CMA acts to prevent misleading online practices
The CMA has secured undertakings from a social media marketing company and a clothing retailer to prevent misleading online practices.
In the first case, the Competition and Markets Authority (CMA) has secured undertakings from Social Chain Ltd, following enforcement action by the CMA using its consumer protection powers. Social Chain, a UK-based marketing company that arranges advertising for businesses through social media, has now agreed not to post or arrange undisclosed advertising. It has engaged constructively with the CMA during this process to improve its practices.
The CMA’s investigation found that Social Chain used its own social media accounts, and arranged for widely followed social media personalities, to promote films, games and takeaway and dating apps, without readers being informed that the content was paid-for advertising.
Social Chain accepts that the adverts, which were posted on Twitter, YouTube and Instagram, may have been difficult for readers to distinguish from other posts, conversations and jokes they appeared alongside. After the issue was raised with Social Chain, it agreed undertakings that will ensure that all advertising that Social Chain posts or arranges will be clearly labelled or identified so that it is distinguishable from other content found on social media.
Between March and July 2015, 19 marketing campaigns that Social Chain arranged involved undisclosed advertising. These promotions appeared on social media accounts with a combined reach of around 4 million followers. Social Chain’s activities also helped to ensure that some of these campaigns trended on Twitter, which may have increased their readership further.
The CMA has also written to 15 businesses, on whose behalf Social Chain acted, and the 43 social media personalities who published content for Social Chain to warn them that arranging or publishing advertising that is not clearly labelled may result in them breaching consumer protection law.
In a second, separate case, following another investigation, the CMA has secured undertakings from Woolovers Limited, a knitwear retailer, to ensure that it will publish all genuine, relevant and lawful customer reviews on its website, and will not suppress unfavourable reviews.
The CMA’s investigation found that, over the period from December 2014 to November 2015, Woolovers “cherry-picked” more favourable customer reviews for publication on its website. Woolovers staff were instructed to approve only a selection of reviews, and none below 4 stars. This resulted in almost half of the reviews it received during the period going unpublished.
Woolovers Limited underwent a change of ownership in July 2015 and it has engaged constructively with the CMA during this process to improve its practices.
Nisha Arora, CMA Senior Director for Consumer Enforcement, said:
Social media personalities can have an important influence on people’s views, especially young people. It is therefore crucial that when people decide what to buy, they should not be misled by adverts on social media that read like independent opinions. Businesses, marketing companies and authors of online content all need to play their role in ensuring that advertising is clearly labelled as such.
It is also important that, when consumers read reviews on a company’s website, they are given the complete picture. Critical reviews must be published as well as those that praise the company’s products and services.
Since we published our call for information on online reviews and endorsements in June 2015, the CMA has secured changes from 15 companies and individuals and published wider compliance advice. Online reviews and opinions are an increasingly useful source of information for people in making their buying choices – and so are an important element of effective competition in the market - and businesses must comply with consumer law so that consumers can trust the opinions they read online.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn.
- The CMA has published open letters for other social media marketing companies and retailers on its website to inform them of the steps they need to take to comply with consumer protection law. It has also written to 25 social media marketing companies and a number of retail trade associations about these issues.
- The CMA has produced ‘60-second summaries’ for businesses on both online endorsements and how to treat online reviews. The International Consumer Protection and Enforcement Network of 60 consumer protection authorities has also published 3 sets of guidelines on online reviews and endorsements for review administrators, traders and marketers, and digital influencers.
- Only a court can decide whether a particular practice breaks the law. The provision of the undertakings by Social Chain and Woolovers is not an admission of a breach of the law.
- The social media sites on which undisclosed endorsements appeared were not the subject of the CMA’s investigation.
- In 2015, the CMA carried out a call for information on online reviews and endorsements, and followed this with 3 separate cases aimed at maintaining consumer trust in these sectors.
- The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) contain a general prohibition on unfair commercial practices, in particular misleading and aggressive practices. The commercial practices of review sites fall within the scope of the CPRs. Businesses may breach the prohibitions in the CPRs where, for example, they mislead consumers or engage in practices that contravene the requirements of professional diligence (meaning honest market practice and good faith). The CPRs also contain 31 banned practices which are prohibited in all circumstances. It is a banned practice 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 clearly identifiable by the consumer. The CPRs are enforceable through the civil and criminal courts. Only a court can conclude whether a particular practice infringes the law.
- Enquiries should be directed to Simon Belgard (email@example.com, 020 3738 6472).