On September 9, 2021, the Federal Supreme Court decided in three proceedings on the question of whether influencers violated the obligation to label advertising on their Instagram posts. The decisions are significant because previously there were diverging rulings at the level of the Higher Regional Courts in Germany. The decisions rendered by the Federal Supreme Court should provide more clarity – at least with respect to some of the issues involved.
Instagram posts with „tap tags“
The defendants in these proceedings are all influencers who publish pictures on their profiles on the social media platform Instagram, which they often provide with short texts. They have inserted so-called „tap tags“ into some pictures, which appear when you click on products such as clothing and name the companies or trademarks of the manufacturers or suppliers of these products. When clicking on a „tap tag“, in some cases the user is redirected to the Instagram profile of the respective company. The plaintiff considers these behaviors of the defendants as inadmissible surreptitious advertising and therefore as unfair competition.
Is a post a commercial act?
The first legal issue in the context of influencer posts is the question of whether they represent private expressions of opinion or a commercial act. The question is important, because only in the case of commercial acts the prohibition of surreptitious advertising applies and labeling would be required.
In its decision the Federal Supreme Court found that influencers who sell goods, offer services or market their own image by using a social medium such as Instagram operate a company so that the posts constitute a commercial act. The publication of posts by these influencers is likely to increase their awareness level and advertising value and thus promoting their own company.
Further, the Federal Supreme Court noted that publication of a post can also constitute a commercial act in favor of a third-party company. According to the Federal Supreme Court a commercial act in favor of a third-party is obvious if the influencer receives something in return for its post. Apart from the scenario of a compensation, commercial acts in favor of a third-party must also be assumed if the post is displaying an overly promotional impression, for example because it emphasizes the advantages of a product from this company without any critical distance in such a way that the presentation leaves the framework of factually prompted information. However, the mere fact that images on which the product is shown are provided with „tap tags“ shall not be sufficient for the assumption of such an advertising surplus. On the other hand, an advertising surplus shall exist if there is a link to the website of the manufacturer of the product displayed.
Considering these findings, it is likely that in the future the dispute will revolve around whether a post is „exaggeratedly promotional“ in case the plaintiff cannot show clear indications that the influencer has received something in return for its post. The examination of whether a post is exaggeratedly promotional requires a comprehensive assessment by the court and always depends on the facts of the individual case.
Labeling of the commercial purpose of a post
In case a post constitutes a commercial act of the influencer the second legal issue is how the influencers must disclose the commercial purpose of their posts. In the past it was argued that often the circumstances of the post, namely the social media profile of the influencer, shall make this commercial purpose clear, e.g. a high number of subscribers and its professional design, so that no explicit labelling shall be necessary. The Federal Supreme Court confirmed that the commercial purpose of a post can be revealed by the factual circumstances, however, only in cases where the influencer wants to promote its own business. In cases in which the influencer wants to promote a third party in its post, it must explicitly be labeled to that effect.
Consequences of the decisions
To some extent the decisions make life easier for influencers as not every post necessarily has to contain an explicit advertising reference. As long as only the influencer’s own company shall be promoted, the commercial character should regularly emerge from the design of the profile. However, the situation is different when third-party companies shall be promoted, which is particularly the case if the influencer receives some kind of compensation for the post. Insofar there is clarity, however, numerous other questions are still unanswered, e.g. whether any granting of advantages on the part of the advertised company is sufficient for the assumption of a commercial act or how respective labeling must be worded and designed.
It is worth to mention that decisions of the Federal Supreme Court are not only significant for influencers, but also for the advertised companies and agencies that provide companies with suitable influencers. Because even these can, under certain circumstances, be held liable for missing or insufficient labeling. Therefore, the advertised companies and influencer agencies should consider the existing legal requirements and take precautions prior to a cooperation with an influencer. For example, training courses for their influencers on how they must label a post are recommendable. Further, certain clauses should be included in an agreement with an influencer, e.g. the right to request a cancellation of a post in case of insufficient labeling.