Influencer marketing has gained increasing significance in recent years. In this form of advertising, so-called influencers promote products primarily via social media platforms such as Twitter, Facebook, Instagram, Snapchat, TikTok, and newer platforms like Twitch. Influencers are individuals who are particularly active on social networks and, due to their presence and reputation, are especially suitable for advertising purposes. These individuals, who often serve as role models, promote products to their followers in an almost casual manner and, thanks to their personal approach, enjoy heightened credibility. Influencer marketing is considered a subcategory of “native advertising.”
In addition to personal blogs hosted on their own websites, influencers can also promote products simply by presenting images (so-called “posts”), short videos (“stories”), as well as newer formats like “reels” or “live videos” on social media. They may use “tags” or “tap tags,” as well as explicit links that, when clicked, lead directly to the advertised products.
Whether influencer marketing constitutes a violation of competition law under Section 5a (4) of the German Unfair Competition Act (UWG) depends on the specific case. Because case law regarding labeling obligations in influencer marketing has varied widely, the legislator has attempted to provide clarity with the revised Section 5a (4) sentences 2 and 3 UWG.
When assessing whether an action benefits a third-party company, it is now crucial that the influencer has received payment or a similar benefit, with the burden of proof resting on the influencer. Section 5a (4) sentence 2 UWG does not apply to actions benefiting one’s own company. This is because self-promotion is also generally subject to a labeling obligation if it is not otherwise recognizable. For unpaid recommendations by influencers, as per the addition in Section 2 (1) No. 2 UWG, it must be considered whether there is a direct connection to the sale of products or services. Influencers in this area are to be regarded similarly to media companies, as they regularly finance themselves through advertising revenue and are particularly attractive to clients when they have a large reach.
Furthermore, for actions benefiting one’s own company, there must be no doubt among the relevant target audience that a commercial purpose is present. The requirement to label only lapses if the advertising nature is immediately and unmistakably apparent. A commercial purpose is not absent just because a profile is labeled “private” and not a “business account,” as long as it is publicly accessible. For “business accounts” on Instagram, which are marked with a blue checkmark, case law correctly assumes that the relevant audience is aware these are operated mainly for monetary reasons and thus pursue commercial purposes. The same applies to accounts with millions of followers and posts of high quality with more than 50,000 likes. The situation may be different if the advertising effect only becomes apparent after a detailed analysis of the post, for example, if decisive company tags for the commercial purpose only become visible when hovering over the posted image.
The requirements for labeling (the “how”) depend on the circumstances of each case, especially the communication medium used. Key factors include the placement of the label within the post, the design and visual emphasis, as well as the specific wording. The use of hashtags like “#ad” or “#sponsored by” is not sufficient if they are placed at the end of a post. In all cases, the freedom of expression and media freedom under Article 11 of the Charter of Fundamental Rights of the European Union must be considered.
Influencer marketing can also be relevant under media law. If influencers, through specific presentations, draw attention to products or services, this may constitute advertising if the presentation of goods or services is prominent; it may be considered sponsorship if, for example, a video is fully or partially financed by a company, and product placement if brands or products are specifically shown or mentioned.
It is also important to consider No. 11 of the Annex to Section 3 (3) UWG. The key question here is whether the influencer’s posts can be classified as “editorial content.” For blog posts, this can generally be affirmed, though it depends on the individual case. For Instagram posts or similar media, this is more critically assessed.
Additionally, claims may arise under Section 3a UWG in conjunction with Section 10 LPG, Section 3a UWG in conjunction with Section 22 MStV, and Section 3a UWG in conjunction with Section 6 (1) No. 1 TMG if the influencer receives financial compensation. In such cases, these provisions are considered special regulations and take precedence when actions benefit a third-party company.
For impermissible advertising in editorial form, the distributor can initially be held liable for injunction and removal under Section 8 (1) UWG. In print media, the publisher and responsible editor or editor-in-chief, as well as the printer, are liable and cannot invoke the press privilege recognized in competition law for publishing advertisements. The independent advertising agent, who forwards a pre-prepared contribution from the advertiser, can also be held liable, but only for their involvement in editorial advertising, not for its publication. In broadcasting, not only the broadcaster is liable as an interferer; the production company, if separable from the broadcaster, is also liable. Additionally, all other independently involved parties in the program or film, such as the director, moderator, or main actor, can be held liable. In influencer marketing, liability may extend not only to the influencer but also to other involved parties or companies, such as consumer goods manufacturers, retailers, or agencies increasingly used by influencers.
Practical Tip:
To avoid liability in influencer marketing, it is advisable to agree on indemnification clauses internally.
The traditional liability rules apply to the distributor without restriction. To avoid unlimited liability for those not directly acting, case law has restricted the concept of “interferer liability” and requires a breach of a duty to review. In competition law, “interferer liability” has now been abandoned, and direct liability is now linked to the breach of duties of care or review. Liability for adopting third-party content arises from general rules but can be problematic with new technical possibilities like hyperlinks and framing.
For the relatively rare claims for damages and preparatory information, the press privilege under Section 9 sentence 2 UWG must be observed, which stipulates that a claim for damages against those responsible for periodical print media can only be asserted in cases of intentional violation. Section 10 UWG also regulates a claim for disgorgement of profits for associations under certain conditions.
b) Beneficiary
The liability of the beneficiary of impermissible disguised advertising is somewhat more nuanced. The beneficiary is fully liable under general principles if they have deliberately caused the disguised editorial advertising, especially through agreements with the distributor. However, this can often be difficult to prove. In such cases, the beneficiary is only liable if, based on life experience, it is clear that the beneficiary submitted their advertising material in such a way that they deliberately speculated on disguised editorial advertising. This is the case, for example, if the beneficiary submits advertisements in editorial form; they cannot later claim ignorance of insufficient labeling. The same applies if a beneficiary sends ready-to-print articles with disguised advertising to newspapers to which they have also placed insertion orders, as this may compromise editorial independence.
The beneficiary’s responsibility may also arise if they provide building blocks for the editorial text that, upon reasonable assessment, can only be incorporated into editorial advertising (sometimes even the provision of product images suffices), and they may need to reserve the right to review the final article. Disguised advertising can appear not only in editorial press reports but also in statements by seemingly neutral third parties that are, in fact, paid advertisements and are thus objectionable under competition law.
In recent years, influencer marketing has emerged as a successful business model alongside traditional marketing methods. Its peculiarity lies in the fact that, rather than traditional sales intermediaries, influencers—often female personalities (“role models”)—operate accounts on social media platforms, mainly Instagram but also YouTube, Facebook, and Snapchat, for self-presentation and have gathered a large number of followers. They use their popularity to present certain products or companies (such as clothing, handbags, cosmetics, food, hotels) to their followers in a seemingly private and casual manner through posts, tagging, and linking, thereby encouraging purchases. When products are clicked in image posts (“tap tags”), the company’s identifiers (electronic tags) appear. Clicking these “tap tags” leads via links to the companies’ accounts, which directly or indirectly enable the purchase of the displayed goods or services. Influencers typically receive, demand, or expect payment or other material benefits for these activities.
The numerous legal questions regarding the permissibility of influencer marketing have led not only to extensive academic discussion but also to various court decisions. These issues have largely been clarified by three leading decisions and two further decisions of the Federal Court of Justice (BGH). However, the BGH could no longer take into account the new regulations in Section 2 (1) No. 2 (insertion of the word “directly”) and in Section 5a (4) sentences 2 and 3, introduced by the Act to Strengthen Consumer Protection in Competition and Trade Law as of May 28, 2022. These new regulations were intended to provide a secure legal framework for influencer actions. Legal consulting practice has adjusted to the largely clarified legal situation. The relationships between advertising companies and influencers are increasingly governed by detailed contracts, which also stipulate the influencer’s obligation to appropriately label the commercial purpose of their posts. As a result, it is expected that there will be hardly any major legal disputes over influencer marketing in the future.
For the legal assessment of influencer activities, it is important to distinguish between actions for one’s own company and those for a third-party (advertising) company, as different requirements apply. The same action by an influencer must therefore usually be examined from both perspectives. It should be noted, however, that under Section 5a (4) sentence 2, in the case of actions for a third-party company, a commercial purpose does not exist if the actor does not receive or is not promised any payment or similar benefit from the third-party company.
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