Stemming regulations start from October! How should I respond?

Restrictions on stealth marketing (commonly known as "stema") began on October 2023, 10.

Since stealth marketing has been used as an effective marketing technique in the fashion and beauty industries, this regulation is sure to have a major impact on these industries.

So, what is stealth marketing? Why is it bad? How should we deal with it? I would like to explain the questions surrounding stealth marketing.

What is "Stealth Marketing"?

Stealth marketing is generallyAdvertising that is not recognized by consumersIt refers to
There are said to be two types of scams:

Past developments regarding stealth marketing

In Japan, with the exception of malicious cases such as stealth marketing where the content of the product gives the wrong impression that it is of significantly better quality than it actually is (this constitutes "false representation" under the Act against Unjustifiable Premiums and Misleading Representations), there are basically no laws that directly regulate this, and it has been left to the self-regulation of industry associations.

On the other hand, overseas, for example in the United States, stealth marketing is widely regulated, and we provide easy-to-understand explanations for influencers on how to display information.Booklet,Videoetc. are available (the booklets and videos are in English, but they are very easy to understand, so if you're interested, be sure to check them out!).
In addition, the Federal Trade Commission (FTC) is actively working to regulate stealth marketing, such as by sending warning letters to influencers whose posts are deemed problematic.

As such, regulations on stealth marketing are accelerating overseas, and it has been pointed out that Japan is the only OECD member country (the top nine countries by nominal GDP) that does not have any regulations on stealth marketing.

Why do stealth marketing? Why is stealth marketing bad?

In general, consumers are often wary of posts that are clearly advertisements, thinking, "Of course it's an advertisement, so of course it's only going to say good things."
In contrast, when it comes to posts from people who appear neutral, such as influencers that we regularly watch, people are likely to be more trusting, thinking, "If this person says it, I can trust it," or "If this person recommends it, I might try buying it."

It has also been pointed out that "advertisements that do not explicitly state that they are 'advertisements' have the added benefit of at least an increase of around 20%"(*).
For advertisers, stealth marketing is one of the most attractive promotional methods.

On the other hand, if a consumer finds out that a post made by an influencer they thought they could trust was actually being paid by a brand or company, they may feel disappointed and betrayed, thinking, "If I had known, I wouldn't have bought it" or "I trusted them."
If consumers had known the post was an advertisement, they might have made a different choice.

In this way, stealth marketing isThere is a risk of hindering consumers from making independent and rational decisions.So it is.

How should we respond to the stealth marketing regulations?

In this context, momentum for regulating stealth marketing has been building in Japan as well, and it has been decided to regulate it under the Act against Unfair Premiums and Misleading Representations (Act against Unfair Premiums and Misleading Representations).

To briefly explain the structure of the law, Article 5 of the Act on Unjustifiable Premiums and Misleading Representations lists, as one of the representations (advertising, etc.) that businesses are prohibited from making, "representations that are likely to mislead consumers, unfairly induce consumers, and are designated by the Prime Minister as likely to hinder consumers' independent and rational choices" (item 3).The Prime Minister has designated "an indication that is difficult for the general consumer to distinguish as an indication by a business operator.", is the structure.

◆What is regulated?

This time, the restrictions are:"Displays that make it difficult for general consumers to discern that they are the display of a business operator",In other words"Advertisements that are difficult for consumers to distinguish as advertisements because they are not clearly marked as advertisements, even though they are advertisements for the company's products or services"is.
Simply put, the law applies to "anything that appears to be a display (advertisement) of a business operator but that looks like a display of a third party."
Stealth marketing, which hides the fact that it is an advertisement, is definitely subject to regulation.

However, when a display is clearly a display of a business, such as in a television commercial or movie end credits, or when it is advertised on a company's official website or posted on an official account, it is not subject to regulation (although even in these cases, it may be subject to regulation if there is a risk that consumers may mistakenly believe that the display is not a display of a business).

◆How should we respond specifically?

There are two key points to consider when responding to stealth marketing regulations:

Let's take a closer look at each one.

◆ If a business operator is involved in deciding the content of the label, clearly indicate that the label is the business operator's label.

When advertising by executives or employees in charge of product development, sales, etc.

Roughly speaking,When an executive or employee in charge of product development or sales advertises that productIn this case, since the business operator is involved in deciding the content to be displayed, it is necessary to make it clear that the display is made by the business operator.
To put it a little more difficult,When an employee who has a certain relationship with a business operator and is recognized as one with the business operator (including employees of the business operator's subsidiaries, etc.) advertises (posts, etc.) a product or service.In the case of a posting, the business operator is deemed to have been involved in the decision-making of the posting content. Whether or not an employee is one with the business operator is determined by comprehensively taking into account the employee's status, position, authority, responsibilities, purpose of the posting, and other factors, and whether or not the business operator was involved in the decision-making of the posting content.

When using a third party such as an influencer to promote your product

Even if a business asks a third party such as an influencer to promote their business,Whether the business operator is involved in deciding the content of the display (advertising)The key point is whether or not this is the case.
For example, in the following case:When a business entity explicitly or implicitly instructs or requests an influencer to be involved in the decision-making of the content to be displayedSuch as it will be mentioned.

• When instructing or requesting influencers to post on social media or review sites
• When you ask brokers (people who solicit reviews on social media, etc.) or customers who have purchased the product to post reviews
• When you ask an affiliate to introduce you through an affiliate program
• When you ask other businesses to rate competing products lower than your own products

Incidentally,When a business entity has not clearly instructed or requested an influencer to promote an influencer, etc., and it is determined from objective circumstances that the influencer's promotion is not based on the business entity's own free willis the business operator's indication.
For example, this would include cases where, even though no explicit request has been made, the company implies that "if you post something, future transactions may be possible."

Exceptional cases where the business is not represented

In contrast,When a third party such as an influencer or customer posts of their own volitionIn these cases, it cannot be said that business operators were involved in deciding the content to be displayed, and therefore they are generally not subject to regulation.
I think this is an important point for business owners, so I will explain it in a bit more detail.
However, it is difficult to draw the line as to whether or not something is being done voluntarily, so it is a little difficult to judge. We look forward to seeing more cases in the future.

• When an influencer or other person posts of their own volition
• When a company provides a product or service to a third party free of charge and asks them to post something, but the third party posts it of their own volition
• In cases where the display of an affiliate is not an advertisement made by an advertiser using an affiliate program, for example, when there is no communication between the business and the affiliate regarding the display.
• When a buyer posts a review of their own volition
• Even if a discount coupon or other reward is given to a customer for posting a review, there is no communication between the business and the customer regarding the content of the review, and it can be said from an objective standpoint that the customer posted the review of their own volition.
• When a third party posts voluntarily in order to enter a campaign or contest on SNS
• When a business quotes a third party's review on its website, it does not selectively pick out only the positive reviews, but quotes the review without modifying it.
• When samples are distributed to unspecified third parties, and the third parties post reviews of their own volition
• When a sample product is distributed to a specific third party, such as a member, and the third party posts a review of their own volition
• When a business entity provides a third party with a relationship that does not allow the business entity to decide the content to be displayed with a product or other item other than as a gift, without the intention of posting, and the third party posts of their own accord.
• Articles, book reviews, and program broadcasts that are independently planned, edited, and produced by newspapers, magazines, and broadcasting companies
  However, if payments far exceed normal reporting fees or other reporting activities that go beyond normal business practices, the business operator will be required to indicate this.

◆ Make it clear from the whole display that it is a business display.

If it can be considered as a business operator's indication, please state so.Make it clear
Specifically, the following methods can be considered:

Instagram also has a feature for posting in collaborations, so be sure to make use of that as well.

In response to this, not only should you not state at all that the display is that of a business, but you should also avoid any confusing displays such as the following:

• If the word "advertisement" is stated at the beginning, but the text states "This is a third-party opinion" (or vice versa), it is unclear whether the statement is from a business entity or not.
• When a video is displayed for such a short period of time that consumers cannot notice it, or when it is displayed only in a part of a long video, making it difficult for consumers to notice it
• When using language that consumers cannot recognize
• When it is difficult for consumers to recognize the mark due to its location or size being difficult to see, long text, or a color that is lighter than the surrounding area
• When it is mixed in with other information, such as by burying it in a large number of hashtags on social media posts.

What happens if there is a violation?

If stealth marketing regulations are violated, the Consumer Affairs Agency will issue a "measure order" to order the company to eliminate any misunderstandings it has given to consumers, implement measures to prevent recurrence, and refrain from engaging in similar violations in the future. Even if no violation is found, guidance measures may be taken if there is a risk of violation.
In any case, you should be careful not to violate the order, as it could take time and effort to respond, which could affect your business, or the results of the order could be made public, damaging your brand and corporate image.

Finally

So far we have looked in detail at regulations on stealth marketing, but the most important point is that if it can be said that the business was involved in deciding the content to be displayed (when the advertising is done by developers or sales staff, or there is no explicit or implicit instruction or request, or it cannot be said to be the result of the independent will of an influencer or other such person), it must be clearly stated that the display is made by the business.
Measures are needed, such as establishing rules for advertising within the company and standardizing the way influencers use the wording.

For more information, please contact the Consumer Affairs Agency.Guidelines for the application of "labels that are difficult for general consumers to distinguish as being those of businesses"

*　"Report of the Study Group on Stealth Marketing"