MoreNiche: non-disclosure of commercial promotion of products
Office of Fair Trading (OFT) closed consumer enforcement case.
Case information
Case reference: CRE-E/26745
Complainant: OFT own-initative investigation
Investigation against: MoreNiche Limited (MoreNiche)
Issue
The promotion of products by online affiliate businesses in circumstances where it is not clearly identifiable to consumers that the affiliate business is not a consumer and will receive remuneration.
Relevant instrument
Enterprise Act 2002, Consumer Protection from Unfair Trading Regulations 2008
Summary of work
MoreNiche Limited (MoreNiche) operates an affiliate marketing network which enables affiliate marketing businesses (affiliates) on that network to promote products (for example, diet aids and teeth whitening products) offered by product merchant businesses (merchant). An affiliate who promotes the product of a MoreNiche merchant will, along with MoreNiche, earn money when a consumer clicks through from the affiliate's website to the merchant's website to make a purchase.
The OFT was concerned that affiliates within the network were publishing online content which promoted the activities of MoreNiche merchants without sufficient disclosures in place, where relevant, to make it clearly identifiable to consumers that:
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the affiliate's promotion had been paid for or otherwise remunerated by the merchant and/or
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the editorial content had been prepared and/or published by or at the instigation of someone other than the author (including, without limitation, a trader providing payment or other remuneration) by or at the instigation of anyone other than the affiliate and/or
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the affiliate was not acting as a consumer.
As a result of its investigation, the OFT formed the view that breaches of the CPRs may have occurred. In particular, the OFT identified evidence of commercial practices which it alleged to MoreNiche:
(a) constituted misleading omissions contrary to Regulation 3(4)(b) under the provisions of Regulation 6 of the CPRs, in that the promotion did not disclose material information (i.e. that the promotion had been paid for or otherwise remunerated), or provided that information in a manner that was unclear, unintelligible, ambiguous or untimely. As a result, this caused or was likely to cause the average consumer to take a transactional decision that would not have been taken otherwise
(b) constituted unfair commercial practices, contrary to paragraph 11 of Schedule 1 of the CPRs, as they involved the use of editorial content in the media to promote a product where such promotion had been paid for, without making that clear in the content or by images or sounds clearly identifiable by the consumer
(c) constituted unfair commercial practices contrary to paragraph 22 of Schedule 1 of CPRs, as they involved falsely claiming or creating the impression that the affiliate was not acting for purposes relating to its trade, business, craft or profession, or falsely representing itself as a consumer.
During the investigation MoreNiche engaged constructively with the OFT and showed a strong commitment to full disclosure and transparency in relation to its networks' activities.
As required under the Enterprise Act 2002, the OFT consulted with MoreNiche to ensure that the identified infringements are not continued or repeated. Following this consultation, (pdf 83kb) to comply with the law.
The undertakings require that MoreNiche, as the operator of an affiliate network, take sufficient steps within an agreed timescale, to ensure that affiliates within the MoreNiche network, when promoting MoreNiche merchants' products, do not continue or repeat the conduct of concern in this case. For example, affiliate websites must not include promotions that do not include a prominently displayed statement which would be unavoidable to the average consumer, that the promotion has been paid for or otherwise remunerated.
Having secured these undertakings, the OFT has now closed its investigation into this matter. The OFT will promote wider industry awareness of the principles of the case to secure greater levels of compliance among businesses operating with similar business models. The OFT will also after a reasonable period monitor compliance with the undertakings.