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Covert advertising on social media

August 9, 2021

On 20 July, the Council of Ministers approved the start of the reform of the regulation on the Defence of Consumer and User Rights to adapt it to the new forms of e-commerce and to regulate business behaviour that is harmful to the rights of consumers, thus initiating the process of transposing Directive (EU) 2019/216 into Spanish law.

Just a few months ago we saw the first “Code of Conduct on the use of influencers in advertising” come into force, establishing a set of rules that bind all members of the Spanish Association of Advertisers (“AEA”) and the Association for the Self-Regulation of Commercial Communication (“AUTOCONTROL”), as well as any other companies in the sector (advertisers, agencies, media, etc.) and influencers who voluntarily adhere to it.

Well, a further step could soon be taken in the fight to regulate advertising on social media, in particular, that which pursues hidden advertising, as the Government has begun the process of transposing EU Directive 2019/216 into Spanish law.

The proposed text to reform the current General Law on the Defence of the Rights of Consumers and Users (“TRLGDCU”) includes for the first time the prohibition of surreptitious advertising on social media, as well as the publication of false reviews and evaluations or those paid by the manufacturer.

In this new scenario, it will be the entrepreneur who will have to guarantee that the reviews that appear come from consumers or users who have actually purchased the good or used the service commented on, with the inclusion of reviews from consumers without first verifying that they have actually purchased the good, or the inclusion of false reviews, being classified as an unfair practice.

The maximum penalties foreseen for these unfair practices may be up to ¤1 million or eight times the unlawful profit obtained, in the case of infringements committed only in Spain, and up to 4% of turnover, if the infringement affects several Member States.

The quantification of fines will take into account the degree of culpability of the offender, his or her economic capacity, the continuing nature of the infringement, the number of consumers affected or the level of damage they have suffered.

What is difficult to regulate are the means of proof required to demonstrate that the company has complied with its obligation to verify that the influencer or owner of the rating has purchased the product that is the subject of the review or comment. Beyond the proof of purchase that could be provided to prove the purchase of the product, would it not be admissible for the author of the review to try a product that has been lent or given to him or her as a gift?

On the other hand, once again, the debate arises as to who should be liable for these unfair practices: the company that publishes the false review or hires an undercover advertising campaign to influencers, the influencers who practice undercover advertising or post reviews on their social network profiles about products that they have not purchased, or the social network platform – information service provider – that hosts such illegal content?

To answer all these questions, and many more, we will have to wait for the full legal text, which is now beginning to be processed.

Article by Marta Vilá.

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