been adequately informed of the nature
of the promotional material. In summary, companies and
influencers seeking to engage in a partnership should always
disclose the necessary references and details indicating the
existence of a commercial relationship.