How legitimate is a celebrity endorsement, especially in the digital age? And how does the law protect you? Food law specialists at Simpson Grierson explain.
Have you ever bought a brand of yoghurt after your favourite actor said you should? Or do you favour a particular energy drink because your sports idol promotes it? If so, you are not the only one.
Advertising is everywhere: on televisions, on billboards and filling our social media feeds. And often ads come with a celebrity ‘sell’. Companies use celebrities due to their public appeal. All Blacks Beauden Barrett, Sam Cane and Samuel Whitelock endorse My Food Bag, Richie McCaw is the face of Fonterra’s Milk for Schools programme and basketball player Steven Adams is a Powerade ambassador.
Celebrity endorsements are a win-win for both the company and celebrity involved. But the public can find it difficult to determine whether an endorsement is paid advertising or whether a celebrity approves of and is voluntarily promoting a product or service, leaving questions about how genuine the endorsement is.
What’s the law got to say?
There is no law in New Zealand specifically regulating celebrity endorsements. The Fair Trading Act (FTA), though, prohibits misleading and deceptive conduct in trade. We can expect ads to embellish the product, but if they cross over into being misleading or deceiving, that breaches the FTA, which could lead to hefty fines.
The Advertising Standards Authority (ASA) Code of Ethics requires advertisements to be clearly distinguishable, whatever form they may take. A celebrity endorsement is considered an advertisement and must be identified as such if the brand has control over the content of that endorsement.
Specific to social media, ASA guidance states that paid-for Twitter endorsements must use the hashtag #ad. Also, a person fronting an ad does not necessarily have to be paid for the ad to be considered advertising, for example, where an influential blogger is used to plug a certain brand in exchange for free products.
What’s the big deal?
New Zealand may appear rather relaxed about celebrity endorsements, but other countries have been tightening up their rules. The US Federal Trade Commission (FTC) has issued Endorsement Guidelines, which have strengthened requirements around celebrity endorsements. Last year, the FTC warned nearly 100 celebrities of the need to make clear in social media posts that the post is sponsored by a company. We expect NZ will follow suit, given social media is increasingly the communication medium of choice for consumers.