Dealing with social media influencers - Portugal

Produced in partnership with LexisNexis.

This Practice Note is aimed primarily at brands wishing to engage with influencers for social marketing campaigns and advertising activities in Portugal. It is intended to give an overview of the key issues relevant in Portugal, including issues to be considered when negotiating an influencer agreement. It covers:

• Influencer regulation - ‘commercial communications’
• Sanctions and risks
• Written agreements with influencers

In the last decade there has been a gradual but undeniable shift from the use of traditional media, such as TV and outdoor and print advertising to digital platforms, including social media platforms. Influencers produce digital content, frequently using social media platforms, and have the ability or potential to influence consumer habits, which make them very attractive to brands.

In Portugal, there are no specific legal rules applicable to influencers. The Portuguese regulatory authority with jurisdiction over consumer issues (Direcção - Geral do Consumidor) analysed the phenomenon of influencers, and specifically the relationship between brands and influencers, and decided in 2019 that no legislative change was necessary. It is the view of the consumer watchdog that the existing rules regarding advertising and unfair commercial practices are sufficient to adequately address the legal issues raised by the use of influencers by brands to promote their products. The Portuguese regulatory authority issued guidelines, in 2019, directed at brands and influencers.

Influencer regulation - ‘commercial communications’

One of the most important matters related to the use of influencers is understanding the distinction between unregulated publications and those publications which are governed by legislation applicable to advertising and commercial activity. In Portugal, the relevant trigger which will determine whether the content published by an influencer is regulated is the existence of a ‘commercial communication’. If the content is a commercial communication the rules contained in the Advertising Code and the legislation regulating unfair commercial practices need to be complied with.

In simple terms, and this has been explicitly spelled out by the consumer watchdog in their 2019 guidelines, the mere existence of an agreement between a brand and an influencer will determine that all content published by an influencer which is related to the brand will be deemed to be a commercial communication.

This is a very broad interpretation of the definition of commercial communications and places considerable pressure on the practices of the influencers. If an influencer provides an opinion about a product, they need to disclose that an agreement is in place with a brand. If they fail to do so, the brand will be exposed to potential liability. As a result, brands need to be careful when negotiating agreements with influencers.

The agreement may take different forms, such as a simple endorsement request where products are offered to an influencer and the brand has no control over the content or even if any content will be produced at all. It may also be a formal agreement where a brand pays an influencer to produce specific content. The levels of control which the brand might have over the content to be produced by the influencer or the formality of the agreement are not relevant. Insofar as an agreement exists between a brand and an influencer, any related publications will be regulated.

The main legal obligation applicable to this type of commercial communications is disclosure, ie the influencer must disclose that it is publishing a commercial communication. The manner of disclosure will vary depending on the type of publication (as we will explain below) but will take the form of the use of specific words in the actual publication.

The influencer must distinguish between four types of communication:

• advertising - the promotion of goods or services
• sponsorship - goods or services offered to the influencer so they may be included in a publication
• partnership - a collaboration with influencer with no conditions attached, or
• offer - the offer of goods or services to the influencer with no conditions attached

The words to be used vary and correspond to each type of communication, as follows:

• advertising - ‘AD’ or ‘#AD’ (in Portuguese ‘PUB’ or ‘#PUB’)
• sponsorship - ‘SPONSORSHIP’ or ‘#SPONSORSHIP’ symbols (in Portuguese ‘PATROCÍNIO’ or ‘#PATROCÍNIO’)
• partnership - ‘PARTNERSHIP’ or ‘#PARTNERSHIP’ symbols (in Portuguese ‘PARCERIA’ or ‘#PARCERIA’), or
• offer - ‘OFFER’ or ‘#OFFER’ symbols (in Portuguese ‘OFERTA’ or ‘#OFERTA’)

These words must be included at the start of any publication, whether in writing, audio, photography or video. The use of these words at the end or in the middle of a publication is frowned upon by the consumer watchdog and considered to be bad practice.

The distinction between the four types of commercial communication is not very clear in practice, especially the distinction between what constitutes a partnership and what constitutes an offer. Furthermore, it is rare that an influencer explicitly states that they are carrying out advertising. Possibly as a result of these issues, there is widespread breach of the guidelines published by the consumer watchdog.

A significant number of influencers do not identify any of their publications, which may raise concerns on whether an agreement with a brand exists or not. The influencers which do identify certain publications, typically use the ‘PARTNERSHIP’ tag to identify commercial communications, which is arguably more vague than the other available disclosure options.

Another different legal obligation which needs to be taken into account by brands is related to the fact that most publications include a personal opinion of the influencer. In fact, it is their digital reach (such as the number of followers to a social media account) combined with their personal opinions which makes influencers so attractive to brands.

The Advertising Code regulates specifically testimonials, ie personal opinions included in an advertisement. The law requires that personal opinions included in a commercial communication are genuine, demonstrable and that they actually correspond to the actual experience of the person expressing their opinion. This means that the influencer needs to have some experience with the product or service in question and the opinion needs to be genuine.

Finally, it is important to consider that specific products and services are regulated by special rules and, insofar as they are mentioned by an influencer in the context of a commercial communication, these rules need to be complied with. The content of the publication may require additional requirements provided for in legislation. Here are the more common additional requirements which might apply to commercial communications contained in influencer publications.

Consumer credit

Any mention of consumer credit solutions, a financial product subject to stringent rules, requires the identification of the global applicable charges and costs, in the form of a special annual percentage rate.

Health claims

A reference to the importance of a varied and balanced diet and a healthy lifestyle is mandatory in any publications which mention food supplements.

Alcoholic beverages

Publications which mention alcoholic beverages cannot:

• encourage excessive drinking
• neglect non - consumers
• suggest the existence of therapeutic properties or of stimulating or sedative effects
• associate the consumption of these beverages with the physical exercise or driving
• underline the alcohol content of the drinks as positive quality

Minors

Publications directed at minors cannot:

• exploit their inexperience or credulity
• encourage minors to persuade their parents to buy products
• contain elements likely to endanger the physical or moral integrity, as well as the health or safety of minors, in particular through pornography or incitement of violence

Betting and gambling

Any mention to betting or gambling needs to be made in a responsible manner.

Sanctions and risks

The enforcing authority in relation to publications made by influencers on digital media is the consumer watchdog. Influencers as well as brands are at risk for infractions of the legal obligations described above.

The Advertising Code determines that all ‘parties’ are joint and severally liable. In a traditional model this will include the brand, the advertising agency, and the entity owning the advertising media (such as a newspaper or television operator). In this case, it applies only to the influencer and the brand, as the digital platform (such as a social media network) will generally benefit from the safe harbour provisions in Directive 2000/31/EC (EU E - Commerce Directive) which apply to content which was not approved or reviewed by the digital platforms.

Failure to disclose that a publication is a commercial communication is an administrative offence, punishable with a fine of up to EUR45,000.00 (forty - five thousand euros) for each infraction.

Failure to comply with the rules regarding personal opinions or the sector - specific advertising regulations outlined above are also administrative offences, punishable with a fine of up to around EUR25,000.00 (twenty - five thousand euros) for each infraction.

Enforcement in Portugal is in general terms not very aggressive. The consumer watchdog is short - staffed and poorly resourced and will normally only respond to complaints. Complaints filed by brands against their competitors is however not uncommon.

Written agreements with influencers

Written agreements are becoming increasingly popular in Portugal and are an important mechanism for brands to reduce and control risks. As explained above, the brand is joint and severally liable for any breach of a legal obligation caused by a publication made by an influencer. Agreements should address the legal obligations and guidelines applicable to commercial communications published by influencers and define clear indemnification obligations in case there is a relevant breach.

Agreements will normally be executed only between brands and influencers, with no involvement of other contractual parties. Occasionally, the influencer’s agent or a company holding the influencer’s image rights will also be a contractual party.

We will look at specific key clauses that should be included in a written agreement with an influencer in Portugal, assuming it will also include normal boilerplate clauses for services agreements.

Identification

The main risk related to any type of commercial agreement with an influencer, as detailed above, lies in the correct identification of any publications made by the influencer which reference the brand as being commercial communications. Each and any publication which constitutes a commercial communication must be identified with the correct symbols and words.

Brands need to ensure that influencers comply with this obligation and introduce appropriate mechanisms to be able to verify compliance of this obligation. Due to the relevance of this obligation, penalties or special termination rights associated to a breach should also be considered.

Sector - specific applicable law

Whenever products marketed by brands are subject to sector - specific regulations, brands must make sure these are complied with. As influencers may not be aware of the full extent of the regulations, brands have a special responsibility in educating and assisting the influencers in achieving compliance of these obligations. It is worth spelling out in the agreement the precise obligations the influencer must comply with.

Control

Brands normally expect to have some sort of control over the content of the publications. This control may amount to prior written approval of all publications referencing the brand or the obligation to follow certain guidelines, which may be checked after the content has been published. The content of this clause will depend on the marketing strategy of the brand and the objectives related to the hiring of the specific influencer.

As the brand is potentially jointly and severally liable for the content, the level of control will not affect in any way the liability of the brand. In certain cases, for example, when the influencer has a large amount of bargaining power, the brand will not be able to exert any control over the content. In the case of emerging influencers, it is not uncommon that brands pay and produce the content (hiring photographers and makeup artists, for example), which will confer some control over the content.

Intellectual property

The brands may wish to grant a limited licence to the influencer for use of their intellectual property rights over trade marks or materials used by the influencer. This licence needs to be carefully drafted because the influencer will own copyright over the publication itself, and the respective rights of the brand and the influencer need to be clearly set out.

Morals clause

A morals clause is a contractual rule which grants the brand the right to terminate the agreement if the influencer engages in certain behaviour in their private life which the brand considers to be objectionable or which breaches the values associated with the products marketed by the brand. This type of clause is frequently used in influencer agreements, but it needs to be drafted with care. A morals clause needs to be precisely defined and justified in order to ensure it is enforceable under Portuguese law.