Influencer advertising: EESC proposes EU regulation to draw red line

Rules should set obligations for influencers, but also for video-sharing platforms and social media networks

Influencer advertising and marketing has been one of the fastest-growing industries of the last decade. Perceived by consumers as closer, more authentic and more trustable than traditional advertising or celebrity endorsement, influencers are attracting more and more brand investment.

However, unlike traditional advertising, which is subject to very strict rules, influencer advertising can fall through the cracks of ad disclosure. The commercial nature of influencer posts is not always identifiable as such, with ads featuring alongside similarly styled, but independent editorial content. Companies using influencers as ambassadors for their products and brands also have greater freedom than in conventional advertising, developing sales pitches which sometimes flout the rules.

This lack of transparency is dangerous for consumers in general and particularly for minors who are constantly on social media. Exposing this vulnerable group to covert advertising could potentially harm their physical, psychological, social or emotional development.

Should the EU do something about this? In fact, the EU already has some mechanisms in place to deal with influencers, which are covered by legislation on both advertisers and sellers/traders. However, we think it would be desirable to have a comprehensive approach given the fast rise of this phenomenon, says Bernardo Hernández Bataller, rapporteur for an EESC report on this issue. We would need specific regulation to cover the rights and obligations of the people involved, so that all legal operators and consumers know exactly what is and what is not acceptable.

Some Member States have gone it alone (France, Spain and the Belgian region of Flanders). But a "hard core" of EU rules would be more effective, argues the EESC, as it would leave no loopholes allowing different Member States to take a softer line, although they could still take tougher measures if they wanted to.

Obligations for all

The Committee suggests that the EU should set specific obligations for both the administrators of the video-sharing platforms and social media networks on which influencers operate, and for content creators/influencers themselves.

The basic principle is that advertisers should leave consumers in no doubt that what they are engaging with is advertising. And they should not mislead consumers or cause serious offence.

Influencers should:

• include a prominent label upfront to highlight that a post is a marketing communication;
• comply with sector-specific rules designed to protect the health and safety of consumers and users, especially minors and other vulnerable groups;
• be liable if they fail to make it sufficiently clear when they are being paid to endorse or promote a product or service.

Platform administrators and social media networks should:

• also be liable for content published by the content creators and influencers they host;
• have an obligation to take down illegal content and report illegal activity;
• ask all content creators/influencers operating outside the EU to clearly indicate who is legally liable for their activity within the EU and to have professional insurance to cover harm caused by illegal activities.

Protecting minors

To protect minors, platforms, and social network administrators, together with influencers, should ensure:

• that it is technically possible to prevent underage users from viewing sensitive content, which in any case must be marked as "prohibited for children under 18", require age verification and allow the use of parental control;
• that influencer posts targeting minors include the words "advertising", "commercial communication" or "sponsored by"; that modified images are marked as "touched up image" and products of artificial intelligence as "virtual image".

More threats ahead

Beyond these core issues, there are other emerging threats that the EESC flags up for regulation: first and foremost, the more and more frequent use of child influencers. Others include dark patterns, improper use of trademarks and unauthorised financial products. A worrying trend is fake influencers using the images of well-known people without their knowledge. These are increasingly common, particularly in financial investments and cryptocurrencies, and could become more and more sophisticated and widespread with the fast development of AI techniques.

Beyond these, there are issues concerning influencers as a trade: What should their position be in employment law? What about the tax issues raised by influencer advertising? How should we tax influencer income and the profits influencers generate? How should we tax the added value they create?, asks Stefano Palmieri, co-rapporteur for the opinion. These are all matters that need to be tackled – sooner rather than later.

This EESC opinion has been drawn up for the Spanish presidency of the Council of the EU, which is considering whether a specific regulation should be adopted and has asked the European Economic and Social Committee for its views on this matter.