A Tweet may represent a mere 140-characters; however a recent investigation in the UK is exposing that those 140-characters can represent big money. In July, 2010, the Office of Fair Trading (UK) (OFT) launched an investigation on its own initiative into Handpicked Media (Handpicked), a self-described “Collective of independent sites and blogs with a focus on publishers”, due to suspicion that it was engaging and paying individuals for online promotional activity in circumstances where such remuneration was not clearly disclosed to consumers. It was the OFT’s view that Handpicked was operating in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPUTR) which prohibits the use of editorial content in the media, including Twitter, blogs and other social networking websites, for the purpose of product promotion where the promoter has been paid, unless such payment is clearly identifiable to the consumer.
Sections 5(1) and 5(2)(a) of the CPUTR state that “A commercial practice is a misleading action if it … causes or is likely to cause the average consumer to take a transactional decision he would have not taken otherwise” and such action is prohibited. The regulations also include prohibitions against “misleading omissions” which may be triggered where a Tweeter, Blogger or the like fails to indicate that he or she has been paid to publish their opinion of a particular product. The OFT investigation into Handpicked’s practices was closed on December 13, 2010. Handpicked was forced to sign undertakings prohibiting it from engaging in any future promotion without clearly identifying that the promotion has been paid for or otherwise remunerated.
The UK is not alone in its crusade against misleading marketing practices through digital media. In Canada, the Competition Act (the Act) contains provisions addressing false or misleading material representations and deceptive marketing practices in promoting the supply or use of a product. Representations are considered to be material where the statement would affect a consumer’s decision to buy or use a particular product or service. The Act provides for both criminal and civil adjudication of misleading representations, with penalties including fines and imprisonment. Online marketing, including the use of Twitter, is captured under the Act.
In the United States, the Federal Trade Commission (FTC) has also recently revised its Endorsement Guides (the Guides) so as to reflect modern truth-in-advertising principles. The Guides, which were originally written in 1980, were revised to address new social media, although the FTC states that the legal principles have not changed. The general principle is that if there is a connection between the endorser of a product and its manufacturer/marketer that would affect how consumers evaluate the endorsement, such connection should be disclosed in the statement.
Companies should exercise caution to ensure that they do not accidentally violate any of these laws or regulations.