UNRAVELLING THE SOCIAL MEDIA INFLUENCER JIGSAW IN UGANDA: THE LEGAL QUESTIONS.

The emergence of social media influencers fits within the broader framework of peer- to-peer services, the sharing economy, the ‘gig-economy’ and the ‘do-it-yourself trend’ that has grown dramatically in the past decade[1] reaching its height in these times of the COVID-19 Pandemic where everything is being done online.

In Uganda, the emergence of what has been coined to be a “scientific campaign and election” has brought to the fore the emerging importance of influencers. Recently, socialite Shanita Namuyimbwa aka Bad black was engaged in a campaign by Ministry of Health to appeal to a certain cluster of society which she did excellently. Her work was initially not rewarded as the technocrats did not understand what exactly she had done to earn the money she was demanding. This matter was settled outside court but is a reflection of the questions that lie ahead for influencers, consumers, legal practitioners and the adjudicating courts.

This phenomenon is generating a wealth of new legal and ethical issues which deserve to be addressed. For example, how should the advertising practices of influencers be regulated? Should these individuals be treated as professionals or as consumers?[2] How should their speech be regulated? Is influencer marketing a new type of work? What is the role of online platforms? What are the consumer protection issues around this phenomenon? Are there any child labor issues where the influencer is under 18? Should Uganda Revenue Authority move in on this income stream?

Thus far, these issues have been paid lip service in the media and have attracted the attention of Uganda Communications Commission (UCC) to the extent of licensing of social media influencers[3] under its mandate in Section 6(A) of the Uganda Communications Act, 2013. UCC has approached this issue rather narrow-mindedly.

Who is a social media influencer?

One of the challenges of influencer marketing in the digital age is precisely its definition. Influencer marketing is characterized by diversity at several levels: social media influencers share common features such as their reliance on social media networks, production of regular media content, and a peer-to-peer engagement with the public on apparently non- commercial grounds (e.g., sharing workouts on YouTube to inspire users rather than to offer services).

Nevertheless, since social media influencers engage with different audiences and focus on different types of content, these general features are insufficient to truly understand their nature. In other words, social media influencers should be primarily characterized by reference to a number of specific elements. These features may be crucial to assess whether an individual can be considered as an influencer or not.[4]

The first element is the industry where an influencer operates. In 2017, Forbes tracked top influencers from 12 categories: pets, parenting, fashion, entertainment, travel, gaming, fitness, beauty, home, food, tech & business, and kids.[5] On the basis of this analysis, the top ten influencer pets (e.g. Grumpy Cat, Nala) had at that moment a total reach of 68 million users. In comparison, the gaming sector does much better at amassing followers (e.g. the highest outreach in this sector was 228 million users).

The same applies to the beauty industry which at the time of the Forbes analysis has about 135 million followers. The total dimension of the industry is relevant as the qualification of an individual’s influence will be evaluated according to the average number of followers in the industry in which he or she operates. In the gaming sector, influencers will thus need to have several hundreds of thousands of followers to become relevant, while in more niche markets some thousands will be sufficient to have an impact on the market. However, there are some influencers who do not fit into predefined market definitions.

The second element of an influencer brand is the source of their popularity. Here we can distinguish between celebrities who became famous outside of social media, but use social media for their personal and professional promotion, and influencers who are exclusively known for their activity on social media.

The first category under element 2 includes well-known singers, football players, actors, TV stars and some cultural leaders. The second category refers to individuals who were fully anonymous before they started attracting attention on social media and owe their popularity to YouTube, Instagram, Facebook, twitter, snapchat or tiktok etc.

This second element is important as the first group (show- business professionals in general) ought to be well-informed as to their role as public figures and the compulsory disclosure of sponsorship. The second group (originally ‘peers’), on the contrary, may start being treated in the same way as the first one (the ‘professionals’) only from the moment they start amassing a significant amount of market power and influence, typically translated into the number of followers and the ability to shape for example their commercial or political decisions.

The third element that can help us characterize an influencer is their influence analytics, that is, any data-driven measurement of how far their influence spreads (e.g. the number of followers, subscribers, views, likes and dislikes, retweets, impressions). These metrics point to which influencers are well-known - and have managed to amass the highest number of followers in a specific industry - and those influencers with a more limited impact on the market.

The fourth element of an influencer is their legal status, closely linked to the pursued business models. Here we can distinguish between influencers who have companies, influencers who have the legal status of a freelancer, and influencers who are still consumers themselves. This is a very important legal aspect, which is very rarely obvious to users. Some high-earning influencers launch their own brand of products and create companies to this end. Other influencers – also depending on the industry – will rely on freelance legal forms to gather financial resources through platforms.

Lastly, influencers who are still consumers may be involved in influencer marketing, but with more limited ways of earning financial benefits.

Legal Qualification of Content monetization.

Monetization entails creating revenue out of content posted on social media by creators who are social media influencers.

The first business model used by influencers is affiliate marketing, ‘an endorsement marketing strategy that pays affiliates (the content publishers) money when users click on their customized URLs’.

The main feature of affiliate marketing is that influencers are paid for sales/clicks. An example of this business model is any Instagram post which includes a discount code. When such a code is included, the influencer will typically receive a commission for every item purchased with it.

Although the practices of affiliate marketing are not fully transparent, we can assume that this can either be (i) a service contract between either a producing/selling company and the influencer, or as the case may be, between an advertiser and the influencer; or (ii) an innominate contract which can bear any name and which will establish advertising obligations on the influencer, as well as payment obligations on the advertiser/seller/service provider.

The second business model is the exchange of goods and/or services. In this case, the advertising brand offers its goods or services for a post, a review, a mention and/or a story made by the influencer on their social media, depending on the nature of the industry e.g., Uganda Tourism Board reaching out to influencers and taking them to a different national parks to get free access and stays. This agreement can be explicit, if the offer and acceptance model is fulfilled in a more formal way (e.g., by signing a contract), or it can be implicit, if the influencer accepts, through their conduct, to promote the goods/services in a way that the other party can benefit from, based on negotiations undertaken in the private messaging of social media platforms.

The third business model is that of endorsement deals. These are framework contracts by which influencers receive a compensation for advertising as indicated by the brand. A good example in this respect is Luka Sabbat’s contract with Snap Inc.[6] In 2018, Sabbat, a fashion/lifestyle influencer who was supposed to advertise eyewear made by social media company Snapchat, was sued by the company’s PR agency for non-performance. So far, the litigation further revealed the conditions of the contract, which Sabbat had broken: a lump sum paid in exchange for a number of posts and stories on Instagram.

In such a transaction, the influencer acts as more or less like a brand ambassador, and often is limited by exclusivity clauses, meaning that they will have to specifically not endorse any competing brands.

The fourth business model reflects more complex business operations which include the influencer becoming a producer/provider of goods or services themselves, or – depending on how the agreement is built – collaborating with other companies for guest products. This business model raises a number of legal questions as once again the legal obligations of the influencers are determined by their agreement with the parties whose products they promote. In the case of an influencer owning a brand and promoting it among other brands, it is unclear what capacity the influencer acts in – as the CEO of the company, as an advertiser of the company, or as an actor completely independent from the company.

Legal Questions beyond Advertising.

The earlier stated legal questions include:

1.      What is the liability of influencers?

No Ugandan Court has been faced with this question and therefore the decisions on this subject are largely in foreign jurisdictions that we can persuasively rely on.

Swedish Patent- and Market Court[7] published judgment in a case concerning a Swedish influencer and an Influencer Marketing Agency. The main legal issues concerned: 

1. how marketing should be indicated on social media (wording, placement etc.) to be clearly distinguishable, and; 
2. who is liable for the (misleading) marketing for the purposes of the Swedish Market Act (transposing Directive 2005/29/EC on unfair business-to-consumer commercial practices).

In this specific case, an Influencer Marketing Agency gave an influencer the task to promote a certain service on her blog and Instagram account. She made three postings, two blog postings and one posting on her Instagram account. The first blog post had the text "in collaboration with" (in Swedish: i samarbete med) written in small font at the end of the post. The second post had "sponsored post" written in English and highlighted in pink directly under the title of the post. The Instagram post had the #collaboration (in Swedish: #samarbete) at the end of six lines of text under a photo.

The Swedish Consumer Ombudsman deemed the choice of wording and placement of the words in all three of the cases to be insufficient as a clearly distinguishable indication of marketed content. (See for instance Article 9 of the ICC Code which has been confirmed in Swedish case-law by the case MD 2009:15).

The Court started by defining the concept of the "average consumer" for the purposes of the marketing in question. The target group for the influencer was said to be women between 18 - 34 years old. The Court held that the average consumer in this group was probably more skilled and used to distinguish marketed content on social media than the average consumer in general. Taking this into account, the Court looked at the wording used by the influencer. It found all the expressions, which the influencer had used, to be enough to indicate marketed content for the average consumer of the target group. The Swedish expressions for "in collaboration with" as well as the English expression "sponsored post" were all accepted by the Court. It should be noted in this regard that Sweden, unlike several other European countries, has no legal protection in place for the use of Swedish as a language to communicate with consumers in Sweden. The Court noted that the word "sponsored" was differently used compared to what been established by ICC Code and reflected in national legislation on broadcasting, but that change of meaning of the word "sponsored" had been established as market practice in social media by several of the main actors, such as Facebook and Instagram.

Turning to the layout of the three different posts, the Court found the second blog post with "sponsored post" highlighted in pink directly under the title was sufficient to make it clearly distinguishable as marketing. However, it amounted to misleading marketing when the text "in collaboration with" or the #collaboration were placed a[iv]t the end of the posts.

It should be noted that the Swedish Consumer Ombudsman had not included the trader when the case was filed to the Court. It could be that the Consumer Ombudsman found the legal liability of the trader to be clear and the, in general fairly low, conditional administrative fine only to be of symbolic value anyway.

The Swedish Consumer Ombudsman argued that the influencer was either mainly (in Swedish: huvudsakligen) or jointly liable for the misleading marketing and the Influencer Marketing Agency was jointly liable for the marketing in question.

The Court stated that as such, both influencers and Influencer Marketing Agencies could potentially be held as "acting on behalf of a trader" and be jointly held liable for misleading marketing. It also clearly pointed out that it is the trader who is always mainly liable for any misleading marketing. Turning to the facts of the case, it noted that the influencer had finalised the design and the content of the posts in her social media channels and published the posts. In other words, she was acting on behalf of the trader by substantially contributing to the marketing. As a consquence, the influencer got a conditional administrative fine of 100 000 SEK (approx. 10 000 EUR).

The Court stated it was established that the Influencer Marketing Agency had:

?            Provided an online platform for the influencer's blog;

?            Communicated the task to the influencer;

?            Provided the influencer with a draft of the post(s), and;

?            Commented on the influencer's first reworked version of the draft (which the Agency had provided)

Even so, it was not enough to establish that the Influencer Marketing Agency had acted on behalf of the trader, because:

?            The Swedish Consumer Ombudsman had not shown that the Agency had given the influencer any instructions regarding how the marketing should be indicated as such, and;

?            The Agency had no final decision right regarding the posts. The influencer could (and did) publish the final versions of the posts without needing a signing off or approval from the Agency.

The Swedish Consumer Ombudsman was to therefore reimburse the legal expenses of the Influencer Media Agency, amounting to 963 650 SEK (approx. 96 365 EUR).

2.      How should the advertising practices of influencers be regulated?

We must acknowledge that in most cases, technology moves much faster than the legal framework and Uganda is no exception. Uganda needs a comprehensive legal framework to deal with influencer marketing as has been done in some advanced jurisdictions like the United States like the laws pertaining to the influencer brand relationship in the United States codified in 15 U.S.C. §§ 41–58 (and mirrored in the Electronic Code of Federal Regulations, §§ 255–255.5).

In the United States, the laws surrounding how social media influencers should interact publicly with consumers with respect to brands and companies can be found in the Federal Trade Commission Act (FTC Act), 15 U.S. Code, § 45. Section 5(a) of the FTC Act prohibits ‘unfair or deceptive acts or practices in or affecting commerce’ (15 U.S. Code, s 45(a)(1)).

The time is now for UCC to come up with proper and well thought out guidelines keeping in mind the ever changing nature of this phenomenon.

3.      Should these individuals be treated as professionals or as consumers?

This is a question that can be answered based on the category of influencer and the business model as earlier discussed.

4.      How should their speech be regulated?

Under national, regional and international laws, Uganda is obligated to respect the right to freedom of speech and expression of all persons. Article 29 of the Constitution of the Republic of Uganda 1995, guarantees protection of these individual rights—which include freedom of the press, media practitioners, civil society organizations (CSOs) and all political groupings.

The overriding importance of the freedom of expression—including the right to seek, receive and impart information, as a human right has been widely recognized, both on its own and as an essential underpinning of democracy and means of safeguarding other human rights. Therefore, Social media influencers should be allowed to express themselves for as long as the information is not misleading or discriminatory.

5.      Is influencer marketing a new type of work?

In some ways yes, it is a new way of doing things largely because it is mostly run by anyone and not qualified marketing executives.

6.      What is the role of online platforms?

Online platforms owe consumers and influencers alike a duty of care to flag any content that is deemed misleading or offensive and to protect the data of consumers in accordance with the GDPR and the Data Protection and Privacy Act, 2019.

7.      What are the consumer protection issues around this phenomenon?

Uganda unfortunately has not yet passed a comprehensive consumer protection law and therefore consumer protection legislation is largely scattered in different legislation, chief among them being the Uganda National Bureau of Standards Act. In the absence of a proper consumer protection law, consumers are exposed to a business environment that is uncertain.

8.      Are there any child labor issues where the influencer is under 18?

Yes, the demographics show that children in Uganda access internet as early as 8 years. Of those, 7 out 10 face the risk of unregulated internet exposure[8]. Many companies have taken to using children influencers such as fresh kid to send a message to that market segment. The law[9] prohibits exploitation of children below 18 for labor and financial gain. Therefore, children influencers must be protected in terms of content and what contracts of minors their guardians enter on there behalf.

9.      Should Uganda Revenue Authority move in on this income stream?

Yes, Income tax laws apply to influencers. However, the majority of the youth engaged in this activity need encouragement from government as a source of alternative income rather than discouragement through taxation. It is a careful balance where there is need for extensive dialogue with the youth.

The Writer is Advocate of the High Court of Uganda.

[1] Vanessa Katz, ‘Regulating the Sharing Economy’ (2015) 30 Berkeley Tech. L.J. 1067.

[2] Catalina Goanta and Sofia Rachordas’, “The Regulation of social media influencers, University of Groningen Faculty of law Research Paper series 41/2019.

[3] Public Notice of Registration by UCC dated 5th March, 2018.

[4] Catalina Goanta and Sofia Rachordas’, “The Regulation of social media influencers, University of Groningen Faculty of law Research Paper series 41/2019.

[5] Forbes, ‘Top Influencers’ (Forbes, 2017) <https://www.forbes.com/top-influencers/#2ed2b38a72dd .

[6] Alexandra Ma, ‘20-year-old ‘influencer’ sued for allegedly refusing to wear Snap Spectacles in public despite being paid $45,000’ (Business Insider, 1 November 2018) <https://www.businessinsider.com/influencer-luka- sabbat-sued-for-alleged-refusal-to-wear-snap-glasses-2018-11> .

[7]https://www.konsumentverket.se/globalassets/artikel/pagaende-mal-domar-och-forelagganden/domar/dom-kissie-konsumentverket.pdf

[8] UNESCO Institute for Statistics, 2018. Source for all other data: Understanding Children’s Work Project’s analysis of statistics from Labour Force Survey, 2011–12. (9).

[9] ILO C.138, Minimum age, Section 7 of the Children (Amendment) Act 40.