Complying with Stealth Marketing Regulation: A Legal Review System for Influencer Campaigns

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

On October 1, 2023, "Representations That Make It Difficult for General Consumers to Recognize Them as Representations by a Business Operator" took effect as a designated public notice under the Premiums and Representations Act. This is the so-called stealth marketing regulation, and campaigns in which influencers or ambassadors are engaged to introduce products or services are subject to this notice. More than two years have passed since it took effect, and several cases in which cease and desist orders were actually issued have been published, so companies running influencer campaigns urgently need to review their contracts and operational workflows.

What Is Regulated and the Criteria for a "Representation by a Business Operator"

The stealth marketing notice is a category of misleading representation designated by the Prime Minister under Article 5, item 3 of the Premiums and Representations Act. That item provides that, among representations other than those relating to quality or standards (item 1) and those relating to transaction terms such as price (item 2), the Prime Minister may designate representations that are likely to mislead general consumers and that are likely to unjustly induce customers and impede their voluntary and rational choice. Based on this provision, representations made by a business operator with respect to transactions in goods or services it supplies, which general consumers find difficult to recognize as representations by the business operator, were designated.

What deserves practical attention here is the scope of who is regulated. The Consumer Affairs Agency has made clear that those subject to the regulation are the business operators (advertisers) that supply the goods or services, and that the influencers and affiliates who make representations at their request are not themselves subject to the regulation. In other words, the addressee of a cease and desist order is always the requesting business operator. Even if a poster forgets to include a PR disclosure, it is the business operator that overlooked it that will be held responsible.

In addition, whether a post constitutes a "representation by a business operator" is judged by whether the business operator was involved in determining the content of the representation. Under the Consumer Affairs Agency's operational standards, a post naturally constitutes a representation by the business operator if there is a request and payment of consideration, but it may also qualify even without monetary payment. Even where samples are provided free of charge, if there are instructions on the content of the post, specification of wording, advance review or requests for corrections, or ongoing provision of products, the business operator's involvement tends to be judged as strong. Rather than omitting contracts and disclosure instructions because a product was provided free of charge, a realistic approach is to decide whether disclosure is required based on how far the company was involved in the content.

Clarity of PR Disclosures and the Impact of Administrative Action

To avoid falling within the notice, it is important to make it clearly recognizable to general consumers that the post is a representation by the business operator. Under the Consumer Affairs Agency's operational standards, in addition to using words such as "advertisement," "promotion" and "PR," it is also acceptable to state it in a sentence such as "I am posting this after receiving the product from Company A."

On the other hand, disclosures buried at the end of a long string of hashtags, or written in a separate thread or reply from the main post, are often considered not clear because general consumers are unlikely to notice them. For videos, a disclosure only at the beginning may be overlooked, so it is considered desirable to display it continuously so that it can be recognized throughout viewing. Because the screen layout and how posts appear in the timeline differ by social media platform, preparing materials that concretely set out disclosure examples for each medium and inappropriate examples, such as text that is too small or disclosures buried among other tags, makes it easier to prevent inconsistency in disclosures from post to post.

When a cease and desist order is issued under Article 7, paragraph 1 of the Premiums and Representations Act, the Consumer Affairs Agency publishes the name of the business operator and the details of the violation. In 2024, cease and desist orders were issued on the ground that representations fell within the stealth marketing notice against the medical corporation Yushinkai in June (linking review posts with discounts), RIZAP Inc. in August (representations for "chocoZAP"), and Taisho Pharmaceutical Co., Ltd. in November (reposted representations on its own website). Violations of a notice under Article 5, item 3 of the Act are not subject to administrative surcharges, but the loss of social credibility resulting from publication of the company's name has a significant impact on a company.

Engagement Contracts and Pre-Posting Review Procedures

In engagement contracts with influencers, it is necessary to clearly provide not only for fees and delivery dates but also for the disclosure obligation itself. Specifically, include provisions requiring a PR disclosure, specifying its position and method, requiring advance review before posting, requiring compliance with correction instructions, and giving the business operator the right to check after posting whether the disclosure has been deleted or changed. Even for free provision, I think it is desirable to exchange a simple agreement containing similar provisions.

Beyond signing a contract, a system for checking the actual content of posts is also essential. As pre-posting review procedures, put in place items such as the following.

• Rules for advance submission of planned post text and image and video materials
• Checking whether a PR disclosure is included and where it is positioned
• Checking expressions that could lead to misleading representations about quality or about terms (definitive claims of efficacy, comparative claims, No. 1 claims, etc.)
• Setting deadlines from a correction request to resubmission
• Saving screenshots showing how the post actually appears after posting

When the same content is rolled out across multiple social media platforms, it is easy to check only one medium and miss stories or clipped videos, so identifying in advance which media the content will be posted on and in what format helps prevent gaps in review.

Key Points for Managing Agencies and Internal Review

Even when influencers are engaged through an advertising agency or intermediary, the addressee of a cease and desist order remains the business operator that supplies the goods or services. Outsourcing to an agency does not relieve the company of responsibility, so in practice it is essential for the outsourcing agreement with the agency to provide for informing posters of the disclosure obligation, securing a final review step by the business operator, and an obligation to report on how posts actually appear.

In addition, it is important to take stock not only of new campaigns but also of past posts. For campaigns that have continued since before the regulation took effect, or campaigns whose operation has become unclear after a change in the person in charge, there are cases where posts remain online with unclear disclosures. It is necessary to review the list of past posts and proceed with correcting or deleting those with insufficient disclosures.

I explain points to note regarding the planning of campaigns as a whole and premium regulations in Premiums and Representations Act Points Legal Should Check Before Launching a Campaign. For reviewing the terms that form the basis of engagement contracts, Terms of Use and Privacy Policies Should Be Reviewed Whenever Your Business Changes may also be helpful.