Social Media Marketing Law

Social Media Marketing Law
Social Media Marketing Law
Social Media Marketing Law

What is Social Media Marketing?

Universal engagement on social media has exploded on mediums like Instagram and TikTok, which has been innovatively leveraged by marketing and advertising agencies to reach consumers at unprecedented levels. As such, social media is now the leading contributor to online marketing success – and for many reasons. Marketing on these platforms is cheap and quick as it uses word of mouth marketing on a worldwide scale, it is based on more extensive consumer analytics, and most importantly it leverages consumer trusted relationships and brand loyalty through influencers and endorsers.

Anyone can be an influencer, as long as they have the clout to affect the purchasing decisions of others, have a dedicated social following, or are trusted social influencers. They can have 100,000 followers or be a micro-influencer with 1,000 followers.

Influencers can work directly with companies to promote certain products. For example, makeup companies may reach out to a beauty vlogger (a video blogger) and send them free products to sample and review on their channel or may offer a promotional code for which the vlogger may exclusively share with their followers for special discounts. Influencers in turn may get paid monetarily, or with products and other incentives.

Who Are Influencers?

What is Social Media Marketing

Deceptive Marketing – Don’t be a Phony

So, what’s the problem?

The opportunities to capitalize as an influencer are vast, but there are many risks that are important to keep in mind if you want to venture into this realm. One such risk that we will discuss is deceptive marketing.

The Competition Act in Canada outlines provisions which discuss the issue of false or misleading representations made by influencers as well as companies who are seeking to use influencers to market their products. The issue of liability arises when influencers fail to disclose to their followers that they have a “material connection” to the company. A material connection can include: receipt of payments or commissions; receipt of free or discounted products, services, or travel; or a personal or family relationship with the company.

It is important to remember that followers are ‘consumers’ and are influenced by what is being represented to them. As such, the Canadian Competition Bureau is concerned that consumers are not going to be able to tell when an influencer is endorsing a product or service because they are being paid to do so. If disclosure is not properly or adequately given by the influencer, it may be considered a misrepresentation. The post may be deemed deceptive if the consumer would likely be influenced by the misrepresentation when deciding whether to purchase the product or service being featured.

For example, if you are a fashion influencer with a dedicated following, your followers would likely trust your opinion to buy a pair of leggings that you highly recommended, especially if on your post they do not see anything about a paid sponsorship or advertisement. You are not getting paid to endorse them so they must be great!

However, if you are promoting the leggings because you are being paid to, and your followers rely on your representation and go buy the leggings without you having disclosed your material connection to the company, this is deceptive marketing. Misleading the consumers would not be good for the company or for your image as a trusted personality. Not to mention worst case scenario, you and the company can face legal liability for not being forthright.

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How can I protect myself from liability?

Disclosure obligations are extremely important, especially when a material connection can be established with a brand/company. Adding hashtags such as #ad and #sponsor to your posts is a start but is simply not enough on its own.

The Canadian Competition Bureau and the Competition Act set out best practice tips to make sure you are in compliance with your disclosure obligations. Here are some best practice tips to get you started:

  • Do not post fine print disclaimers. Viewers should not have to zoom in or expand your post to see the disclaimer
  • Write it clearly and concisely. Don’t beat around the bush
    • e.g., Thank you @brand for X, #sponsored, #ad, #promotion, #paidinfluencer, #contest #[Brand]Ambassador
  • It is not enough to tag the brand, their site, or just post the discount code
  • Base your reviews on actual experience

Head to the Canadian Competition Bureau’s webpage and see their Influencer Checklist for more information.

Hummingbird Lawyers LLP has two offices for your convenience. Providing qualified, skilled and experienced lawyers in Toronto and lawyers in Vaughan, we are committed to giving our clients the convenience, expertise and guidance they need.

Professional guidance can help ensure you are meeting your compliance obligations. If you are an influencer and you are concerned with your disclosure obligations and protecting your brand, or you want to make sure you are contractually protected in your partnerships, give us a call. We are here to help!

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Azra is an Associate Lawyer with Hummingbird Lawyers LLP and specializes in Entertainment, Business and Real Estate Law.

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