Influencers and indirect advertising - current ruling

They post, present products and are now the figureheads of numerous companies: Influencers. While advertising on linear television and radio is becoming increasingly less important, the marketing market on platforms such as Instagram is growing rapidly. Large companies and businesses are using the millions of followers of internet stars to make their brand attractive and to bring their products to the smartphones of an entire generation in an authentic and true-to-life way. The sales items are usually placed inconspicuously and almost casually in the daily posts in order to subconsciously convince the mostly young audience of a product.

But this is where a big problem begins that also raises legal questions: When do influencers have to start labeling their advertising as such? And when does surreptitious advertising begin, which is strictly prohibited by law in Germany?

In recent years, the courts have never been unanimous when it comes to advertising labeling for influencers. The phenomenon was probably too new for the responsible legal spokespersons to have been able to penetrate it completely.

On September 9, 2021, the Federal Court of Justice (BGH) issued three groundbreaking rulings - but this legal gray area is far from being fully clarified.

When advertising must be labeled - and when not

As ambiguous as the legal situation in the area of influencer marketing has been up to now, it is generally regulated quite clearly. This is clearly stipulated by the Unfair Competition Act (UWG). The general rule is that commercial content must be clearly distinguished from private or editorial content. This applies not only to the colorful world of social media, but also to traditional newspapers. Commercial content must always be labeled as such, as stipulated in Section 6 (1) No. 1 of the German Telemedia Act and Section 3 (3) of the German Act Against Unfair Competition (UWG). If commercial communication cannot be clearly identified as such, this constitutes a breach of the law. This applies in particular to representations that do not necessarily have to look commercial, but behind which there is an employment relationship with the aim of selling a product. According to the law, you cannot be employed by a company and produce "private" reviews at the same time.

Exceptions only exist if business endeavors are obvious due to the external circumstances. For example, if a skin cream manufacturer advertises its product on its own website, in an in-house magazine or on its own social media account, the obligation to label advertising does not apply.

It has not yet been conclusively clarified when influencers test or try out products on their high-reach channels in order to attract more followers to their pages, but at the same time do not receive any financial or material consideration from the company. Do internet celebrities also have to label this as advertising? A groundbreaking ruling has yet to be issued.

Specific cases of inadmissible surreptitious advertising

On September 9, the BGH handed down three rulings that at least provide an initial direction in the ever-growing market of influencer marketing. Specifically, the judges ruled on three Instagram influencers with a reach of between 147,000 and 3.7 million subscribers (as of September 18, 2021). All three online entrepreneurs were accused of violating the obligation to label advertising. They were warned by the Association for Social Competition.

But what exactly was involved and how did the Federal Court of Justice rule in the individual cases?

In the first case, it was decided whether a fitness influencer unlawfully advertised a jam on her channel. The jam can be clicked on the sports entrepreneur's Instagram posts, whereby a so-called "tap tag" with the name of the manufacturer appears. By clicking on this tag, the user is then redirected to the manufacturer's Instagram profile. The influencer also received something in return.

In a decision in spring 2020, the Braunschweig Higher Regional Court ruled that the Instagram posts at issue constituted commercial activities and that these were not sufficiently labeled as advertising. The BGH has now confirmed this decision. Commercial acts within the meaning of Section 2 para. 1 no. 1 UWG are therefore present, even though the product was only shown without commentary. For the judges, the commercial communication is not sufficiently labeled as such.

There was no consideration for the influencer in case two. The entrepreneur had only used the products for her own presentation. In the opinion of the court, the business activity and the advertising purpose were already recognizable from the profile. In addition, the influencer did not receive any consideration, as can be seen from the BGH's press release: "However, in the absence of consideration from a third party, the posts complained of do not constitute commercial communication or advertising within the meaning of these provisions." The BGH therefore rejected the appeal by the Verband Sozialer Wettbewerb.

In the third and final case, an influencer published private photos of herself on her account, but also pictures advertising products. These posts, for which the entrepreneur also received consideration from the respective companies, were labeled as advertising with explanatory texts. As the warning was also directed against publications for which the social media celebrity did not receive any consideration, the BGH saw no reason to label these photos as advertising, as in the previous decisions of the Regional Court and Higher Regional Court of Munich.

BGH ruling: clarity or question mark?

It is clear that the BGH ruling provides influencers with more legal certainty. In future, it will probably be possible to post and advertise with even more peace of mind, as the first legal framework conditions in this business area have been outlined. One thing is clear: if influencers receive consideration from companies for presenting their products, this must be clearly labeled as advertising. This is not always just about financial benefits, but also material ones.

However, question marks remain. There are still no clear criteria as to how detailed an entrepreneurial activity must be highlighted in the overall account of the individual person. If you are active on Instagram or a similar platform and are increasingly afraid of legal consequences, we look forward to hearing from you.