When Is a Marketplace Liable for Influencer Marketing or Sponsored Listings?

In recent years, the rise of influencer marketing and sponsored listings has transformed how businesses promote their products. As brands increasingly rely on platforms to connect with influencers, the question arises: When is a marketplace liable for influencer marketing or sponsored listings? This legal ambiguity can cause significant headaches for online platforms, businesses, and influencers alike. To understand the dynamics at play, it’s important to explore the roles marketplaces play in these transactions, the responsibilities they bear, and the potential liabilities they face.

What Is a Marketplace’s Role in Influencer Marketing and Sponsored Listings?

Before diving into liability, it’s essential to clarify what a marketplace is in this context. A marketplace is a platform or service where third-party vendors or creators (such as influencers) can offer products, services, or content to an audience. Examples include online platforms like Instagram, TikTok, Amazon, eBay, or Etsy.

In influencer marketing, businesses partner with influencers to promote products or services. These partnerships may be managed directly between the brand and the influencer, or the marketplace may act as an intermediary. Similarly, sponsored listings are advertisements or promoted content displayed by brands, which marketplaces may sell as part of their advertising services.

The Marketplace’s Direct Involvement

In some cases, marketplaces act as mere facilitators, offering space for influencers to post content or allowing businesses to advertise. However, their involvement can extend beyond this passive role. Some platforms allow for monetized posts, track influencer performance, or even assist with content creation and placement. When these elements are involved, the marketplace may find itself more directly involved in the advertising process and, therefore, at greater risk of liability.

Types of Liabilities Marketplace Faces

There are several ways a marketplace could be held liable in influencer marketing or sponsored listings. The legal framework governing these matters is complex, and liability can arise depending on the marketplace’s level of involvement, the nature of the transaction, and the laws of the jurisdiction in which it operates.

1. Liability for False or Misleading Advertising

One of the primary concerns with influencer marketing is the potential for false or misleading claims. When an influencer endorses a product, consumers are influenced by their perceived trustworthiness. If an influencer promotes a product with exaggerated or false claims—whether intentionally or not—the marketplace could face legal consequences. In many countries, false advertising laws mandate that advertisements be truthful and not misleading.

In this scenario, a marketplace might be held liable if it had significant involvement in the content creation process, if it promoted the influencer’s post through its advertising system, or if it failed to properly vet the influencers or monitor the content being posted. For instance, if the platform facilitated a misleading campaign and profited from it, this could expose the marketplace to liability under advertising laws.

2. Liability for Non-Disclosure of Sponsored Content

Another liability concern is the failure to disclose sponsored content. Many countries have regulations requiring that influencers explicitly disclose when a post is sponsored or contains affiliate links. For example, the Federal Trade Commission (FTC) in the United States mandates that sponsored posts should be clearly marked with terms such as “ad” or “sponsored.”

If a marketplace has a role in facilitating or promoting the sponsored content, it could be held accountable for ensuring compliance with these regulations. Failure to do so could lead to penalties for both the influencer and the marketplace, particularly if the marketplace benefits financially from the promotion without taking steps to ensure transparency.

3. Liability for Infringement of Intellectual Property Rights

Influencers often create content that includes music, logos, or other intellectual property that they may not own. If a marketplace hosts or facilitates such content without ensuring proper licensing, it could be held liable for intellectual property infringement. This is especially important when the influencer’s content is promoted as part of a sponsored campaign.

For example, if a marketplace allows an influencer to post a video that uses copyrighted music without proper authorization, the platform could face legal action from the copyright holder. The degree of liability often depends on whether the marketplace was aware of the infringement and whether it took reasonable steps to prevent it.

4. Liability for Defamation or Harmful Content

Influencers may sometimes make statements that harm a person’s reputation or promote harmful behaviors. If an influencer’s sponsored content defames an individual or group, the marketplace could be held responsible if it was involved in the promotion of the content. For instance, if a marketplace provided a platform for the influencer’s content, profited from it, or played a role in distributing it widely, it could be considered complicit in the defamation.

In some jurisdictions, platforms are shielded from liability under safe harbor provisions, such as Section 230 of the Communications Decency Act in the United States. However, these protections do not always apply if the marketplace takes an active role in curating, editing, or promoting the content.

5. Liability for Privacy Violations

Another area where a marketplace could face liability is in relation to privacy violations. Influencers often have access to consumer data, particularly when they run campaigns that involve collecting personal information. If a marketplace facilitates or stores this data, it could be held liable if the information is mishandled or if consumer privacy laws are violated.

For example, in the European Union, the General Data Protection Regulation (GDPR) imposes strict rules on how personal data should be handled. If an influencer uses a marketplace platform to gather personal information from followers without complying with GDPR requirements, both the influencer and the marketplace may face penalties.

The Role of Marketplaces in Mitigating Liability

While liability is a genuine concern for marketplaces, there are several proactive steps they can take to minimize their risks. These steps not only help reduce the chance of legal complications but also foster trust with users, influencers, and consumers.

1. Developing Clear Guidelines and Policies

Marketplaces can mitigate liability by setting clear guidelines for influencers and advertisers. These guidelines should outline acceptable practices, including the requirement for accurate and non-misleading claims, the proper use of intellectual property, and transparency around sponsored content. By creating these standards and ensuring influencers are aware of them, a marketplace can reduce its risk of being associated with illegal or unethical behavior.

2. Implementing Monitoring and Vetting Processes

Proactively monitoring influencer campaigns can help marketplaces spot problematic content before it reaches the public. Platforms can implement automated tools that flag content that violates advertising standards, intellectual property rights, or privacy laws. Additionally, vetting influencers and businesses before allowing them to engage in promotional activities on the platform can prevent issues from arising in the first place.

3. Providing Education and Support for Influencers

Another important step is providing education and resources to influencers about their legal obligations, such as proper disclosure of sponsored content, copyright laws, and privacy rules. Many influencers may not be fully aware of the legal requirements that come with promoting products, so offering support can help them comply with these laws.

4. Establishing a Complaint Resolution Process

Marketplaces should also have a clear and efficient process for handling complaints or legal challenges. By establishing a formal procedure for addressing violations of advertising, privacy, or intellectual property laws, platforms can demonstrate their commitment to compliance and transparency. This proactive approach can reduce the likelihood of extended legal disputes.

Conclusion: Navigating Liability in Influencer Marketing and Sponsored Listings

When is a marketplace liable for influencer marketing or sponsored listings? The answer depends on the marketplace’s level of involvement, its policies, and its adherence to relevant laws. While the marketplace itself may not always be directly responsible for an influencer’s actions, there are numerous scenarios in which it can face liability. By understanding these risks and taking the appropriate steps to mitigate them, marketplaces can play an active role in ensuring that influencer marketing remains a transparent, legal, and ethical practice.

In the rapidly evolving landscape of digital advertising, marketplaces must stay informed about legal regulations and be proactive in developing policies that protect both businesses and consumers. With proper oversight and legal safeguards, marketplaces can navigate the complexities of influencer marketing and sponsored listings while minimizing the risks associated with potential liability.