Stealth Marketing Regulations Have Started!
Miu Yokota／Premiums and Representations Officer, Representation Division, Consumer Affairs Agency
I am currently working as a fixed-term civil servant in the Representation Division of the Consumer Affairs Agency (my registration as an attorney has been temporarily paused). I am primarily engaged in law enforcement related to the Act against Unjustifiable Premiums and Misleading Representations (hereinafter, "the Act"). The Act is closely related to everyday life and protects the interests of general consumers by regulating the advertisements of products and services seen on a daily basis.
On October 1, 2023, a new regulation concerning "representations that are difficult for general consumers to identify as business operator's representations" was enacted under the Act. These representations are known as stealth marketing. Although the regulations have just been enacted and there is no record of enforcement, the Consumer Affairs Agency has announced the concept of "representations that are difficult for general consumers to identify as business operator's representations" (passed by the Commissioner of the Consumer Affairs Agency on March 28, 2023; hereinafter, "the stealth marketing operational standards"). In this article, I will give a brief explanation of the standards in my own words.
2. What are stealth marketing regulations?
Based on Article 5, Item 3 of the Act, the Consumer Affairs Agency has publicly designated "representations that are difficult for general consumers to identify as business operator's representations" as misleading representations as described below and has passed regulations targeting such misleading regulations. This is so-called the stealth marketing regulations.
Regarding transactions of products or services which business operators supply, representations which are difficult for general consumers to identify as those of business operators
Stated more simply, the regulations target the following representations:
- Representations (advertisements) by business operators.
- Said representations (advertisements) cannot be recognized as such by general consumers.
According to Article 7, Paragraph 1 of the Act, business operators (advertisers) who engaged in such representations (advertisements) are subject to punitive action (administrative punishment).
3. Why is stealth marketing bad?
I would now like to pose a question to my readers: Do you get different impressions from "representations (advertisements) by business operators" and "representations by third parties (for example, reviews by other consumers)?" The impressions received from these two types of representations differ as shown below. Consequently, if general consumers are unable to distinguish between the two types, it may interfere with their independent and rational selection of products.
Representations (advertisements) by business operators
Likely to be thought that it contains some degree of exaggeration and hyperbole in the displayed content.
⇒It is possible for general consumers to take into account the exaggeration and hyperbole of the displayed content when selecting products.
Representations by third parties
(example: consumer reviews)
Likely to be thought that it is the honest impression (representations) of third parties.
⇒General consumers can assume that the representations do not contain exaggeration or hyperbole and accept the displayed content as is when selecting products.
The following is a summary of this chart.
Even though the content of representations made in advertisements contains exaggeration, etc., if a general consumer misunderstands said representations as genuine consumer reviews, the consumer will fail to realize the presence of exaggeration, etc., when selecting a product based on the content of representations. This may hinder the ability of general consumers to make independent and rational choices.
This explanation illustrates the harm posed by stealth marketing, as well as the need for regulations.
4. Details of specific operational standards
(1) Representations made on a transaction involving products or services which are supplied by a business operator
=Concept of representations (advertisements) made by business operators
Under the stealth marketing operational standards, representations made by a business operator are considered to be those of which it can be understood that the business operator was involved in determining the contents; in other words, based on objective circumstances, when the representations cannot be considered as those based on the subjective opinions of a third party.
There are various specific examples of representation cases by business operators. For details, please refer to the stealth marketing operational standards. Here, I will introduce the following examples, which I find to be of interest. (Please note that all of the following is solely my impression, and does not represent the opinion of the Consumer Affairs Agency.)
I am introducing the following specific examples to illustrate a business operator's representation even if a third party is not explicitly requested to represent specific content.
・Based on objective circumstances, it is not possible to recognize that the representations were not born from the subjective opinions of the third party, in such cases when a business operator requests a third party to represent a product or service through social media while providing the product or service free of charge and the third party makes representations in accordance with the policy or content of the business operator which provided the product or service.
(Stealth marketing operational standards 2-1(2)-b(a))
On the other hand, the following is a specific example of content which is not considered to be representations of a business operator.
・When a business provides its own product or service to a third party free of charge and requests representation through social media, etc., but the third party represents the content based on its subjective opinions.
(Stealth marketing operational standards 2-2(1)-b)
In these two examples, a business operator provides a product, etc., for free to a third party, and then requests that the product, etc., be represented on social media, etc. However, in both cases, the business operator does not clearly request the representation of specific content. The main point of the issue is that whether or not representations were made based on the subjective opinions of the third party.
As mentioned above, whether or not representations were made based on the subjective opinions of the third party is determined based on objective circumstances. In objective circumstances where a business operator has provided a product, etc., for free to a specific individual and has requested that the product, etc., be displayed on social media, etc., an individual may want to continue to receive the product, etc. free of charge in the future, or from a sense of gratitude for receiving free provision (this may be a feeling unique to Japanese people), the individual may represent contents which consider the intentions of the business operator. Generally speaking, this coincides with the first example introduced above. However, if the individual had received a similar request in the past and has given a harsh evaluation (representation) without considering the intentions of the business operator, or if the product, etc., had been provided free of charge to an unspecified number of people rather than a specific individual (for example, in the case of samples distributed on the streets), it can be assumed that the content was based on the subjective opinions of a third party. This coincides with the second example introduced above.
(2) Representations which are difficult for general consumers to identify as those of business operators
=Concept of representations (advertisements) that general consumers cannot identify as those of business operators
The stealth marketing operational standards state that this requirement is judged by determining whether or not it is clear to general consumers that the representations are from a business operator, based on the impression and recognition that general consumers receive from the overall content of representations.
Based on the following two categories, a variety of examples can be raised for the concept of clearly determining that representations are from the business operator.
① Representations that are easy for general consumers to recognize as representations made by a business operator
② Representations that are clearly recognizable to general consumers as being made by a business operator based on conventional wisdom
If you would like further details, please refer to the stealth marketing operational standards. I will now introduce another example that I find interesting. (Please note that all of the following is also solely my impression, and does not represent the opinion of the Consumer Affairs Agency.)
・When a person whose social position or occupation is clear based on conventional wisdom (e.g., a tourism ambassador) makes representations after receiving a request for advertising from a business operator.
The above example, which is given as a specific example of ② introduced earlier, only introduces a tourism ambassador as an example of position. However, there are also other cases in which organizations such as publishers and music distribution companies promote the work through the creator himself or herself. Even in such cases, as long as the work is represented as being one's own work, then it should be possible to recognize through conventional wisdom that the representation (advertisement) is that of a business operator. Therefore, such cases should be treated the same as that of an introduced example of a tourism ambassador. However, it is natural for the creator to desire to advertise his or her work to the world, regardless of the intentions of the publisher, etc. Therefore, in the first place, it may be more appropriate to say that representations in such cases are not made on behalf of the business operator. In any case, it is unlikely that stealth marketing regulations will pose an issue when promoting one's own work.
On the other hand, consider a case in which a celebrity has a contract with a certain clothing brand to appear in an advertisement and posts a photo of himself or herself wearing that brand's clothing on his or her social media. Even if the celebrity's main fans understand that the photo is posted based on a contract with the brand, general consumers may not understand the fact. In such cases, it is likely that the examples introduced above do not apply.
In this article, I have provided an overview of the stealth marketing regulations under the Act that came into effect on October 1, 2023, and have also provided some of my general impressions.
I am sure that many company officials are trying to figure out how to deal with this issue as there is no record of enforcement. The most important thing is to represent products in a way that avoids misunderstandings from the perspective of general consumers. This may seem obvious at first glance, but from the perspective of a company whose goal is to highlight the appeal of its products and services and provide them in large numbers, it is a very difficult concept. Still, I believe that providing general consumers with products and services that they can rationally and voluntarily choose is essential for a company to survive with social significance over the long term.
Please continue to comply with the Act against Unjustifiable Premiums and Misleading Representations.
Thank you very much for reading this article.
 When a business operator distributes free samples, etc., to unspecified third parties, and the unspecified third parties represent the content of their subjective opinions, (refer to the stealth marketing operational standards 2-2(1)-h).
Miu Yokota／Premiums and Representations Officer, Representation Division, Consumer Affairs Agency
Miu Yokota was born in Okayama Prefecture in 1989.
In March 2012, she graduated from the Department of Law in the Faculty of Law, Chuo University.
In March 2014, she graduated from the Chuo Law School.
In September 2015, she passed the 69th bar examination.
In January 2017, she entered the Torikai Law Office.
In January 2022, she assumed her current position as Premiums and Representations Officer in the Representation Division of the Consumer Affairs Agency (registration as an attorney has been temporarily paused).