Author: Pierre Daniel Wittmann
Influencer marketing is very much in vogue. In a recent study carried out by the German Association for the Digital Economy (Bundesverband Digitale Wirtschaft – BVDW) in March 2020, one in five respondents said they were influenced by influencers online when making a purchase (cf. https://www.bvdw.org/veroeffentlichungen/studien-marktzahlen/detail/article/more-than-every-fifth-sales-are-influencer-marketing-taking-according-to-bvdw-study-2020-again-1/ – the information is only available in the German language). Influencers are considered authentic and credible because they present themselves to their followers as private individuals and, therefore, are ideally suited to cooperate with companies as brand ambassadors for advertising purposes. The promotion of sales takes place via various social networks, such as Instagram, YouTube, Twitch and TikTok. In this context, influencers do not identify all posts in which they present third-party products and services as advertising. As a result, there have been several sensational cases in which influencers were sued by consumer associations such as Verband Sozialer Wettbewerb. The legal uncertainty among influencers is great, as the courts judge the question of whether there is an identification obligation in influencer marketing very differently. A new “influencer paragraph” in the German Act to Strengthen Consumer Protection in Competition and Trade Law, which was passed by the Federal Cabinet on 20 January 2021 (see https://www.bmjv.de/SharedDocs/Gesetzgebungsverfahren/DE/Staerkung_Verbraucherschutz_Wettbewerbs-_und_Gewerberecht.html for further information and the draft bill in the German language), is intended to bring more legal clarity.
Whether influencers are obliged to identify their posts in social networks as advertising needs to be assessed based on the relevant “influencer paragraph”, as set out in Section 5a(6) German Unfair Competition Act. According to this provision, anyone who fails to identify the commercial purpose of a commercial act, unless such purpose is directly apparent from the circumstances, is deemed to be acting unfairly, provided that the failure to identify is suitable to cause the consumer to make a transactional decision that he or she would not otherwise have made. Influencers again and again post or include tags in their posts referring to the Instagram accounts of the brand manufacturers whose products they wear, or whose services they otherwise present to their followers, without receiving any remuneration or other consideration from the brand manufacturer. However, the fact that there is no consideration does not mean that the existence of a commercial purpose can definitely be ruled out. Instead, some courts rely on circumstantial evidence which, taken together, either speaks in favour of regarding the Instagram posts as editorial contributions that primarily serve the purpose of informing the followers or as posts that serve above all advertising purposes, as was most recently done by the Higher Regional Court of Cologne (Higher Regional Court of Cologne, judgment of 19 February 2021 - 6 U 103/20; for the judgment in the German language, see OLG Köln, Urteil vom 19.02.2021 - 6 U 103/20 - openJur). Other courts, such as the Higher Regional Court of Hamburg, take the view that an obligation to identify advertisements does not exist if an influencer who has a large number of followers includes links to Instagram accounts of other brand manufacturers in his or her Instagram posts, as the followers are well aware of the commercial purpose of the posting activities, according to the Hamburg judges. As a result of this legal uncertainty, influencers identify their posts as advertisements even if they have bought the products themselves and provide a link to the manufacturer’s Instagram account via a tap tag, i.e. a link in the clickable post itself.
The German Federal Court of Justice currently has to deal with an appeal on points of law that was lodged by the German association Verband Sozialer Wettbewerb after the Higher Regional Court of Munich denied that the influencer Cathy Hummels had engaged in prohibited surreptitious advertising, stating as a reason that there had been no commercial act within the meaning of Section 2(1) no. 1 German Unfair Competition Act. The Federal Court of Justice’s position on identification obligations for influencers is eagerly awaited.
In terms of legislation, there are also new developments that are intended to lead to more legal clarity for influencers. The German Act to Strengthen Consumer Protection in Competition and Trade Law is currently going through the legislative process. According to this law, Section 5a(6) German Unfair Competition Act will be replaced with Section 5a(4) German Unfair Competition Act as the new “influencer paragraph”, pursuant to which a commercial purpose will not be deemed to exist in the case of an act performed in favour of another entrepreneur if the person acting does not receive, or allow himself/herself to be promised, any remuneration or similar consideration for the act from the other entrepreneur. If the influencer receives any direct or similar consideration (for example, commission, products, press trips, the provision of equipment or the assumption of costs), tap tags in posts must be identified using the hashtag #Werbung or #Anzeige (meaning #advertisement).
If the law is adopted in its current form, influencers will no longer be required to identify social media posts as advertising in which they present their followers with products and services from other brand manufacturers that they have purchased themselves, provided that they have not received or been promised any consideration in return. Influencers should, therefore, continue to closely monitor the legislative process and court rulings in order to reduce the risk of violating legal requirements regarding advertising and, in this way, ideally avoid any warnings and judicial proceedings.