Together with the ever-increasing influence of social media, which is no longer just a means of communication but also a tool for advertising and promoting products and services, the use of influencer marketing as a very common form of disseminating business messages goes hand in hand.
Although at first sight it might appear that the activities of influencers are beyond the reach of legal regulation, in practice it is appropriate to reflect the generally applicable rules set out both by national legislation and by European Union (EU) legislation on contractual legal relations and the legal regulation of advertising in the context of the use of influencer marketing.
In the following article, we would like to outline how a reliable basis can be established for the dissemination of commercial messages using influencers and the legal boundaries of the form and content of the advertising itself from the perspective of current legislation.
Legal basis for cooperation with an influencer
The current legislation does not offer a specific solution that would regulate the specific relationship between the entrepreneur and the influencer. However, a reliable legal basis is clearly a written cooperation contract within the meaning of Section 1746(2) of Act No. 89/2012, Civil Code, as amended, a so-called innominate (unnamed) contract.
The written contract ensures that both parties guarantee the fulfilment of the terms of the agreed cooperation, where the influencer explicitly undertakes, among other things, to perform a certain performance consisting in the promotion of the brand, products or services and the entrepreneur undertakes to pay the agreed remuneration for these performances. In the absence of written arrangements, it will be very difficult to prove what the parties have agreed to verbally or by telephone.
In addition to these general elements, the legislation offers a number of tools to strengthen the legal position of the parties, both in the contractual relationship between the entrepreneur and the influencer, in the context of competition on the market and towards the supervisory authorities.
As regards the mutual rights and obligations of the parties, it is appropriate to include in the cooperation contract in particular:
- concrete specification of the promotion, especially from which account, in what form, length, frequency and specific time period and frequency the posts will be published, on which platform (Youtube, Facebook, Instagram, TikTok) the influencer will publish the content and in what specific way (feed, stories, reels, video);
- a license to further use the influencer’s contribution (videos, photos, texts, etc.) as a work of authorship, to the widest extent possible;
- in connection with further use of the post, it is also appropriate to secure the influencer’s consent to the dissemination of the influencer’s likeness (image) and spoken or written expression;
- for easier traceability of the promoted brand, products or services, it is appropriate to negotiate the obligation and method of their designation in the post;
- in cases where the influencer has a free hand in his/her work and at the same time specific legal requirements are imposed in relation to the promoted commodity, it is appropriate to negotiate a mechanism for approving contributions before their publication;
- the influencer’s commitment to protect the reputation of the brand, products or services being promoted;
- in contrast, it is necessary to negotiate in the contract the remuneration (in the form of monetary compensation or barter for the promoted products or services), its amount or at least the method of its determination (e.g. a percentage of sales for using the influencer’s discount code) and the conditions under which it will be paid to the influencer;
- At the same time, it is appropriate to negotiate a reasonable contractual penalty in the event of a breach of the influencer’s obligations under the cooperation contract (e.g. if the post is not properly tagged, the frequency of posts is not observed, etc.), which will be an insurance for their performance.
In order to eliminate the risk of promotion of a competitor’s brand, products or services by the influencer, it is appropriate to negotiate an exclusivity clause in the cooperation contract, i.e. exclusivity of cooperation, on the basis of which the influencer will be obliged to refrain from promoting competitors for the duration of the validity and effectiveness of the contract (or for an otherwise agreed period of time), again under the threat of a penalty in the form of a contractual fine and/or early termination of cooperation.
Another equally important, but often neglected, topic that should be the subject of contractual arrangements is the regulation of the rights and obligations of the entrepreneur, as the advertiser, and the influencer, as the processor and/or disseminator of advertising within the meaning of Act No. 40/1995 Coll., on Advertising Regulation, as amended (hereinafter referred to as the “Advertising Regulation Act“), so that, in the event of sanctions by the supervisory authority, it is clear which of the parties is responsible for the illegal content or manner of dissemination of advertising.
Content and dissemination of the content
The promotional posts of influencers clearly fulfil the definitional features of advertising within the meaning of Section 1(2) of the Advertising Regulation Act, which means any announcement, demonstration or other presentation disseminated in particular by the communication media with the aim of promoting business activities, in particular promoting the consumption or sale of goods, the provision of services or a trademark, unless otherwise provided by the Advertising Regulation Act.
The basic legal requirement is the clear and visible indication of the advertisement, otherwise the influencer’s contribution could be qualified as so-called hidden advertising, i.e. advertising where the consumer cannot clearly identify from the content of the message, images or sounds that it is advertising, and at the same time it would be an exemplary unfair commercial practice, which is expressly prohibited under Section 2(1)(b) of the Advertising Regulation Act.
For example, #advertising, #collaboration or #placenepartnerstvi, ev. verbal indication in the caption or statement/mention within the post. Some platforms, such as Instagram, even allow the use of “paid partnership” or similar explicit labelling of the post that implies that it is an advertisement, which we consider even more appropriate. In this context, we cannot but recommend that the terms of the partnership designation be explicitly stipulated in the influencer contract.
Furthermore, it is important to bear in mind other generally applicable restrictions on the content of advertising set out in Articles 2 to 2c of the Advertising Regulation Act, such as the prohibition of misleading advertising, advertising of goods or services that are illegal (drugs, etc.), the prohibition of advertising contrary to good morals, the conditions for the admissibility of comparative advertising and the restrictions set out in relation to advertising aimed at persons under the age of 18.
Last but not least, due consideration must be given to the specific conditions set out in Sections 3 to 6a of the Advertising Regulation Act for commodities such as tobacco products, electronic cigarettes, alcoholic beverages, health-targeted products and food (including dietary supplements). In this context, it is also necessary to reflect the EU legislation, to which the provisions of the Advertising Regulation Act in question make numerous references, on the basis of which an influencer may, for example, declare only permitted health claims in the context of advertising for a dietary supplement, i.e. The influencer may not make claims that state, imply or imply that there is a link between a food category, food or any of its ingredients and health (e.g. “a dietary supplement containing magnesium contributes to the maintenance of normal bone health“), or refer to the rate or amount of weight loss, etc.
In practice, there is considerable self-regulation beyond the legal framework. In this context, it is worth pointing out in particular the Code of Cooperation issued by the Internet Development Association, which was drawn up in cooperation with both the sponsors and the influencers themselves. The Influencer-Advertiser Code of Conduct introduces recommendations that both parties should follow in order to achieve cooperation in accordance with the law. At the same time, it is also advisable to keep in mind the on self-regulation of the platform which the post is published, as also at this level specific advertising terms and conditions and sanctions for their violation are often established.
Video Sharing Act
On 15 September 2022, a new Act No. 242/2022 Coll., on Video Sharing Platform Services (hereinafter referred to as the “Video Sharing Platform Services Act“), which transposes Directive 2018/1808 of the European Parliament and of the Council of 14 November 2018 amending Directive 2010/13/EU on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services (the Audiovisual Media Services Directive), came into force.
The Video Sharing Platforms Services Act is intended to increase consumer protection from inappropriate content on online video sharing platforms, such as YouTube, Facebook, Instagram, Tik Tok, which are characterised by the fact that content can be uploaded by the users themselves, whose editorial responsibility for the content of the shared video content is limited.
The main objective of the new legislation is to set transparent rules for online video sharing platforms and to enable the providers of these services to apply the measures provided for by law in order to eliminate undesirable content, consisting in the introduction of user-friendly systems and procedures allowing, for example, notification of the presence of inappropriate commercial content on the platform, age verification for platform users and parental control for inappropriate content that may impair the physical, mental or moral development of minors, etc.
The new legislation currently creates a legal basis for self-regulation through codes of ethics, which set out in particular the objectives of self-regulation, procedures for regular, transparent and independent monitoring and evaluation of the fulfilment of these objectives and a mechanism for addressing complaints, including a mechanism to enforce appropriate sanctions for breaches of the rules set out.
Responsibility for the content of the post
The operator of the video sharing platform is solely responsible for any violations of the Video Sharing Platform Services Act. The cooperation between the entrepreneur and the influencer is thus subject only to the provisions of Section 6b of the Advertising Regulation Act, which lays down the rules for learning responsibility for the content of advertising and the manner of dissemination of advertising.
In the case of promotional posts on social networks, in the vast majority of cases, the entrepreneur as the advertiser and the influencer as the advertiser will be jointly and severally liable for the content of the advertisement, but only if the influencer himself, for example, takes a photo with the product or makes a video with a review of the service. If the influencer is not involved in the creation of the post but presents the finished post on his/her profile, he/she will only be liable as a disseminator for the way the ad is disseminated.
The entrepreneur, as the advertiser, will only be exempt from liability for the content of the advertisement disseminated in violation of the law if it proves that the processor did not follow its instructions in the preparation of the advertisement and that, as a result, the content of the advertisement is in violation of the law.
In view of the fact that the entrepreneur may be held liable for offences committed by the influencer, it is appropriate to transparently stipulate the terms of cooperation in the cooperation contract, including the specific content of the advertisement and the sanction for any violation of the legal rules of advertising regulation, at least in the form of compensation for damages incurred, as well as for any non-pecuniary damage caused to the entrepreneur.
The general supervisory authority in the area of compliance with legal regulation of advertising is the regional trade licensing offices, unless it is an area entrusted to specialised supervisory authorities, such as the Council for Radio and Television Broadcasting in the case of commercial communications on internet video sharing platforms, the State Institute for Drug Control in the case of advertising of medicinal products, or the State Agricultural and Food Inspectorate in the case of advertising of food, including food supplements.
Where misconduct is found, the supervisory authority may order the removal or termination of the advertisement or impose a fine for an offence, up to a maximum of CZK 5,000,000, depending on whether the person who committed the offence was the advertiser, processor or disseminator of the advertisement, as well as the nature and seriousness of the infringement.
While social media advertising is an effective tool for spreading business messages, it is important to be wary because although influencer marketing may at first glance seem like a simple form of promoting a brand, products or services, as with traditional forms of advertising, it is advisable not to underestimate the setting of binding terms of cooperation, including sanction mechanisms in the event of a breach, not only in order to protect the reputation of the brand or products being promoted, but also in order to prevent damage in the event that an influencer breaches the statutory limits on the content and form of advertising posts.
The Video Sharing Platforms Services Act should also bring about a change in this area, the application of which we will continue to monitor for you.
If you have any questions about issues related to the legal regulation of advertising, please do not hesitate to contact us.
Mgr. Tereza Dvořáková, attorney-at-law – firstname.lastname@example.org
Mgr. Jakub Málek, managing partner – email@example.com
30. 09. 2022