The OFT has recently confirmed that undisclosed paid-for product endorsements on blogging sites or social media platforms, such as Facebook and Twitter, breach UK consumer protection laws.
Some kind of response from the OFT was perhaps inevitable given the prevalent trend of celebrities tweeting about products (top endorsement tweeters include Lily Allen, Snoop Dogg, Kim Kardashian and Charlie Sheen).
The OFT has not yet launched an official investigation into celebrity endorsement practices on Twitter, but it is closely monitoring the situation and has issued some initial guidance.
This follows an , for allowing promotional content to appear on their blogs without prominently disclosing that the promotions had been paid for.
In its report on Handpicked, the OFT reaffirmed that a blog, tweet or equivalent that does not make it clear that a promotion has been paid for constitutes a "misleading omission" under Regulation 6 of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and is, therefore, an "unfair commercial practice" under Regulation 3.
Indeed "using editorial content in the media to promote a product where a trader has paid for the promotion without making it clear in the content or by images or sounds clearly identifiable by the consumer" is an automatically unfair commercial practice under Schedule 1, paragraph 11, of the CPRs.
And it is not just the OFT that will be policing the disclosure of remunerated endorsements on the internet; the Advertising Standards Authority has jurisdiction over the full range of online advertising and marketing practices ().
The Cap Code reflects the requirements of the CPRs, for example in its requirement in Rule 2 that "marketing communications must be obviously identifiable as such... marketing communications must make clear their commercial intent, if that is not obvious from the context."
So how is the recent clampdown by the OFT groundbreaking? Is it an extension of the remit of current consumer protection legislation?
Of course not: celebrities have long been adding value to brands through ambassador, sponsorship and product endorsement agreements, and consumer protection law has always needed to regulate such relationships.
It is just that the number and variety of media platforms has grown rapidly in recent years.
In a world where celebrities can now directly communicate with their fans and wield so much influence over them in seemingly social rather than commercial contexts, consumer protection and advertising regulation have to adapt to maintain appropriate levels of transparency - for example, as to why a particular brand or product is mentioned or praised by a celebrity.
The future of online celebrity endorsement
Celebrity endorsements and social media are a match made in brand-heaven and it is not difficult for brands to capitalise on the latest craze for Twitter and blogging while remaining on the right side of consumer protection and advertising laws.
In the USA, celebrity endorsement tweeting has developed to the extent that the number of followers a celebrity has on Twitter can be the basis of the fee they will receive for an endorsement tweet.
The Federal Trade Commission’s endorsement guidance includes specific guidance on the disclosure of paid-for endorsements on limited-character platforms, suggesting that the disclosure duty can be discharged by the inclusion of hashtags like #paid or #ad (a cost of but 3-5 characters out of a possible 140).
Back in the UK, the OFT has emphasised that the key principle is that consumers should understand when they are reading paid-for commercial content.
In terms of how paid-for endorsements on microblogs should be disclosed, the OFT has declined to specify particular language to be used, but says that it should be "prominently displayed with the editorial content such that it would be unavoidable to the average consumer."
It has said that it "expects a degree of harmonisation" in global approaches, the implication being that practices here will probably closely follow those developed in the USA.
As far as Twitter in particular is concerned, the OFT has commented: "the general principle applies. It is possible to use a hashtag that clearly indicates that a Tweet is a promotional activity."
In making these statements, the OFT has confirmed that undisclosed remunerated relationships between celebrities and brands are not acceptable and that it will be monitoring online practices going forward.
Whether this really will herald a globally harmonised system of disclosure signage on social media platforms remains to be seen.