Prize operations: relations with Facebook and Instagram

Mattia Raffaelli – Partner

Sofia Mercedes Bovoli– Trainee

It is now increasingly common to come across operations and competitions on social networks, such as Facebook and Instagram, which provide for the awarding of prizes, discounts and refunds given to users in exchange for publishing a "post" or sharing a "story" on Instagram.

These phenomena, more and more growing, are in fact winning Marketing activities that have as a central idea to make the protagonists of the promotional activity the users themselves, inviting them to create content and to personally promote a certain product.

From a legal point of view, however, the applicable legislation is very strict and, unlike prize competitions, does not give discounts.

Our legal system regulates these phenomena in the Presidential Decree N. 430/2001 which includes most of the prize contests that we are used to see on social networks and distinguishes between:

• prize competitions

• options trading

The first ones consist in promotional initiatives through which prizes are awarded without any purchase condition, therefore the awarding of the prize will depend only on fate, on a computer system or on an algorithm. The latter, on the other hand, consist of a contest in which a prize is offered to all those who have purchased a product during the launching of the promotion.

There are only a few exceptions and derogations to the discipline, for example, competitions that have social purposes, those that provide for the production of literary, scientific or artistic works or in the case where the prize is represented by a discount or objects of minimal value are excluded from the application of the regulations.

It is also necessary to point out that, in order to organize a contest on the main Social Networks, such as Facebook and Instagram, although the association with them is no longer an essential requirement, it will be necessary to comply with the specific conditions provided for by the Social Network itself and, in particular, to explicitly exclude in the regulation of the promotion any association with the same, relieving it from any liability that may arise from the launching of the operation or of the contest.

Moreover, the Ministry of Economic Development, through the updated FAQ published on 13 February 2020, has clarified some particularly thorny points of the regulations.

In fact, it has been highlighted how it is possible to exclude the association with Social Networks and consequently dispense them from any liability, only in the case where equal opportunities for all participants are guaranteed. Therefore, the registration to the Social Network cannot constitute a limit to the participation to the promotional initiative, it will be necessary, therefore, to reserve the participation to the contest only to those who were already registered to the Social Network before the beginning of the promotion or to offer to the users the possibility to participate also through different and alternative modalities.

Another important and particularly limiting element is the location of the server for the acquisition of participation in the promotion, which must necessarily be located on Italian territory.

In conclusion, the organization of operations or competitions with prizes is far from being simple and immediate, but it is necessary to provide for the drafting of a detailed regulation, to communicate notice of the call of the competition 15 days before its beginning to the Ministry of Productive Activities, to pay the deposit equal to the value of the prizes as a whole and to adopt a privacy policy in compliance with the GDPR.

Italian version

Indirect and Subliminal Advertisements on Social Media.

The advertising market is undergoing a major change and indirect - subliminal advertisements promoted through online and social networks are becoming more and more common.

Indirect advertising is a clear and explicit message that appears on unusual spaces, but not mentioned as such. Subliminal advertising, instead, isn’t evident. This practice is banned by Italian law but only with respect to TV advertising and although film and television are a fertile ground for this kind of promotion, new challenges have emerged above all on social networks. Indeed, as the world wide web represents a new opportunity to express our thoughts and interests and tastes and a new way of learning and sharing information and content, companies have also begun to use them in an explicit or tacit manner.
On the one hand, we have real advertising spots and sponsorships, although not fully controlled: Facebook and Instagram, for example, check that ads don’t have an illegal content or prohibited by rules but they don’t control the accuracy of the information communicated, nor their congruity with the regulation, since there is no discipline code to be respected.

On the other hand we notice serious “product placement” proliferation within the most clicked profiles.

In this regard, the British Competition and Markets Authority stood up against disguised advertising, which is not recognizable in photos and videos posted on social media. Recently also the American Federal Trade Commission, for the first time addressed the issue, asking “web influencers” to emphasize that hidden  recognizable through hashtags or comments.

However, there are no specific rules governing indirect and subliminal and the terms of use of social media like Instagram, provide and restriction. The question arises as to whether consumers, who shall not be subject to untruthful and deceptive ads, have also the right to distinguish the advertising contents from a “lifestyle tips”.

Recently, the Italian National Consumer Union has questioned the Competition and Market Authority (AGCM) to ask for the legitimacy of indirect and subliminal advertising on social networks. The legal basis for this controversy is the article 22 of the Consumer Code which asserts that the commercial intent must be explicitly stated if it is not obvious from the context or if it is capable of misleading the consumer.

The AGCM should soon clarify the issue and provide adequate information both on the relationships between producer and influencer, and on the obligation to declare the advertising purpose of the posts.

Meanwhile, Instagram has launched a new tag, "Paid Partnership with", so that users can include it in their stories and post. Alternatively, many bloggers, including the most famous Chiara Ferragni, have started using some "claim-hashtags" such as #ad, #advertisement, or #advertising to highlight the commercial purpose of their photo, protecting the consumer.
 

Do you use Instagram?

Instagram, like many other image-sharing platforms, needs you to grant them the right to display your images, or else they would be violating your copyright by displaying your pictures in the app. Obvious? Maybe, but there’s more to it…

1.    You grant them a License

Instagram does NOT claim ANY ownership rights in the text, files, images, photos, video, sounds, musical works, works of authorship, applications, or any other materials (collectively, “Content”) that you post on or through the Instagram Services. By displaying or publishing (“posting”) any Content on or through the Instagram Services, you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, worldwide, limited license to use, modify, delete from, add to, publicly perform, publicly display, reproduce and translate such Content, including without limitation distributing part or all of the Site in any media formats through any media channels…

Does this mean you still own your pictures? Well, yes, but they can use it whenever they want. At the moment, they only use user pictures in seemingly harmless instances like blog posts and whatnot, so it may be true that the chances of Instagram exploiting user content for profit aren’t that high. That clause, however, is still there. Not to mention that if you’re on Instagram, you already agreed to it.

2.    Not unless your account is set to ‘Private’

…except Content not shared publicly (“private”) will not be distributed outside the Instagram Services. 
Great! But what if you use Instagram to gain followers? 

3.    Reps and warranties…

You represent and warrant that: (i) you own the Content posted by you on or through the Instagram Services or otherwise have the right to grant the license set forth in this section, (ii) the posting and use of your Content on or through the Instagram Services does not violate the privacy rights, publicity rights, copyrights, contract rights, intellectual property rights or any other rights of any person, and (iii) the posting of your Content on the Site does not result in a breach of contract between you and a third party. You agree to pay for all royalties, fees, and any other monies owing any person by reason of Content you post on or through the Instagram Services.

In other words, DO NOT TAKE ANY PICTURE FROM THE INTERNET AND POST IT IN YOUR INSTAGRAM. 

4.    You wanna read the last sentence in that quote again? Ouch.

You agree to pay for all royalties, fees, and any other monies owing any person by reason of Content you post on or through the Instagram Services.

In other words, the people over at Instagram have their backs covered. They won’t waste a penny if you get in trouble. This is why you don’t want to get sued (other than, well, obvious reasons). If the entity that sues you decides to include Instagram in the lawsuit (which they probably will since it was their service you used), it is my understanding from this clause that you could end up paying for your lawyer AND Instagram’s lawyer. That is, in addition to any damages you owe for copyright infringement, should you be found guilty. Ouch? OUCH.

By the way… Instagram is awesome, though, check it out if you haven’t done so already.