Ads & Brands Law Digest: April/May 2022

It has been a very busy few weeks, so sit down and enjoy our discussion of the ASA’s new guidance on influencer marketing, new laws on green claims at EU level, as well as new consumer protection rules in the UK, the long awaited Gambling White Paper, and draft Media Bill, among other developments.

In this issue:

• Advertising and Marketing

• Regulatory

Advertising & Marketing

European Commission proposes new directive on green claims

The European Commission has proposed a new directive to improve the way in which green claims about products and businesses are substantiated and make more and better information about these claims available to consumers. The Directive also aims to curb the proliferation of environmental labels (such as trust marks) within the EU and ensure that labelling schemes are robust and transparent. It is intended to complement separate plans to amend existing EU laws, including the Unfair Commercial Practices Directive, to tackle greenwashing.

For more information, see here.

ASA issues updated guidance on influencer marketing

The ASA has issued updated guidance on influencer marketing. It is intended to clear up any ongoing confusion regarding advertising regulations amongst influencers, brands and agencies. In an online environment which is rife with uncertainty and overseen by an eager regulator, the demand for clarification has been at a fever pitch for some time – but does the updated guidance live up to the influencer industry’s hopes?

For more information, see here.

CAP issues updated guidance on social media promotions

Running prize draws which ask followers to complete certain actions, such as like, tag, follow or comment on a post or social media page to enter, may be a good way to encourage followers to engage with your brand, but you should think carefully about how you plan to administer the promotion and select winners, and make sure there is a fair and robust process in place.

CAP has published guidance explaining some key findings from three ASA rulings about prize promotions run on Instagram, Facebook and Twitter.

For more information, see here.

Enforcement Notice on 'free trials' and other promotional subscription models issued

CAP has published a new Enforcement Notice about the digital advertising of free trials and other promotional subscription models.

In recent years, the subscription market has seen huge growth, in part accelerated by lockdown. Consumers can choose from a wide variety of subscription services to suit their interests and lifestyles, with those offering them ranging from comparatively small start-ups to high-profile companies. Research from Citizens Advice has found that three in four people in the UK (73%) have at least one subscription, while one in four (26%) have signed up to a subscription service by accident, in most instances, because they didn’t get round to cancelling a free trial.

CAP is therefore issuing an Enforcement Notice to ensure companies offering subscription services understand how to promote their products and services in a compliant way.

For more information, see here and here.

Regulatory

CMA issues guidance on dark patterns

The CMA has issued a letter to UK businesses detailing its ‘online red lines’ on misleading price reduction and urgency claims – which are a type of pressure selling. It provides practical illustrations of where common online tactics may be misleading consumers or applying unfair pressure. The advice is for all businesses that sell or promote products online to UK shoppers, so they can stop sales practices that could break the law.

It has also launched a digital tool for consumers to report online rip-offs.

Finally, it has launched an investigation into the company Wowcher, to examine whether Wowcher has misled consumers by using countdown timers and other urgency claims, which may place unfair pressure on consumers to complete their purchases quickly. It follows the launch of the CMA’s investigation into Emma Sleep in late 2022. The CMA’s investigation of Wowcher will also examine other online selling practices used by Wowcher, including how it enrols consumers in its membership scheme. The CMA is at the initial stage of its investigation and therefore it should not be assumed that any business under investigation has broken consumer protection law.

For more information, see here and here.

UK government introduces Digital Markets, Consumer and Competition Bill to parliament

The UK government has introduced the long-awaited Digital Markets, Consumer and Competition Bill to parliament. As well as introducing more regulation for digital markets, and reviewing competition law, it makes significant changes to consumer protection law.

The CMA will be able to award compensation to consumers and directly impose financial penalties for breach of consumer protection laws. There are some hefty potential fines of up to 10% of global annual turnover.

‘Subscription traps’, in which businesses make it difficult to exit a contract, will also be stopped. The rules about misleading and aggressive consumer practices will also be restated.

The Bill also contains powers to create new laws against fake reviews, including prohibiting the commissioning of someone to write a fake review; posting consumer reviews without taking reasonable steps to check they are genuine; and offering or advertising to submit, commission or facilitate fake reviews.

For more information, see here and here.

Ofcom fines video-sharing platform provider Tapnet £2,000

Ofcom has fined Tapnet Ltd – which provides the video-sharing platform RevealMe – £2,000 after the company did not respond to a statutory request for information.

Under legislation passed by Parliament, Ofcom’s job is to make sure that UK-based video-sharing platforms (VSPs) have appropriate measures in place to protect users from certain types of harmful material in videos. Last year, it issued information requests to VSPs to help it understand and monitor the safety measures they have in place and to inform the VSP report it published in October.

VSPs are required by law to comply with a statutory demand for information from Ofcom. Tapnet did not provide the required information by the deadline, and following a formal investigation, Ofcom has confirmed that this failure breached its rules.

In deciding the level of financial penalty, Ofcom considered, among other things, the size of the company and that the information was ultimately provided to Ofcom swiftly after it started its investigation.

For more information, see here and here.

UK government publishes draft Media Bill

The UK government has published its draft Media Bill aimed at levelling the playing field between linear and streamed content by bringing the streamers under new Ofcom rules.

Last year the government published a White Paper on media regulation with the aim of updating decades-old broadcasting rules. It acknowledged that technology has moved on and regulation needs to catch up.

Following that White Paper, the government has now published a draft Media Bill. Its headline changes are:

• It confirms plans to bring video-on-demand services such as Netflix, Amazon Prime Video, Disney+ under new Ofcom rules and aims to ensure public service broadcasters’ on-demand services are easy to discover on smart TVs and streaming sticks;

• New reforms to guarantee access to UK radio on smart speakers and cut red tape for commercial radio stations; and

• Streaming services will be required to provide subtitles, audio description and signing to support people with disabilities.

For more information, see here.

UK government publishes proposed cryptoasset promotion rules

The UK government has published its proposed rules about promoting cryptoassets, which is snappily called the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023.

As expected, most cryptoasset promotions will fall under the remit of the FCA, as part of a tougher regime aimed at protecting consumers. However, NFTs are not in scope.

Once the regime is in force there will be four routes to legally communicating a financial promotion for qualifying cryptoassets:

• the promotion is communicated by an authorised person;

• the content of the promotion is approved by an authorised person under Section 21;

• the promotion is communicated by, or on behalf of, a registered person;

• the promotion otherwise complies with the conditions of an exemption.

The FCA will be provided with rule-making, supervision and enforcement powers to enable it to have effective oversight of cryptoasset promotions. This will allow the FCA to apply financial promotions rules to cryptoasset promotions communicated by or on behalf of registered persons and to act if such promotions do not comply.

For more information, see here.

Ofcom consults on length of advertising breaks

Ofcom is consulting about whether to remove some or all of the stricter advertising rules that apply to commercially-funded public service broadcasters.

Commercially-funded public service broadcasting (PSB) channels in the UK are subject to stricter rules on the quantity and scheduling of television advertising than other commercial channels. These rules were introduced over 30 years ago.

Following a call for evidence last year, Ofcom has provisionally concluded that stricter advertising restrictions on PSB channels are no longer justified or proportionate. Therefore, it is now consulting on two options:

• make the rules between PSB and non-PSB channels the same; or

• make them the same, except for the difference in the number of internal breaks permitted in programmes.

Ofcom says that it is also open to making no changes at all. However, it says that allowing the PSB channels somewhat more flexibility in scheduling advertising may help strengthen their commercial position as they continue to manage their transition to digital-led organisations, and provide them with more opportunities to monetise their content.

The consultation ends on 31 May 2023.

For more information, see here.

Gambling White Paper published

The long-awaited Gambling White Paper has been published. However, it contains much less about advertising than originally thought.

This apparent change in direction follows the Premier League’s voluntary decision to ban gambling advertising from the front of clubs’ shirts from the end of the 2025/2026 season.

However, the White Paper does include proposals for all major sports governing bodies to sign up to a cross-sport Code of Practice on gambling sponsorship.

The government wants customers to have greater control over the types of marketing they receive, such as opting-in for online bonuses and offers for different types of gambling products. The Gambling Commission will consult on introducing such controls (one of many consultations linked to White Paper, which seems to hedge its bets in that way on a few issues). Also, it's worth remembering that the government’s Online Advertising Programme will explore further mechanisms to reduce harm from advertising across all sectors.

The government also says that certain types of competitions and prize draws which offer significant prizes such as a luxury home or car now operate online in ways which could not have been foreseen in 2005. It intends to explore the potential for regulating competitions of this type to introduce appropriate controls around player protection and, where applicable, returns to good causes.

For more information, see here and here.