Social media stars can face jail if they do not disclose adverts
CELEBRITY “influencers” have been warned by competition watchdogs they could face jail if they fail to disclose that their Instagram posts are being paid for by advertisers.
Household names who have been asked to sign a formal agreement that they will disclose adverts to fans include popstar Ellie Goulding, internet star Zoe Sugg, supermodel Rosie Huntington-whiteley and Binky Felstead of Made in Chelsea.
Online endorsements from celebrities and influencers can help boost brand sales through exposure to their millions of followers. However regulators have previously warned that some posts could break consumer protection law.
It is in breach of the Consumer Rights Act to use editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content, or by images or sounds identifiable to the consumer.
The Competition and Markets Authority (CMA) said it had “not made a finding on whether the influencers’ practices have breached consumer law”.
It comes after the CMA opened an investigation in August last year to establish whether influencers were disclosing clearly when they had been paid or rewarded for endorsements.
It found that paid product placements were not always being made clear, leading to fears that consumers could mistake them for genuine personal recommendations.
Now, a group of 16 celebrities have entered into a formal agreement with the Competition and Markets Authority stating that they will not continue to advertise brands without declaring it.
The CMA said that if they continue to do so it could take out a court order against them, which could lead to fines and up to two years in prison.
Regulators have previously said advertisers must declare what they are doing by writing the word “advert” or “sponsored” clearly above online posts.
Under the Advertising Standards Authority’s rules, for an influencer’s post to be classified as an advert they must be paid in some form and give some control of the message to the advertiser.
Andrea Coscelli, the CMA chief executive, said: “You should be able to tell as soon as you look at a post if there is some form of payment or reward involved, so you can decide whether something is really worth spending your hard-earned money on.
“The enforcement action sends a clear message to all influencers, brands and businesses that they must be open and clear with their followers.”