When an individual becomes an Influencer under the EU law: Insights from CJEU Rulings

The rise of influencers in the digital age has prompted significant legal scrutiny within the European Union (EU). Two landmark cases from the Court of Justice of the European Union (CJEU), Case C-105/17 (Kamenova) and Case C-371/20 (Peek & Cloppenburg), provide crucial criteria and insights for determining when an individual can be classified as a trader. This classification is essential for regulatory compliance, particularly concerning transparency and consumer protection.

CJEU Case C-105/17 (Kamenova): Criteria for Determining a Trader

In Case C-105/17 (Kamenova), the CJEU established key criteria to determine when an individual qualifies as a trader/influencer. The case involved a private individual selling goods on an online marketplace, raising the question of whether such activities constituted trading.

Key Criteria for Identifying a Trader:

1. Volume of Sales: A high volume of sales suggests a systematic and regular activity, typical of trading.

2. Profit Motive: The intention to generate profit from sales activities is a crucial factor.

3. Organizational Features: The presence of business-like practices, such as structured inventory management and marketing efforts, can signify trading.

4. Continuity and Regularity: Ongoing and frequent transactions indicate that the individual is conducting business operations.

CJEU Case C-371/20 (Peek & Cloppenburg): Expanding the Concept of Payment

Case C-371/20 (Peek & Cloppenburg) broadened the understanding of what constitutes payment in the context of advertorials and influencer marketing. The court clarified that payment is not limited to monetary transactions but can also include other forms of compensation, such as copyright-free photos.

Key Takeaways:

1. Non-Monetary Compensation: Exchanging goods or services, such as providing copyright-free images, qualifies as payment for promotional activities.

2. Broad Definition of Payment: Any form of compensation that benefits the influencer can be considered payment, necessitating disclosure as part of commercial communication.

3. Transparency Requirements: Influencers must disclose all forms of compensation to ensure transparency and comply with EU advertising regulations.

Implications for Influencers and Brands

The rulings in Kamenova and Peek & Cloppenburg have significant implications for influencers and brands operating within the EU. Here’s how these criteria and definitions affect their activities:

1. Regulatory Compliance: Influencers who meet the criteria of being a trader must comply with relevant consumer protection laws and regulations, including clear disclosure of paid partnerships.

2. Disclosure Obligations: All forms of compensation, monetary or otherwise, must be transparently disclosed in influencer content to avoid misleading consumers.

3. VAT Registration: Influencers who engage in substantial commercial activities may need to register for VAT and adhere to tax obligations.

Best Practices for Influencers

To navigate the complex legal landscape and ensure compliance, influencers should adopt the following best practices:

1. Evaluate Activities: Regularly assess whether their activities meet the criteria of being a trader based on volume, profit motive, and organizational features.

2. Clear Disclosures: Use explicit disclosures such as “#ad” or “#sponsored” for all compensated content, including non-monetary exchanges.

3. Maintain Transparency: Keep detailed records of all transactions and compensation received, ensuring transparency with their audience and regulatory bodies.

4. Stay Informed: Keep abreast of the latest legal developments and rulings from the CJEU and other regulatory authorities to remain compliant.

Conclusion

The CJEU rulings in Case C-105/17 (Kamenova) and Case C-371/20 (Peek & Cloppenburg) provide essential guidelines for determining when an individual qualifies as a trader and what constitutes payment in influencer marketing. By adhering to these criteria and ensuring transparent practices, influencers in the EU can navigate legal requirements effectively while maintaining trust with their audience.

About the Author:

Klara Hiti is a recognized expert in digital law and consumer protection, with extensive experience in EU regulations. With over a decade of advising clients on compliance with legal frameworks, Klara helps businesses and influencers navigate the complexities of social media advertising. Her work focuses on promoting transparency and ethical practices in digital marketing.