CONSUMER LAW | The AGCM on fake endorsements on digital platforms

On 11 June 2024, the Italian Competition Authority (AGCM) concluded proceedings PS12665 against Teahupoo S.r.l., a company that provides search engine optimisation services, imposing a fine for engaging in an unfair commercial practice. Notably, in exchange for a fee,  Teahupoo offered various forms of ‘interactions’ and ‘endorsements’ consisting of followers, listens, views, members, likes, recurring likes, comments, saves and votes intended to be used on digital platforms, especially social media such as Instagram or TikTok. Such interactions would have allowed buyers to take advantage of social network features dedicated to the most successful accounts, especially when used to boost advertisements for the sale of products and services. By recalling the European Commission Guidance on the interpretation and application of Directive 2005/29/EC, the AGCM stressed that endorsements and reviews, to be considered as any practices to express feedback, including ratings, reactions and views, should reflect the experience of real customers. Traders that use fake endorsements and reviews are therefore misleading customers into making choices they would not otherwise have made. In response to Teahupoo’s defence, claiming that its services were for the most part used by private individuals and therefore outside the scope of application of the Italian Consumer Protection Code (the “ICC”), the AGCM stressed that the phenomenon of influencer marketing means that even users with a discreet following that are not permanently engaged in a professional activity through social media can promote goods and services on those platforms, and can thus be assimilated to traders. Accordingly, the purchase of non-genuine interactions by influencers amplifies their own popularity and thus the hook effect of their promotions. As a consequence, the AGCM qualified the commercial practice at issue as unfair and in violation of Articles 20 and 23 bb-quater of the ICC.

Newsletter n. 98 – July 2024