Getting Paid to Post on Instagram? Sure, but #becareful

October 28th, 2015

Advertising in the social media era.

HÉLÈNE BEAUCHEMIN, lawyer | Montreal

Living off the fruits of a blog, Instagram feed, or Twitter account is a dream that resonates with many. It can indeed be a lucrative career choice for some. Social media celebrities, such as Kim Kardashian and fashion blogger Chiara Ferragni, have launched successful businesses by showcasing products and companies on their various accounts, generating revenues far above the average income.

Some sources report that a single Kim Kardashian sponsored “tweet” can cost up to $20,000. On the other hand, hiring a blogger or social media personality can be an affordable and effective way for a company to reach potential consumers.

However, few people realize that these social media activities are also subject to regulation, particularly concerning false advertising.

Same Rules, New Methods

In Canada, advertising must be neither false nor misleading. The concept is simple enough, but what about advertising on Instagram or Twitter?

Let’s look at a typical scenario: Ms. X is an influential blogger with more than 100,000 followers on Instagram. Every day, she posts pictures of different kinds of makeup featuring various beauty products from different brands. Ms. X is contacted by an up-and-coming cosmetics company trying to connect with its target audience. The company sends her free products from its new collection and asks her to promote them on her Instagram account. Ms. X also receives monetary compensation for her efforts.

Is our blogger required to disclose on her Instagram account that she was paid and received the beauty products free of charge?

To determine whether an advertisement is false or misleading, Canadian regulations state that the advertisement must be analyzed as a whole (i.e. including text, images and sounds) from the point of view of the average consumer. In other words, what is the overall impression that the average consumer gets when seeing the advertisement for the first time?

If Ms. X extols a product’s virtues without mentioning that the products were given to her for free and that she has been paid for this promotional effort, the consumer’s opinion might be quite different than if the blogger discloses that she was remunerated. Indeed, the average consumer could then perceive her review of the product as biased and subjective.

In this particular case, the non-disclosure of the financial arrangement between Ms. X and the cosmetics company could therefore breach the law, because the average consumer could be led to believe that Ms. X’s opinion of the product is objective and independent. The advertising by Ms. X via Instagram would therefore be misleading.

It should be noted that this reasoning does not apply when a celebrity or well-known public personality expresses his or her opinion about a product since, in that case, the average consumer will naturally assume that the celebrity has been paid to do so. However, in the era of social media, the concept of “celebrity” is relative. In the absence of criteria established by law, the assessment must be made on a case-by-case basis.

Best Practices

Companies wishing to promote their products via social media must ensure that the individuals or companies promoting products or services on their behalf comply with the regulations governing false advertising. Furthermore, bloggers and other Internet personalities that have a relationship with the company whose products they are reviewing must make sure to clearly disclose that fact.

The Federal Trade Commission, the agency responsible for competition and advertising in the United States, recommends adding keywords (or “hashtags”) to a sponsored tweet, such as “#ad” or “#sponsored”. In Canada, the Competition Bureau has yet to produce such specific guidelines. However, the use of these hashtags or the blogger’s explicit statement that he or she was paid or has received products for free are certainly good practices. Doing so ensures transparency in the process and informs the consumer of the relationship between the company and the blogger.

Disclosure is particularly important because in the event of violation, penalties can be severe. Offenders could be subject to fines of up to $750,000 for individuals and $10,000,000 for companies. Penalties can even include imprisonment.

Research shows that the majority of consumers consider online reviewers to be trustworthy and that reviews have either shaped their opinion or confirmed a decision to purchase a product that they considered buying. This shows that it is in companies’ best interests to adopt transparent commercial practices that maintain consumers’ trust by ensuring that significant relationships with advertising partners, financial or otherwise, are appropriately disclosed.

How can BCF help you?

At BCF, our specialists will be more than happy to advise you on the regulations governing social media advertising, and on how to ensure that you are in compliance with advertising requirements.

Hélène Beauchemin is a member of BCF’s Internet strategic team, which offers our clients strategic advice regarding their online presence. This is a continually evolving environment which calls for the expertise of a multidisciplinary team like that of BCF.