What you need to know about the latest influencer marketing legislation

Last month, an Italian regulator declared that “the wild west of influencers is over” after the country’s top influencer, Chiara Ferragni, was fined £1m for defrauding her 30 million followers.

It’s a landmark case that sparked weeks of parliamentary debate and resulted in the Communications Authority (AGCOM) taking ownership of the regulation of influencer content. The authority said it would start the crackdown on influencers with over a million followers, requiring them to better label ads or risk fines of up to €600,000.

Italy isn’t alone in its decision to take firm action on influencer marketing. Calls for increased regulation are a global trend as the industry grows in value and its models evolve.

Much of the legislation being introduced is targetted at the influencer, but any action against an account will bring the brand reputational damage. There are also recommendations among regulating authorities to introduce a joint liability between influencers, their agencies and brands. For example, the Ferragni case has the potential to set a precedent after the brand owner was fined €420,000 alongside Ferragni.

The UK

In the UK, the Influencer Marketing Trade Body (IMTB) trade body was set up in 2021 to help agencies navigate complex consumer regulations and to represent their interests within the wider marketing industry. In January 2023, the IMTB was admitted into the Committee of Advertising Practices (CAP), the organization responsible for writing the rules that ads in all the UK media must follow.

The first action the IMTB took after joining the CAP was to review the CAP and Advertising Standards Authority (ASA) updates to their Influencers’ Guide to Making Clear that Ads are Ads. The guidance is written with an influencer’s perspective in mind but is also useful for brands and agencies.

In June, the ISBA and the IMTB announced the relaunch of the Influencer Marketing Code of Conduct as a joint venture between the two trade bodies.

The director general of the IMTB, Scott Guthrie, tells The Drum: “Influencer marketing plays a pivotal role in shaping consumer behavior. But that trust is not given; it’s earned. The trust our sector enjoys is earned when brands, agencies, platforms and creators act responsibly, taking seriously their obligations to each other and to consumers.”

The EU

When content creators in Europe advertise or sell products regularly, they’re considered to be traders under European law. That means commercial influencer content should be labeled clearly and immediately as ads. These creators need to share their address or contact information.

France has been leading the way in influencer legislation. In March, the French National Assembly adopted a bill that would legally require influencers to have a written contract for every brand payment or gift over a certain amount and ads must be clearly labeled throughout. The bill also bans certain categories, like cosmetic surgery and tobacco, with penalties extending to up to €300,000 in fines or up to two years in prison.

France’s authority has also created a ‘name and shame’ list that publishes the profiles of repeat offender influencers. The ASA in the UK has a similar list.

The possibility of fines in both Italy and France is significant, considering the UK advertising regulator only has the power to ban posts.

Ireland published fresh guidance in October and now requires influencers to comply with the Consumer Protection Act 2007, which states that influencers must make it clear if their posts are of a commercial nature or they could be breaching the law.

In October, the European Commission stepped up its scrutiny of influencer marketing by working with national authorities to uncover posts that have misled consumers. The EU Commissioner Didier Reynders said in a statement: “The business of influencers is thriving and a lot of consumers – often young people or even children – trust their recommendations. This business model, however, also comes with legal obligations.

“Influencers, too, must follow fair commercial practices and their followers are entitled to transparent and reliable information.”

The US

The Federal Trade Commission (FTC) is responsible for regulating influencer marketing in the US, which sits within its advertising purview. The FTC requires influencers to include #ad or #sponsor in posts.

The US rules also prevent influencers from being able to talk about an experience with a product that they haven’t tried or to make up claims that the advertiser can’t substantiate.

Finfluencers (financial influencers) have been a big concern in the US after high-profile cases against Kim Kardaishan, who was fined $1.26m for promoting EMAX tokens, as well as Lindsay Lohan and Paul Logan. The US Securities and Exchange Commission (SEC) has been at the forefront of action against finfluencers promoting crypto assets.