Recommendations for influencers regarding the marking of advertisements in Poland

Recommendations for influencers regarding the marking of advertisements in Poland

The popular problems of the top brands of the influencing industry in the USA show, in a nutshell, the direction in which the legal status of counteracting unfair practices in the field of advertising labeling by influencers will certainly evolve in Poland as well. Current American press titles draw attention to – as it turns out – quite restrictive approach of regulators to the phenomenon of promoting the most modern financial and investment services by people known but not related to the “crypto, CFD and PRIIP market”, which is more and more frequent also in Poland and common in the USA based on high risk and modern virtual access to the capital and virtual market. This is because we are talking about promoting trading platforms, created with the possibilities of distributed protocol technology in the Fintech sector in mind. Thanks to the wide reach of well-known people, the influencers’ promotion of such services is aimed at reaching the mass circle of end users who, by definition, do not have specialist knowledge about the principles of risk and the potential threats of investing in not only the well-known so-called cryptocurrency, but also in financial derivatives with the help of CFDs, leverage and methods of leveraging investment potential as part of a massive number of distributed maps of individual investors.

The case of “Kim Kardashian” and the legality of influencer promotion of financial and virtual market instruments

The American media recently focused on the problem of the legality of the promotion of the cryptocurrency portal by an influencer brand belonging to a well-known American celebrity.

It is about the case of Kim Kardashian, which, according to the Wall Street Journal [1], was punished for promoting the cryptocurrency by the American body “SEC” (the abbreviation of the name of its own American institution, whose scope of operation is similar to the Polish Financial Supervision Committee and the Polish Office for the Protection of Competition and Consumers). According to the media, an amount in excess of $ 1 million will be paid in the case – including $ 1 million as a penalty, and the rest, simplified, as a refund of the amounts received for such indirect advertising. According to press reports, the purpose of such influencer information was to show followers that cryptocurrencies are safe and easy to acquire. Such an assessment of the authority was allegedly due to the fact that a post containing a link to a page containing instructions on how to invest in cryptocurrencies was published on the influencer’s account. This situation is an example where anti-unfair practice laws are needed to avoid unmarked advertising problems. Therefore, the regulations blocking influencer activities should take into account the risk of promotion dedicated directly to non-professionals, and regarding modern investment products, be it in cryptocurrencies or financial market instruments using virtual investment platforms. Therefore, these are investments on trading platforms related not only to cryptocurrency, but also to other investment instruments possible on virtual investment platforms (for example, trading with financial leverage available on CFDs on currency pairs, commodities, stock indices, cryptocurrencies, bonds, ETFs). Therefore, they are high-risk products from the perspective of non-professionals on the capital and virtual market, the profitability of which is assumed to be associated with the purchase of such products in a small quantity in a mass manner by a large number of end users.Thanks to influencers, promotional activities are aimed at mass recipients. They are advertised on the basis of a quick profit assumption and for these reasons, such an object of information of social channels carries a high risk potential. Therefore, in the light of the authorities supervising the interests of the financial market, and in the case of virtual currencies of the consumer market, such activities may be considered risky and harmful to end recipients. The question arises, however, whether these are the reasons why the tagging of advertisements is so important and whether the information risk justifies the interference of supervisory authorities to force the designation that the information of a publicly known person on his social account is shared by that person due to promotional cooperation with the entity providing such a product or service.

The reasons why Recommendations for influencers regarding the marking of advertisements in Poland were created (anti-taunting provisions)

In Poland, the equivalent of the American “SEC” indicated in the above example would be, first of all, the Office of Competition and Consumer Protection, whose role in trade by its nature is to pay attention to the marking of advertisements for the safety of followers, subscribers and viewers. It should be pointed out that the problem of the supervision of the Polish Office of Competition and Consumer Protection over the information activity of social networking sites is not only “virtual”. The Office already initiated proceedings to clarify the situation of several Polish influencers who prepared allegedly “dangerous” (harmful) content for their followers. In the absence of cooperation with the Office of Competition and Consumer Protection, they were eventually fined.

Polish regulations

The Polish Office of Competition and Consumer Protection has currently published guidelines for influencers regarding the so-called “Ads”. Influencers who operate in Poland should therefore follow these rules. The legal basis for these recommendations can, in some cases, be found, for example, in Article 24 of the Act on the Office of Competition and Consumer Protection, which states that practices violating collective consumer interests are prohibited. Therefore, since the Polish Office of Competition and Consumer Protection is authorized to conduct these types of antitrust proceedings, some direct explanatory actions can be expected.

The Polish Office of Competition and Consumer Protection emphasizes that the correct marking of advertisements is obligatory for influencers. The law in Poland clearly states that advertising content may not mislead consumers. Responsibility for this lies with influencers, advertising agencies and advertisers, which is why well-known owners of social networking accounts are the addressees of these guidelines of The Polish Office of Competition and Consumer Protection.

The purpose of the issued instructional document of the Office of Competition and Consumer Protection is such an active influence on the entities that create the content of social networking applications in order to indirectly influence the better informing of the followers of the profiles of known people about the fact that the specific content is an advertisement or cooperation undertaken by influencers with other entities.

It should be noted that the content uploaded to the Internet may be assessed as an unfair market practice, which the antitrust law in Poland defines as:

–              misleading omission that omits information on the basis of which followers, subscribers or viewers will make a decision, for example to buy or sign a contract,

–              surreptitious advertising as hidden advertising – no information that it is paid content (paid for by an external entity),

–              an act of unfair competition – content that encourages the purchase of a product or service, but gives the impression of neutral information.

If an influencer has doubts about a specific content, he or she should mark it as an advertisement. If an advertisement promotes one’s own brand, it should also be marked as an advertisement.

If an influencer has received a first gift, for example from an advertising agency or brand’s PR department, and decides to publish content with that gift, there is no obligation to tag it as an advertisement, but should inform that it is a gift. According to the guidelines of The Polish Office of Competition and Consumer Protection, the forms of remuneration for such advertisement do not matter from the point of view of the proper marking of cooperation. This could be a product, service, voucher, discount, bonus, movie ticket, overnight cost or anything else. The fact that the advertiser had or had no influence on such content is also irrelevant for the nature of the advertising content. This is because it is part of the contract between the parties, thanks to which the information content was made known to the end recipients. If an influencer receives a product for testing, it is their responsibility to inform followers, subscribers, or viewers who it is from, and that it is free of charge or subject to a return obligation.

Ways to mark the advertisement

Markings should be legible, clear and understandable for recipients. On the one hand, it is a truism. On the other hand, perhaps such guidelines may constitute a questionable area of avoiding liability for the so-called “Influencer content” in relation to the Polish Office of Competition and Consumer Protection. There is an ad tagging feature on social media. The Polish institution recommends two-level marking. The first level is tagging through social media features for this purpose. The second level is tagging by an influencer, for example with hashtags.

Recommended phrases are: #advertisement #sponsoredpost #sponsoredstory #paidcooperation #paidpost #paidstory #autopromotion #authoradvertising #ownbrand

Explanatory or “quasi” anti-monopoly proceedings detrimental to the interests of the general public

Therefore, in the event of a problem with surreptitious advertising, the President of The Polish Office of Competition and Consumer Protection may initiate an investigation or, as an anti-monopoly authority, initiate proceedings on practices infringing collective consumer interests pursuant to Article 47 et seq. of the Act on The Polish Office of Competition and Consumer Protection in a specific case in order to clarify doubts. Then, as a rule, influencers professionally dealing with their image on the Internet as “entrepreneurs” are obliged to provide the President of the Office with all the required information and documents. The President of the Office may hear witnesses and appoint experts in matters which require special knowledge. At the end of the proceedings, the President of The Polish Office of Competition and Consumer Protection issues a decision. He may impose a financial penalty. The decision may be appealed against to the Regional Court in Warsaw. Thus, the clerical reality mainly concerns entrepreneurs, which at first glance does not coincide with the concept of “influencing” activity. Nevertheless, one should expect possible official steps directed at all those entities which, thanks to the popularity of influencers, create content on social networks. At least such legal possibilities are provided by the current legal framework referred to above. Therefore, since the above-mentioned guidelines have general advertising content as their subject, the new legal consequences in Poland include information provided by influencers about investment opportunities dedicated to people who may not be prepared for the risks associated with the investment loss described above.

Polish influencers, advertising agencies and advertisers who do not comply with the above guidelines may be punished under Polish administrative law by a fine, an obligation to refrain from practices that infringed collective consumer rights, to remove the effects of the infringement or to publish the decision of the President of the Office of Competition and Consumer Protection.

Consumers and competitors who are victims (are harmed) of unfair market practices under Polish civil law may, in principle, demand compensation for the damage (for example, annulment of the contract with a refund), abandonment of this practice, removal of the effects of the violation or an apology.

KIEŁTYKA GŁADKOWSKI advises on influencer matters for foreign advertising agencies and under antimonopoly law, in particular for entities from the financial services sector and related advertising of new technologies. In this legal assistance KIELTYKA GLADKOWSKI offers full spectrum of legal services, including regulatory, litigation, contracts and administrative assistance.