The Federal Court of Justice ruled in three judgments on September 9, file numbers I ZR 90/20, I ZR 125/20, and I ZR 126/20, that female influencers must label product posts on Instagram as advertising if they receive consideration for them. Otherwise, the posts would be considered anti-competitive.
Is paid advertising on Instagram permissible without an advertising notice?
The influencers posted images with brief accompanying texts on their Instagram profiles, which boast several million followers. They embedded so-called "Tap Tags" into some of these images. Clicking on products visible in the images, such as apparel, displays the names of the manufacturers or brands of these products or their providers. Clicking a "Tap Tag" redirects the user to the respective company's Instagram profile. Some of the influencers received financial compensation from companies for publishing images with Tap Tags.
When, how, and where must a post be identified as advertising?
The Federal Court of Justice has now ruled that advertising for which an influencer receives consideration from a company must be designated as such.
The Instagram posts in question constitute commercial acts by the influencers within the meaning of Section 2 (1) No. 1 of the Unfair Competition Act (UWG), benefiting their own enterprise and, in any case, the third-party enterprise. Influencers who market goods, offer services, or promote their own image via a social medium like Instagram are operating a business. The publication of posts by these influencers on the social medium is capable of increasing their visibility and advertising value, thereby promoting their own enterprise.
Undisclosed advertising is prohibited
The undisclosed advertising violates Section 5a (6) of the Unfair Competition Act (UWG) because, according to the legally sound findings of the Higher Regional Court, the commercial purpose of this post—to promote the sale of the manufacturer's products—is not sufficiently disclosed and does not arise from the circumstances. In this regard, it is irrelevant whether consumers recognize that the defendant is acting in favor of her own enterprise by publishing posts on her Instagram profile. For consumers, the specific purpose of a post to promote a third-party enterprise must be discernible. The failure to disclose the commercial purpose of such a post, equipped with "Tap Tags" and links, is regularly capable of inducing the consumer to make a commercial decision – clicking the link leading to the manufacturer's Instagram profile – which they would not have made otherwise. Furthermore, the post concerning "Raspberry Jam" violates Section 3a of the Unfair Competition Act (UWG) in conjunction with Section 6 (1) No. 1 of the Telemedia Act (TMG) and Section 58 (1) Sentence 1 of the Interstate Broadcasting Treaty (RStV) or Section 22 (1) Sentence 1 of the State Media Treaty (MStV), because the commercial communication or advertising contained therein is not clearly identifiable as such.
Do you advertise on social media? You should definitely seek legal advice!
If you operate as an influencer on Instagram or other social media platforms, we strongly recommend seeking legal counsel to avoid costly warnings under competition law.
As a specialized law firm for IT law, competition law, and media law, we already advise agencies, influencers, and advertising companies on influencer marketing. We can also assist you in structuring your advertising to be legally compliant. With our advice, you are on the safe side. Feel free to contact us for a non-binding consultation.
Sources:
Press release of the Federal Court of Justice dated 09.09.2021, No. 170/2021
Federal Court of Justice, Judgments of 09.09.2021 – I ZR 90/20, I ZR 125/20, and I ZR 126/20
GoldbergUllrich Attorneys at Law 2021
Attorney Christopher Pillat, LL.M.
