The Competition and Markets Authority (CMA) said it has concerns that some celebrities are failing to disclose that they are being paid for their endorsements.
UK consumer protection laws prohibit the use of advertorials – editorial content that promotes a product – without it being made clear within the content or in images or sounds clearly identifiable to the consumer that the trader has paid for the promotion.
The regulator said it had seen posts online by celebrities that appear to promote or endorse products without clearly stating if the post has been paid for as well as others that appear to offer the celebrity’s personal opinion on the benefit of a product without clearly disclosing if they are being paid by the brand.
"The CMA investigation is considering the extent to which influencers are clearly and accurately identifying any commercial relationships, and whether people are being misled," the regulator said in a statement.
The CMA has asked consumers to let them know their experiences where they have bought products on the basis of online endorsements. It said online endorsements can influence consumers' likelihood to buy products and that therefore influencers must be open where they have been paid to give that endorsement or risk misleading consumers.
George Lusty, the CMA’s senior director for consumer protection, said: "Social media stars can have a big influence on what their followers do and buy. If people see clothes, cosmetics, a car, or a holiday being plugged by someone they admire, they might be swayed into buying it. So, it’s really important they are clearly told whether a celebrity is promoting a product because they have bought it themselves, or because they have been paid or thanked in some way by the brand."
In 2015, the CMA held a call for information in an effort to deepen its understanding of the way businesses use online reviews and endorsements. The information-gathering exercise was conducted after concerns were raised about the "trustworthiness" and "impartiality" of online reviews and endorsements.
The regulator subsequently announced that it was investigating whether a number of businesses had broken consumer protection laws by failing to disclose that they have paid others to endorse their company online. It issued open letters to marketing professionals and to bloggers about clear labelling of paid-for editorial content and also secured undertakings from one social media marketing company which it said would ensure that all advertising the company posts or arranges would be "clearly labelled or identified so that it is distinguishable from other content found on social media".
A group of regulators from around the world, the International Consumer Protection and Enforcement Network (ICPEN), in work led by the CMA, published guidelines on online reviews and endorsements in 2016. That guidance said online publishers, bloggers, tweeters and other "digital influencers" must "clearly and prominently" label content they are paid to produce as paid-for promotions.