Social media platforms have responsibilities under consumer law to prevent and tackle unlawful practices, such as hidden advertising, where they are occurring on their services (including sites in desktop, mobile and app-based formats). In particular, platforms have a duty to act with professional diligence as required under the Consumer Protection from Unfair Trading Regulations 2008.

On 3 November 2022, the Competition and Markets Authority (CMA) published its guidance on ‘Hidden ads: Principles for social media platforms’.

This update summarises the six key principles that the CMA has developed during its consumer enforcement investigation into the disclosure of incentivised endorsements on social media platforms. The CMA considers that, by adopting these principles, platforms are more likely to comply with the requirements of consumer law and reduce the risk of future enforcement actions.

These new compliance principles outline what the CMA believes platforms should be doing now, based on current market practices and technology. Platforms have an ongoing responsibility to remain compliant as technology and the law develop, so must consistently review their practices, and shouldn’t consider these compliance principles as static or one-size-fits-all. Indeed, the CMA specifically acknowledges that each platform is different and may develop alternative ways of complying with consumer law which are not specified in these principles.

Principle 1: Inform users that incentivised endorsements are required to be clearly identified as advertising and clearly distinguishable from other content

Platforms should ensure users are aware that hidden advertising is not allowed on the service by:

• providing information clearly and prominently in the terms of service, policies and any other information relating to incentivised endorsements, that:
  • hidden advertising is prohibited,
  • content creators must label content as advertising where they have been paid or incentivised to endorse a product, service or brand, or if they have a commercial interest in the brand or its products or services, and
  • content creators are required to use a particular tool that is made available to label content as advertising;
• providing timely, clear, unambiguous, sufficiently detailed and easy to find guidance (using examples) about the obligations surrounding incentivised endorsements, including:
  • what constitutes an incentivised endorsement,
  • when disclosure is required, and
  • how to label an incentivised endorsement using any relevant tools; and
• flagging and reminding people of the main requirements about labelling incentivised endorsements at key moments when users start using the service and when they are posting content.

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Principle 2: Provide content creators with tools so they are easily and effectively able to label any content as advertising

Platforms should make it easy for all content creators to label their content as advertising, regardless of the type of device they’re using, so that they can comply with their legal obligations. The CMA considers that the law requires content to be clearly recognisable as advertising as soon as the reader starts to engage with it. This could be achieved by:

• offering a tool that easily enables content creators to use one click to label their content as advertising;
• actively promoting the availability of the tool, so that content creators use it when posting advertising content;
• using algorithms which identify potential unlabelled advertising content, and automatically prompting content creators to use the tool to label it correctly; and
• undertaking regular reviews of the tool and its uptake by content creators and taking steps to improve it.

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Principle 3: Take appropriate, proportionate, proactive steps and use available technology to prevent hidden advertising from appearing on the platform

If hidden advertising is occurring on the site, the platform should take steps to detect suspected hidden advertising, prevent it from appearing, and hold content creators to account by:

• using technology and algorithms designed to identify content containing incentivised endorsements that have not been labelled as such and ensure that any such algorithm that is put in place is effective. As a minimum, such algorithm should consider relevant factors such as:
  • relevant metadata of any content, such as captions that tag specific brands, embedded links to brands’ websites or affiliate links added above / beneath content, and
  • branded content prominently visible within image or video content that can be reasonably identified by automated image recognition tools;
• carrying out regular tests and reviews of systems and processes and updating these to ensure they remain effective and keep pace with evolving abuse. This is likely to be particularly important if the platform becomes aware that hidden advertising is still appearing on the platform; and
• taking reasonable steps where an algorithm identifies suspected hidden advertising, including flagging this to the relevant brand for their confirmation.

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Principle 4: Make it simple for users to report suspected hidden advertising easily and effectively

Depending on how comprehensive the steps the platform takes to prevent hidden advertising from appearing, platforms should provide:

• a clear mechanism for users to report suspected hidden advertising; and
• a tool or contact address for regulators to report suspected hidden advertising and any other concerns and ensuring that platforms have systems in place to act rapidly to address the problem.

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Principle 5: Facilitate legal compliance by brands

Hidden advertising by content creators is illegal, and therefore platforms should take proactive steps to raise brands’ awareness and understanding of the platform’s terms of service, policies and any other information relating to incentivised endorsements, and encourage brands to check that content which endorses them is properly labelled as advertising. This could be achieved by:

• taking appropriate action to inform the brand involved where content is identified either through algorithms or through reporting mechanisms; and
• promote brand compliance by providing functionality to enable those which use the platform easily to review content that mentions their brand, and then request action if necessary.

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Principle 6: Enforce terms and conditions and take appropriate action when violations occur

Platforms should take action to encourage compliance with and enforce their terms of service so that hidden advertising does not continue to appear by:

• promptly removing content which has been confirmed as hidden advertising;
• applying proportionate and effective sanctions to content creators who have posted hidden advertising, to deter them from doing it again. These could include blocking them from posting for a defined period, suspending their account, and (if there are still infringements) closing their account completely. Sanctions should be escalated for repeat offenders; and
• maintaining records of the steps that the platform has taken to deal with hidden advertising.

These steps will help platforms be consistent in applying appropriate sanctions to repeat offenders, and in demonstrating to enforcers that the platform has been acting with professional diligence.

If you’d like to discuss any of these issues, please get in touch with Claire Livingstone.