Companies could face prison for breaching product placement rules

Online marketers could face criminal proceedings if they do not adhere to the Consumer Protection from Unfair Trading Regulations 2008, warns European law firm Osborne Clarke.

The new regulations, which are designed to target “sharp practice” and aggressive selling tactics online, will come into force on May 26.

Under the new Unfair Trading Regulations companies using online product placements are likely to be made to inform their viewers. For instance, brands such as Orange, Procter & Gamble and Microsoft recently signed deals to appear in Bebo’s popular soap Kate Modern. The regulations mean that Bebo is likely to be forced to reveal product placements in its programmes, possibly in the credits.

The practice of astroturfing, a blogger writing on behalf of a commercial entity without making it clear, will be outlawed. Buzz marketers also come under threat from the new regulations. Conducting any marketing without stating that they are doing so on behalf of a brand could result in the company being found to be on the wrong side of the law.

E-mail spammers will also come under threat, as the new rules will also punish directors of companies who “make persistent and unwanted solicitations by telephone, fax, e-mail or other remote media.”

According to the law firm, advertisers could also face the potential of a £5,000 fine if they flout the self-regulation advertising codes. It will also be possible for directors, managers and company secretaries to be found personally liable for offences under the new rules and in serious cases face up to two years in prison.

Also under the new rules, for the first time UK governing advertising and marketing activities will include specific protection for “vulnerable” customers. This could include marketing activity targeting children, older age groups and non-English speaking tourists.

According to marketing and advertising legal experts Nick Johnson and Stephen Groom at Osborne Clarke, these regulations will have significant implications for many businesses, with potential criminal sanctions for those who slip up.