Take Action to Regulate Practice of Deceiving Consumers

Editorial

16:50 JST, February 6, 2023

Stealth marketing — the practice of advertising products online under the guise of personal reviews — is rife. The extent to which government regulations can be effective will be an issue.

In stealth marketing, advertisers provide rewards mainly to online influencers to have them post information without clearly indicating it is an advertisement. This is nothing but an act of deceiving those who view the information.

Last January, the operator of a video-sharing application was found to have given rewards to 20 people and asked them to share videos as a way to increase the number of app users. The company instructed the people on the content of the videos, and some of them reportedly received more than ¥10 million in rewards.

Behind this is the current situation in which influencers’ posts are swaying consumer behavior.

According to a survey by the Consumer Affairs Agency, some advertising companies and others have commented that they have found stealth marketing to be highly effective and that advertisers have experienced an increase in sales of about 20%, while others have said that the practice is rampant in the online advertising industry.

The survey also found that 41% of influencers had been invited to engage in stealth marketing, of which 45% said they had agreed to do so. If the practice becomes widespread, it casts doubt on whether posts are spontaneous, damaging the credibility of online content.

The United States and major European countries have already regulated stealth marketing by law. In the United States, the Federal Trade Commission Act, which regulates unfair competition, prohibits stealth marketing and requires it to be labeled as advertising when rewards are provided.

In Japan, regulations come into play only when there is misrepresentation prohibited by the Law against Unjustifiable Premiums and Misleading Representation, and there is no law that directly regulates the act of stealth marketing. Self-regulation by the advertising industry is also not binding.

In order to improve the current situation, an expert panel of the agency has proposed that stealth marketing be added to the category of misleading representations under the law, and that the regulations be tightened.

The expert panel has concluded that articles based on the media’s news-gathering activities and items labeled “advertisements,” such as those in newspaper advertising sections, can be categorized as not constituting misrepresentation. It is important to clarify where the line is.

The agency is said to be establishing criteria for how the regulations will be applied in accordance with the proposals. If violated, advertisers will be subject to penalties. To make the regulations effective, it is necessary to strengthen the system for gathering information, including establishing a service for people to make reports and conducting regular interviews with influencers.

Platform operators should also cooperate in deleting information posted through stealth marketing. Consumers should also be aware of the problems of the practice and use their own discretion in judging products.

(From The Yomiuri Shimbun, Feb. 6, 2023)