After many well-known YouTubers have recently had to pay high fines due to surreptitious advertising, so-called influencers on Instagram are now also facing high costs. If they do not sufficiently label their advertising as such, they can expect a warning from the “Association of Social Competition”.
In contrast to “Flying Uwe’s” fine of EUR 10,500, the association’s warning costs are rather low. They amount to around EUR 180 per warning.
Advertising on Instagram rarely sufficiently labeled
This new wave of warnings is the result of influencers on Instagram – an online service for sharing photos and videos – not labeling their advertising for a third company clearly enough.
In the previously reported case, an Instagram influencer received a product from a company in order to promote it on her Instagram profile. The Instagram influencer captioned her post with the words #(brand name) and @(brand name). This description makes it possible for other Instagram users to view all images tagged with this hashtag. The @ sign redirects them directly to the brand’s Instagram profile.
Association for Social Competition warns of competition infringement
However, the Association of Social Competition did not consider this labeling to be sufficient. The labeling with a hashtag and the @ sign was not sufficient to make it clear to Instagram users that it was a paid advertising post. Without the designation #advertisement, #paid post or #advertisement, the post gives the impression that the actual advertisement is a private autonomous statement. Rather, it was a violation of Section 6 TMG and Section 5a para. 6 UWG.
#sponsored does not meet the requirements for mandatory labeling
The title #sponsored, #ad or #sponsoredby cannot do justice to the advertising label. This was already decided by the Munich Regional Court in a comparable case (judgment of July 31, 2015, Ref.: 4 HK O 21172/14). The reason for the incorrect labeling is that the average user does not clearly understand the English-language advertising label as an advertising label.
Dealing with warnings correctly is important
If you have received a warning letter from the Verband Sozialer Wettbewerb, you should initially remain calm and not sign the attached cease-and-desist declaration too hastily. This is because these pre-formulated declarations often go too far and therefore lead to a renewed infringement of competition law, which is then subject to a contractual penalty.
It is not uncommon for such contractual penalties to be in the region of several thousand euros. To escape this trap, it is advisable to have a specialist look over the warning letter. In the best-case scenario, the grounds for the warning letter are inadequate or a modified cease-and-desist declaration can “clear up” the matter. When formulating this, the help of an expert is essential.
Instagram plans new function for advertising labeling
However, such warnings may soon be a thing of the past. Instagram is planning a new form of advertising labeling. In future, the hashtag “#Paid Partnership with” will be used to more clearly identify advertisements. Instagram is also introducing a function that will take users directly to the brand’s website if they are interested.
Overall, the creators of Instagram have recognized that brands are very interested in the advertising power of Instagram. This is because companies can reach many users in a very short time at a low cost. To support this, advertisers will be able to access the statistics of Instagram influencers in the future. This will allow companies to better adapt and optimize their advertising to the interests of Instagram users.