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Regulator investigates online endorsements

News, 22 June 2015

LONDON: More than half of UK consumers use online reviews before making purchases according to a new report from the UK's Competition & Markets Authority (CMA) which has also announced an investigation into possible misleading practices.

In Online Reviews and Endorsements, the CMA calculated that as much as £23bn a year of consumer spending could be influenced by online reviews.

It estimated that 54% of UK adults used online reviews before making purchases and that 6% turned to blogs or vlogs. Most said that the product or service purchased after reading reviews matched up to their expectations.

But the CMA added that it had also heard about instances of potentially misleading practices, including fake reviews being posted onto review sites, negative reviews not being published and businesses paying for endorsements in blogs and other online articles without this being made clear to consumers.

This last was a particular area of concern – "a number of large companies and media agencies may be requesting unlabelled paid endorsements" – so it was opening an investigation in connection with the potential non-disclosure of paid endorsements.

Inquiries will take "months rather than weeks", Alex Chisholm, CMA chief executive, told the Financial Times, warning that if the companies identified did could not agree on remedies with the CMA the case could end up in court.

Last year the Advertising Standard Authority rapped snack giant Mondelez over the knuckles for failing to ensure vloggers it had recruited as part of an Oreos campaign had made clear to consumers the videos they were watching were in fact ads.

"The blurring of boundaries between content and commerce, so that online copy looks like editorial but is in reality advertising, might appear less obviously wrong than posting a fake review — but still has the potential to be harmful," said Chisholm.

Data sourced from CMA, Financial Times; additional content by Warc staff