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Social media - legal certainty in the company

Ecolex 2018
6. Juni 2018


The use of social media in business is constantly leading to new legal challenges. The focus is currently on influencer marketing and the conscious use of positive and negative comments and evaluations.

A. Preface

Social media has arrived in the daily life of companies long ago. It is now standard to use at least one Facebook profile, preferably combined with an Instagram and a YouTube account. The reason is simple: This way, (potential) customers in their environment of Web 2.0 can be reached with relatively manageable costs and target group specific. Authenticity and credibility are also emphasized by the direct addressing and mixing of professional and private content. Through these advertising practices, certain topics particularly shift into focus:

B. Influencer Marketing

With influencer marketing, the company does not directly advertise its goods and services itself but uses third parties to create a positive mood for the company (influencer). In addition to blogs and forums, social media platforms are the most important distribution channels. The more personal approach associated with this sort of advertising and the blurring of the usually clearer boundaries between official and controlled corporate communication and the private convictions and opinions of consumers in normal advertising raises a number of legal questions.

1. Legal Framework

Due to its immanent tendency to conceal the advertising content, influencer marketing has to pay particular attention to the separation requirement. This has legally been stipulated several times. For example, Sec 26 Austrian Media Act ("MedienG") provides for mandatory labelling of paid publications unless doubts about the advertising quality are eliminated due to the design of the posting. Similarly, according to Clause 11 of the Annex to the Austrian Unfair Competition Act ("UWG"; "Black List"), paid editorial content in media for sales promotion purposes is in any case considered unfair. According to the ECJ, Clause 11 is not directed towards the media owner but towards the advertising company itself. Therefore, not only the influencer but also the company cooperating with the influencer must comply with the labelling requirements.

2. Cases

In practice, the cooperation between entrepreneurs and influencers is structured in different ways:

a. Company pays influencer for advertising post

In this first case group, the company selects "their" influencer to promote their products on YouTube and Co. This constellation is ultimately a direct alternative to TV or print advertising. In contrast, however, the influencer's followers often do not assume that "their" role model now promotes a product and does not merely reflect their own opinion.
In this constellation, it is clear that the advertising post must be labelled. The exemption rule for the omission of the labelling obligation in the absence of doubts about the remuneration will normally not apply since the blogger usually claims an editorial orientation of his communication channel. Accordingly, posts with a cooperation in the background have to be disclosed. For the existence of the labelling obligation, it is not decisive whether the company also specifies the content. The only relevant factor is whether the influencer received a financial benefit for the post.

b. Company provides product for editorial blogging

This case constellation is less clear legally: Here the company provides an influencer with a product free of charge but does not agree upon an advertising post about it. Rather, the company hopes that the influencer will mention the product positively on its channels and thus contribute to its popularity. This case group is particularly relevant for influencers. After all, a large proportion of bloggers refuse to officially let themselves be used as advertising testimonials.
The first question here is whether a purely editorial report by the blogger contains any content "for sales promotion purposes" (Appendix Clause 11). This is a prerequisite for the labelling regulations to take effect. After all, a contribution is not subject to labelling as long as it only reflects the neutral opinion of the influencer. However, the boundary to advertising content is fluid. For example, a clear appeal by the influencer to buy something or an integrated link to the product on the manufacturer's website can already trigger this advertising character. Ultimately, however, it will always have to be based on the individual case: If the influencer discusses the product negatively or even advises against a purchase, there can per se be no advertising character with regard to the specific product.
Whether the provision of products actually triggers a labelling obligation remains to be seen: Thus, for both Sec 26 MedienG and Annex Clause 11 UWG on the one hand it is recognised that merely indirect remuneration is not sufficient. On the other hand, remuneration is not only the payment of a certain amount of money, but also the granting of a different benefit. Therefore, the provision of a new smartphone free of charge can also be considered as remuneration. Now, however, it depends on how the transfer is made: If the company only makes the product available to the blogger for a test period and the product then has to be returned, a remuneration can be excluded with good arguments - thus eliminating the labelling obligation. However, if the influencer is allowed to use or even retain the product for a longer period of time, remuneration has to be assumed and the post must be labelled as advertising. (FN 11)

c. Company invites influencer to product presentation

Companies also like to invite influencers to product presentations. Here, too, the question of compulsory labelling arises.
First of all, it must be examined whether any report that may appear is used at all for the purpose of sales promotion. If so, the criterion of remuneration must also apply. Often,
however, this remuneration will only exist indirectly, since the remuneration (e.g. the payment of airline tickets) has not been made for a specific contribution. The following bloggers' reports will often be articles out of courtesy. To this end, the Austrian Supreme Court recently expressed in a - rightly - very critical decision that even if there is an "advertising surplus", it does not trigger any labelling obligations. (FN 12)

3. Doing the labelling

Once it has been established that the contribution of an influencer has to be labelled, the question as to its concrete implementation arises. According to Sec 26 MedienG, the terms "advertisement", "paid posting" or "advertising" are to be used for this purpose. This list is not final. However, alternative terms must have the same explanatory value as the words used by the law. So far, the courts have been very cautious and have not even granted the term "promotion" this property. However, since the underlying case was a "daily newspaper also widely distributed in rural areas and among older readers", there are good reasons why the term could be sufficient in the anglophile online world of influencer marketing. Finally, the Austrian Supreme Court itself has emphasised that the measurement should always be the average reader, which in this case has a significantly better understanding of the language though.
But also in liberal environments and with consideration of the mentioned understanding of language, boundaries have to be regarded: For example, German courts have made clear that the hashtag "#ad" underneath an Instagram post is not sufficient for identification if it is only one of many used hashtags. However, a rejection of the term "ad" or hashtags "#ad" in a unique position (i.e. outside of a "hashtag cloud") as a label cannot be derived from the verdict.

C. Dealing with comments

In addition to working with influencers, legally compliant handling of comments on social media channels is essential for companies. Just recently, a German study confirmed that customer ratings have become the most important decision criterion for online shopping: According to the survey, around two-thirds (65 percent) of respondents use customer ratings as a decision-making aid. It is therefore obvious that companies want to encourage positive comments and avoid negative ones.

1. Positive comments

There are two distinguishable types of controlled generation of positive comments: On the one hand through contributions made by third parties for a fee and without an actual purchase experience ("fake comments"). On the other hand, the recommendations generated by certain other measures in which companies want to generate positive feedback through the promise of bonuses, opportunities to take part in competitions, etc. Both types are to be assessed differently:

a. Fake comments

Real fake comments are clearly illegal and contestable on several levels. However, the previously strained Clause 11 does not apply here. After all, the fake evaluations are not intended to pretend editorial objectivity but rather to be artificially subjective. Thus, however, Annex Clause 22, which sanctions the presumption of consumer status, takes effect. Finally, the company passes itself or a third party attributable to it off as a consumer. This qualifies as wrongful appearance as a consumer that is prohibited per se.
Furthermore, Sec 2 and Sec 1 UWG are also relevant. In the case of fake comments, for example, a deception about the essential characteristics of a product (Sec 2 para 1 no 2 UWG) or about the characteristics of the company (Sec 2 para 1 no 6 UWG) may be considered. The popularity of a product manipulated by fake comments can be seen as an essential feature of a product or a company. After all, it is precisely the intention of the legislator to cover all actions that can influence the consumer's purchase decision. The concealment of the nature of fake comments as advertising messages also leads to a violation of the transparency requirement, which is sanctioned by the case group "customer acquisition" within the framework of Sec 1 UWG. A competitor can therefore prosecute fake comments in several ways. A practical problem is, of course, to detect this type of incorrect comments and to prove authorship.

b. Comments generated by actions

The comments generated by other promotional measures are to be evaluated differently. In any case, they do not fulfil Annex Clause 22. After all at the end of the day, the commentary is written by the - albeit motivated - consumer and the entrepreneur himself does not appear as a consumer. However, in extreme cases the average consumer can consider a deception according to Sec 2 UWG: This requires that the positive comment was not caused by the satisfaction of the customer but by a controlled measure and that this cannot be recognized by the average consumer. A violation of the transparency requirement of Sec 1 UWG is also possible due to a "concealment of the advertising character" of the comments. A large part of the assessment will therefore have to be based on the specific circumstances of the individual case. The decisive criterion here is how the company motivates consumers. While mere incentives are still considered harmless, excessive lures may cross the line to unfairness. This is the case when the product is no longer in the foreground but, for example, the promised profit. However, if negative evaluations are also rewarded, it can be argued against unfair action.

2. Negative comments

In addition to generating positive comments as a marketing measure, the consequences of negative comments have recently been given more space in the public debate. Here, too, several approaches are conceivable: real negative experience values of consumers, which more or less exaggerate the process, or negative campaigns controlled by competitors without a factual substrate. The latter are legally relatively easy to qualify as inadmissible - similar to fake comments - as violations of Annex Clause 22, Sec 2 or Sec 1 UWG. After all, here too, the competitor takes on the role of a supposed consumer. Again, in practice, the question of proof is more interesting - can a deliberately negative contribution be attributed to a third party?
More exciting legally are the cases in which companies oppose the experience reports of their own customers and want to eliminate them from the platform. Often, however, this undertaking is not very successful: Sec 1330 (2) Austrian Civil Code ("ABGB") applies if incorrect statements of fact jeopardise the credit, acquisition or progress of the person concerned. This will regularly apply in the case of negative assessments. However, the statements made must also contain untrue facts. On this hurdle, however, the requests directed against online comments regularly stumble. It is sufficient for the commenter to be able to prove the factual core of his claim. A statement is therefore still to be regarded as correct if it is not truthful regarding just insignificant details.
Even the offence of defamation (Sec 1330 para 1 ABGB), which takes effect in the case of general disparagement, does not always provide the company with a remedy. Thus, the speaker can regularly invoke his constitutionally protected right to freedom of expression. This finds its limits in the evaluation excess. The fact that the Austrian Supreme Court did not regard the characterization as a "dubious figure" or the application of "Stasi methods" as such excesses suggests that criticism is widely admissible. However, on social media in particular, every limit of the socially acceptable is often exceeded which often makes requests for deletion possible anyway.

Final Stroke

As illustrated by the examples of influencer marketing and the handling of positive and negative comments, the use of social media contains some legal explosive. Regardless of the legal possibilities, in cases of negative comments and assessments by clients, a PR-compliant approach is often the better approach than a lawsuit in an overall economic view. The legal remedies available can provide a good relief against fake contributions and targeted action by competitors.

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