In its recent judgement, the Higher Regional Court of Hamburg (OLG Hamburg) made a (for German courts) surprising decision: consumers are sometimes not gullible and can detect advertising. The court attests, that the average Instagram user in fact knows, that an influencer does what an influencer does: exchange social media activity for money from sponsors. Quelle surprise.

In its judgement of July 2, 2020 the OLG listed criteria from which the obviousness of influencer advertising can be deduced. That means that labelling according to § 5a (6) German Unfair Competition Act (UWG) is not always necessary. The court believes that consumers are much more likely to be able to recognise the commercial nature of influencer posts than other regional courts have thought in the past.

What happened

The German Antitrust Authority (Bundeskartellamt/BKartA) had taken legal action against an unnamed fashion and lifestyle influencer from Hamburg, who reaches around 1.7 million followers with her Instagram account. The BKartA sued because of three posts which – without any concrete payment – contained references to the manufacturer of the products shown or to other companies and which also linked to their Instagram accounts. The influencer did not label the posts as advertising.

The BKartA claimed this constituted an unlawful act under German and EU law, especially the Unfair Commercial Practices Directive. According to the latter, one has to clearly identify the commercial nature of posts one uploads.

Captain Obvious strikes again?

The court assumed that the commercial purpose of the posts was so obvious that neither a risk of misdirection nor an understanding as a private or editorial contribution could be assumed. You may not believe it, but that is actually something new. Previously, the courts deemed consumers to be a bit sheepish and in need of protection of predatory influencers trying to figuratively hypnotize them into buying handbags and lip gloss. The court stated, that the account is operated by an entrepreneur. It also serves commercial purposes as a whole. In this respect, the fact that individual posts were free of charge was not relevant. In any event, the aim is to present oneself as a (potential) advertising partner for companies. This constitutes a commercial act, irrespective of the remuneration.

Nevertheless, the posts do not have to be labelled as advertising. The commercial purpose of the action is directly apparent from the circumstances (§ 5a (6) UWG) and is therefore immediately recognisable to the consumer.

The court based this on various criteria: The account has about 1.7 million followers. The posts are professionally designed and achieve about 50,000 likes. Every consumer is therefore immediately aware that the account is used for influencer marketing. Even the private appearance of the posts does not change this. After all, this is a marketing measure that is not hidden from the consumer. In particular, the posting of advertising in allegedly private media as a means of sales promotion had long been known. Furthermore, there are also some personal product recommendations in print media which do not have to be marked as advertising if no consideration for the recommendation has been provided.

Furthermore, labelling the posts as “advertising” does not have any effect on consumer behaviour. For one thing, the followers would know that advertising is often presented on Instagram accounts. But on the other hand, they are also interested in this. They have an interest in the advertised products for which no consideration has been provided by a company.

Pamela, Vreni and Cathy

Influencers were the topic of German court rulings repeatedly over the past few years. The decisions “Pamela Reiff”, “Vreni Frost” and “Cathy Hummels” even garnered substantial media attention. With every decision it became more clear, that influencers are not allowed to post pictures of themselves on Instagram in business dealings, on which they present goods and link to the accounts of the manufacturers. At least not without marking this as advertising.

It is not decisive whether the advertisers are paid for their posts or whether they do not receive anything in return for the advertising. Only the expectation of arousing interest in influencer marketing from third parties and thus potentially generating sales later on is sufficient.

The Hamburg ruling is now the first time a court deemed the labeling of posts as influencer marketing as uneccesary. It remains to be seen, if other courts follow this line of reasoning. But these diverging lines of legal thought make it more likely we will soon-ish have a definite ruling from the German Federal Court (BGH), which may, in turn, influence courts in other EU member states and even the US.

Photo by Vonecia Carswell on Unsplash