What next for celebrity Twitter endorsements?

Steve Kuncewicz, digital media lawyer at HBJ Gateley Wareing, discusses the future of celebrity tweets following a crackdown by the Office of Fair Trading.

While celebrity endorsement of products and services is nothing new, social media is providing a new way for the rich and famous to make themselves and their commercial partners even richer.

Given that Twitter in particular creates a direct connection between the twitterati and their fans, big brands have learnt that a celebrity tweet can be priceless.

Range Rover recently enlisted 40 celebrities (including Daisy Lowe and Ben Shepherd) to drive a new model and then tweet about the experience. Fashion designer Henry Holland seemed pretty unequivocal: “CAN’T WAIT FOR MY NEW RANGE ROVER…!!!”. Estee Lauder’s products have been regularly tweeted about by Liz Hurley, who has been the face of the company since the mid-90s. That fact is strangely missing from her profile.

In the US, ‘tweeting for sale’ is already big business. Reality TV Star Kim Kardashian and rapper Snoop Dogg are among Twitter’s top celebrity earners, with Kardashian reportedly earning up to $10,000 for sending a single tweet to endorse a product.

Although the law in the UK on celebrity tweeting is not as clear as in the US, where the Federal Trade Commission developed guidelines which state that a celebrity tweet endorsement must contain the words ‘ad’ or ‘spon’ to show it’s been paid for, this may all be about to change.

In the first case of its kind, the Office of Fair Trading (OFT) has taken action against Handpicked Media, which operates a network of lifestyle sites and blogs. The company was found to be paying bloggers to write reviews or endorsements of their clients’ products, and the OFT ordered it to clearly state when any comment has been paid for.

As the OFT’s action shows, ‘flogging’ (as fake blogging is known) and, by implication, misleading tweets, are a criminal offence under the Consumer Protection from Unfair Trading Regulations 2008. Regulation 3 refers to “unfair commercial practices”, which it describes as any which “contravene the requirements of professional diligence; and materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product.”

One practice that’s explicitly listed as being unfair is “falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer”. The statutory maximum fine is £5,000, but in more serious cases of a breach of the regulations the maximum sentence is two years’ imprisonment. However, prosecutions can only usually be brought within three years of the date of the offence.

As yet, there have been no actual prosecutions under the regulations and it’s important to note that this case hasn’t led to a conviction. However, the action taken against Handpicked Media shows the OFT is not afraid to step in where it needs to.

The OFT’s next step will be interesting to watch. Although the Advertising Standards Agency’s CAP Code (which will apply to online advertising and social media content from March this year) states that advertising must be truthful, not misleading and capable of being substantiated, the penalties for non-compliance are nowhere near as severe as those under the Consumer Protection from Unfair Trading Regulations.

Unless a celebrity brand advocate makes it clear that they’re being sponsored to have a high opinion of a product or service, there’s every chance that they may well be misleading the public by covertly endorsing it.

Although the vast majority of Twitter users will be perfectly able to tell when they’re being sold to, protecting vulnerable consumers is something the ASA and OFT take seriously. Marketers may now have to factor in the cost of defending a prosecution into their ROI, and you can bet the average celebrity tweeter won’t be willing to fund it for them.