What laws can be changed?
Federal law on consumer protection; in particular the obligations of publicity, in connection with misleading advertising
Who can be impacted by the BoL?
The BoL aims to regulate “influencers” who operate on digital platforms; However, due to poor legislative technique, the BoL is very likely to impact brand owners/advertisers as well.
What could be the potential consequences?
This BoL intends to regulate “influencers”. However, instead of creating a definition of “influencers” consistent with comparative law regimes, the drafters chose to create a new concept, which is “creators in the field of digital advertising“. By not defining this concept in the BoL, the drafters have created a confusing framework, in which it is very difficult to distinguish “influencers” from brand owners/advertisers. Therefore, it is not clear whether the new set of obligations aimed to reduce advertising applies to the influencer or advertiser.
While some of the obligations mentioned in the BoL are typical of influencers, others refer to and expand on advertiser-specific obligations. Additionally, the confusion between the terms “influencer” and “advertiser,” which are used interchangeably in the BoL, creates ambiguity and contradictions with other advertising regulations, such as advertising transparency laws.
Regarding the application, the BoL does not provide specific fines against influencers who do not comply with the applicable provisions. Until there are changes to the fines established in the Federal Consumer Protection Act, it is unclear how enforcement will be carried out. In the absence of specific fines for influencers, we believe that consumer protection authorities can bring an action jointly or separately against advertisers and influencers. Advertisers have more to lose, as advertisers could face fines for misleading advertising, which can range up to 10% of revenue generated by advertising or a certain specific product or service.
What can affected companies do?
- We suggest that advertisers carry out lobbying actions to review the initiative because the project combines the obligations of advertisers with those of influencers, to the detriment of advertisers.
- If this BoL is adopted, advertisers should review and revise their contracts with influencers to comply with the new provisions. For example, advertisers should indicate in contracts the advertising nature of the content published by influencers and may need to verify that influencers are registered with tax authorities; influencers could also ask advertisers to provide them with enough information to prove that the advertising information is true.
- If the BoL is adopted, the work of influencers would be subject to stricter regulatory and fiscal control. This can impact advertisers’ ability to design, implement and execute marketing campaigns. Contracts should include provisions that insulate advertisers from liability and marketing teams and influencers will likely need specific training on misleading advertising (traditional and new rules).
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