Regulation Of Influencer Advertising Under Ukrainian Advertising Law: What's New?

Since recently, activities of influencers have been attracting attention not only from users, but also from Ukrainian authorities (e.g., tax authorities). Until recently, placing advertisements within influencers' videos, posts, stories, and messages was a grey regulatory area in Ukraine.

Although still in 2021, the Interactive Advertising Bureau Ukraine introduced the Ethical Code for influencers, advertisers, and other stakeholders in the influencer marketing sector – suggesting guidelines for advertising content distributed across a spectrum of digital platforms – the Ukrainian influencer advertising primarily remained disjointed from the global landscape.

With effect as of October 2023, the reloaded Law of Ukraine "On Advertising" ("Advertising Law") provides regulation for online advertising distributed within influencer's content, directly addressing the influencer market's need for compliance with the new requirements. The new regulation aims to align the Ukrainian advertising law with the legislation of the European Union, specifically the European Convention on Transfrontier Television, Directives of the European Parliament and of the Council 2010/13/EU on audiovisual media services of 10 March 2010.

Scope of the Advertising Law for Influencer Advertising

The current regulation provides greater clarity on which influencer advertisements fall under the Advertising Law. In particular, to establish where the influencer's information (advertisement) is regarded as distributed and consumed within Ukraine, at least three criteria from a non-exhaustive list of the following need to be satisfied:

1. the advertisement is predominantly or entirely targeted towards individuals within Ukraine;
2. the advertisement is in Ukrainian;
3. the seller or the advertiser has a registered address, permanent or temporary representation office (establishment), office, branch, warehouse, or retail space within Ukraine;
4. the seller or the advertiser provides advertised product delivery to or within Ukraine;
5. the seller or the advertiser provides maintenance or related services for the advertised product.

Qualification of Influencer Advertising under Advertising Law

Under the Advertising Law, there is no standalone definition of influencer advertisingor influencer marketing. For the latter law to apply to the influencer advertising, it should be qualified as "user-generated content" and, where relevant, "product placement" or "sponsorship":

• "user-generated content" means information, including user-generated video, created and/or shared through platforms for shared access to information (e.g., Facebook, Instagram), platforms for shared access to video (e.g., YouTube), or through electronic communication channels (e.g., chatbots, messengers, other augmented and virtual reality technologies).
• user-generate content with product placement or, literally, "product placement"means the demonstration, for a fee or other consideration, of a product, service, trademark, or other intellectual property under which business activities are conducted, or recommendations regarding them within programs of audiovisual media, including films and user-generated content.

This definition essentially means that information about a person and/or product posted by the influencers for fixed fees, referral payments, barter transactions, or material incentives (e.g., in the form of monetary funds, gifted items, discounts, or anything received of value in exchange for the post or video) will likely qualify for advertising.

• sponsoreduser-generate content or, literally, "sponsorship" means voluntary tangible, financial, organisational, and other support provided by individuals and legal entities for any activity aimed at promoting solely their name, designation, brand name, product name, or trademark owned or lawfully used by such individuals or entities.

Finally, according to the revised definition of "advertising," the product placement and sponsorship are indicated among the indirect method of creating and maintaining awareness of advertisement consumers and their interest in an individual, concept (idea), and/or product distributed in any form and through any medium.

Labelling the Influencer Advertising

Upon uploading to a platform for shared access to information or video, an influencer distributing user-generated content with the advertisement is obliged to identify (label) the respective content as containing advertising (para. 3 of Article 14² of the Advertising Law). Further, although there is an obligation for the provider of the platform for shared access to video to ensure the technical possibility of advertising labelling as well as provide (add) such labelling if the influencer did not do it, it does not exclude a general obligation for the influences to divide the advertising from other content (e.g., by voice, visual elements).

Likewise, the mention of the sponsor's name, designation, brand name, product name, and/or trademark should be accompanied by sponsorship labelling (para. 4 of Article 5 of the Advertising Law).

While no specific labels are mandated, it is plausible to consider using the hashtags #advertisement or #sponsored respectively.

Main Requirements for Influencer Advertising

When it comes to the product placement approach, user-generated videos incorporating product placement must adhere to the following requirements:

1. advertiser influence: advertisers are prohibited from exerting any influence over the substance of user-generated content and videos.
2. refrain from explicitly promoting the purchase: such user-generated content must not directly encourage the purchase or lease of products, particularly by including specific promotional recommendations for these products.
3. excessive emphasis: user-generated content must not give undue significance to the featured product.
4. identification requirement: to prevent misleading the viewers, they must be clearly informed of the presence of product placement in the program or user-generated content. This notification must be provided through appropriate identification at the beginning and at the end of the user-generated content, as well as after any the end of advertisement placed in such content.

Regarding the sponsorship approach, the sponsor shall not have the authority to influence the substance of user-generated content, whose production (creation)/distribution it supports, and the editorial responsibility and independence of the media entity.

For user-generated content, which is produced or distributed with the sponsorshipor feature product placement, the requirement for the placement of warning statements (e.g., "significant consumption of alcohol is dangerous for your health"; "self-treatment may be dangerous for your health") and other mandatory warning information that may be required under the Advertising Law does not apply.

What is Prohibited for Influencer Advertising?

Generally, influencers are now held to the same limitations related to advertising content as stipulated within the Advertising Law, akin to all the other advertisers. However, this is not applicable to influencer advertising posted before 1 January 2024.

These limitations encompass (to name but a few) (Articles 5², 8, 10, 21 of the Advertising Law):

1. prohibition of unfair advertising;
2. prohibition on sexism, ageism, lookism, fascism, machismo, stereotypical roles of men and women, belittling a person's dignity based on gender, other discriminatory statements or infringements of moral norms;
3. prohibition on advertising prescription-based medicine and blacklisted drugs;
4. prohibition on advertising performance enhancing substances and/or methods of their use in sports;
5. prohibition of certain types of product placement, among others, on platforms for shared access to information and video: tobacco and tobacco-related products, prescription medications, medical equipment, prevention, diagnostic, treatment, and rehabilitation methods, gambling, and goods whose production or distribution is prohibited by law; and
6. prohibition of taking advertising orders from an advertiser that is a resident of the aggressor state (occupying state) (i.e., russian federation).

As for more specific requirements,

• product placement in news programs, programs on current affairs, consumer rights protection programs, religious programs, and children's programs are expressly prohibited.
• sponsorship of news programs and programs about current events is prohibited.

What Influencers Can Be Liable For?

The Advertising Law expressly prohibits the distribution of unsolicited advertising, such as spam and bulk calls, through various communication means provided that no prior written (electronic) consent from the consumer was obtained (para. 2 of Article 14³ of the Advertising Law).

Authorities that enforce advertising law can impose fines that may amount to five times the value of the distributed/produced advertisement or doubled fine for a violation committed repeatedly within the same year. Imposing the fines at issue is mainly the jurisdiction of the State Service of Ukraine for Food Safety and Consumer Protection.

The special laws and regulations also grant authority to impose other fines for advertising-related violations for the National Television and Radio Broadcasting Council of Ukraine, the Anti-monopoly Committee of Ukraine, the Commission for the Regulation of Gambling and Lotteries, and the National Bank of Ukraine.

To exemplify, the Commission for the Regulation of Gambling and Lotteries is entitled to impose advertising-related fines (financial sanctions) amounting to around UAH 2,4 million (equivalent to 300 minimum wages).

For unfair and comparative advertising, the fine may amount to up to 5% of the offender's turnover for the year preceding the year when the fine is imposed, for each such violation.

Influencer as Online Media

Bloggers who possess accounts and channels on platforms for shared access to information and video register voluntarily as online media after the Media Law (for information about online media registration as well as advantages of such registration, please read our overview here).

Notably, only registered online media can form a joint regulatory body and adopt codes (rules) that, among other things, determine the requirements for disseminating advertising in online media.

We are aware of several examples of registration of bloggers (influencers) as online media. For instance, a Ukrainian beauty industry blogger registered her Telegram channel BEAUTIFICATION as an online media. A Ukrainian chef registered his site, KLOPOTENKO, which features recipes from various cuisines, as an online media. Another two examples are the YouTube channels @kazarovua, managed by a Ukrainian media expert, and RABBIT HOLE, managed by a Ukrainian political figure and journalist, which both focus on social and political affairs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.