Regulations On Social Media Marketing

In this brave new world of constantly evolving social media we find ourselves in, you may find  yourself asking what controls are in place to regulate social media marketing. Are there any? And is there anything businesses aren’t allowed to do?

Browsing the internet and social media marketing is one and the same today. Advertisements and promotions are ubiquitous on almost every well-trafficked website. And certainly on popular social media platforms. Given that almost the entire literate population of Hong Kong (basically everyone) is exposed on a daily basis to social media marketing, you would think that there would be strict rules and regulations in place to govern social media marketing.

You’d be wrong. Hong Kong is sorely lagging behind in this area. As of early 2020, there is not a specific ordinance that comprehensively sets out laws to govern issues relating to social media. This includes privacy, digital marketing, intellectual property and more. Instead, laws concerning areas of importance in social media are piecemeal in other more antiquated parts of legislation and case law.

Existing Regulations

In response to my titular question of whether there are any forms of social media marketing businesses can’t engage in, I would say there are restrictions, however, the regulations are rather loose.

The implications of lacking a current and comprehensive ordinance for the purposes of regulating social media marketing means that consumers are subject to more unscrupulous forms of advertising online.

One example concerns the rise of “influencers”. Influencers in Singapore or Hong Kong will be able to post photos on Instagram about their stays at a luxury hotel without explicitly declaring that they were being paid for marketing the product. They may most likely say that hotel was kind enough to allow them to stay for free, but without declaring that the post was sponsored and to what extent.

Another example concerns readers of online news websites where the publisher might engage in native advertising. Native advertising is the practice of using paid ads that match the look, feel, and function of the media format in which they appear. So they are seamlessly integrated into the page, and readers may not realise that the ad is in fact not part of the article. Such forms of advertising may contribute to misinformation and misinterpretation of factual reporting when closely embedded into the body of the news article.

Here are some of the controls that do exist to protect consumers and to regulate social media marketing.

Trade Descriptions Ordinance

The most relevant ordinance applicable to social media marketing in Hong Kong is the Trade Descriptions Ordinance (‘TDO’). The TDO is the main ordinance used to regulate sellers’ practices and for consumer protection. It prohibits the application of false trademarks, false trade descriptions in respect of goods and services, misleading omissions, aggressive commercial practices, bait advertising and bait-and-switch tactics. These are very general provisions that will apply to any form of marketing, not only on social media.

Here are some of the applicable provisions for social media ads:

Misleading omissions

A trader commits an offence under the amended TDO if he omits or hides material information, provides material information in a manner that is unclear, unintelligible and ambiguous or untimely manner, or fails to identify its commercial intent.

A typical example will be a mobile operator advertising an “unlimited mobile data plan” to consumers. If the mobile operator fails to mention that the unlimited mobile data plan is subject to a usage restriction under which the download data rate of the service will be substantially impaired and charges will be higher if a certain usage threshold is exceeded. The failure to mention such restriction is likely to equate to an omission of material information that consumers require in order to make an informed transactional decision. An omission in such circumstances is likely to be considered a breach of the amended ordinance.

Aggressive commercial practices

Traders are forbidden to impair consumers’ freedom of choice through the use of harassment, coercion or undue influence, which leads to the consumers entering into a transaction that they would not have otherwise committed themselves to.

Bait advertising

Traders are prohibited from advertising products at a specified price if there are no reasonable grounds for believing that they will be able to offer for supply those products at that price in a reasonable quantity and period of time.

There are many more detailed offences and regulations in the TDO. Any breach of the TDO will result in a criminal offence and be liable for a maximum penalty of HK$500,000 and imprisonment for 5 years, although imprisonment under this ordinance is rare. Following the principle of fair, truthful and honest advertising practices will easily steer you away from breaching the TDO. It’s really pretty simple.

Privacy Laws

It’s important to distinguish between direct and indirect forms of digital marketing in Hong Kong. Direct marketing is defined in the Personal Data (Privacy) Ordinance as “sending information or goods, addressed to specific persons by name, by mail, fax, electronic mail or other means of communication; or making telephone calls to specific persons”.

In general, most social media marketing are not addressed to specific, named individuals meaning that the Personal Data (Privacy) Ordinance does not apply. Therefore we will will not discuss direct marketing. If you’re not in possession of the personal data of consumers with the intent of using the data for marketing/commercial purposes, you need not worry about privacy issues.

However, if your business is collecting personal data for internal use, you do need to beware of other provisions of the Personal Data (Privacy) Ordinance that apply. The Office of the Privacy Commissioner for Personal Data, Hong Kong has some guidelines for organisations for regulating the collection of personal data. One example concerns online behavioural tracking. The Privacy Commissioner states that the practice of tracking should be made known to the targeted individuals and, where appropriate, allow them to opt-out.

Misrepresentation and Intellectual Property Laws

Hopefully this section will not apply to you. As with any other form of business, the laws concerning misrepresentation and intellectual property applies to social media marketing as well. If the content of your advertisement that contains a false statement of fact which a consumer relies on to make the decision to enter into a contract with you, it would be a form of misrepresentation in common law.

Additionally, the big three intellectual property laws also apply—the Copyright Ordinance, Trademarks Ordinance and the common law of passing off. Businesses and sellers must continue to abide by these laws when marketing on social media.

This article does not constitute legal advice.

The opinions expressed in the column above represent the author’s own.

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