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INFLUENCER AND DIGITAL MARKETING REGULATION IN NIGERIA

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BY ADERONKE ALEX-ADEDIPE AND PROMISE ITAH

INFLUENCER AND DIGITAL MARKETING REGULATION IN NIGERIA

Introduction
As businesses continue to explore innovative ways to engage their target audience, influencer marketing and digital advertising (ads) have become increasingly popular. This marketing strategy presents significant opportunities for businesses and influencers alike. It is however essential for all parties involved to understand the legal implication of their activities to avoid potential legal pitfalls.

In this newsletter we highlight key legal aspects of influencer marketing and digital advertising which businesses, influencers, and digital marketers need to consider.

What is Influencer Marketing?

This occurs when businesses collaborate with individuals (influencers) who have a substantial following or influence on social media platforms, blogs, or other digital channels to promote products, services, or brands to their audience, leveraging their credibility and trust.

What is Digital Advertising?

This involves using online platforms, websites, and digital channels to promote products, services, or brands. This includes various strategies such as display ads, search engine marketing (e.g., Google ads), social media ads, email marketing, and video ads, all targeted toward specific demographics or user behavior.

What You Need to Know

1.Advertising and Marketing Content
As the primary regulatory body for advertising in Nigeria, the Advertising Regulatory Council of Nigeria (ARCON) sets the rules governing advertising activities, including those in the digital space, such as influencer marketing campaigns and online ads. The Advertising Regulatory Council of Nigeria Act (ARCON Act), the Code of Advertising Practice, and the Vetting Guidelines establish specific principles and requirements for advertising and marketing content and materials. Some key considerations  include:

  • Advertising and Marketing Principles: Marketing and advertising materials must be truthful, decent, and non-deceptive, ensuring they are appropriate for minors if the target audience includes them. Content should never exploit sexual behavior, promote superstition, or discriminate based on sex. It should also avoid misleading or exaggerating claims. Influencers who endorse brands and products must ensure that endorsements  they give are accurate and transparent, providing genuine recommendations. It is essential that brands and influencers constantly review their materials to ensure they comply.
  • Vetting of Advertisements and Marketing Materials: All marketing and advertising materials, including flyers and jingles intended for digital platforms, must undergo vetting by ARCON before publication. The only exceptions are vacancies, notices, financial statements, goodwill messages, obituaries, and immemorial ads. The Vetting Guidelines issued by ARCON provide the procedure to follow to obtain vetting approval for advertising and marketing materials before exposure to the public.
  • Failure to obtain vetting approval prior to exposure of the advertising or marketing materials attracts a fine of up to N1,000,000.00 (One Million Naira) per infraction from ARCON. The ARCON Act also makes failure to obtain vetting approval prior to exposure a crime punishable by both fine and imprisonment upon conviction.
  • Disclosure of Paid Partnerships: Influencers must clearly disclose any paid partnerships to maintain transparency and prevent misleading their audience by presenting paid promotions as organic content.

2.Consumer Protection
The Federal Competition and Consumer Protection Commission Act (FCCPCA) empowers the Federal Competition and Consumer Protection Commission (FCCPC) to maintain and protect consumer rights in Nigeria. Brands and influencers must avoid engaging in unfair or deceptive marketing practices that could harm consumers. Key things to look out for here include:

  • False Advertising & Consumer Rights: Both influencers and advertisers must avoid practices that mislead or deceive consumers. False or exaggerated claims about products or services can lead to consumer complaints and regulatory sanctions from the Federal Competition and Consumer Protection Commission (FCCPC).
  • Transparency in Pricing and Products: The FCCPC mandates clear and honest communication about product pricing and quality. Influencers must avoid making misleading claims, such as promising unrealistic results or misrepresenting product effectiveness.
  • Brands and influencers who engage in activities that violate these provisions and other consumer rights may be required to pay damages to consumers or face fines imposed by the FCCPC. Additionally, engaging in unfair and deceptive practices that infringe upon consumer rights is considered a criminal offense under the FCCPCA, which may result in fines and potential imprisonment for the brands and influencers involved.

3.Data Privacy and Protection
Personal data is sometimes often processed during the creation and publication of digital ads. Brands and influencers must therefore comply with the Nigeria Data Protection Act (NDPA) and other data protection laws and regulations when collecting, processing, and using consumer data. Key points include:

  • Data Collection and Consent: Businesses and influencers must obtain explicit consent before collecting or processing personal data of individuals, including using cookies or tracking data to target ads. Non-compliance with the NDPA may result in severe penalties.
  • Data Sharing and Security: Influencers and brands must ensure consumer data is securely stored and not shared without consent. If data is shared, there must be adequate protection provided for such data.

4.Intellectual Property
Influencers and businesses must be cautious about intellectual property laws when creating or sharing content. The Copyright Act in Nigeria governs the protection of original works, including photographs, videos, written content, and logos.

  • Use of Copyrighted Content: Influencers often share content provided by brands. Both brands and influencers must ensure that the content shared does not violate copyright laws. Proper licenses or permissions should be obtained for any third-party content used in marketing campaigns.
  • Trademarks and Branding: Brands must protect their logos, trademarks, and other intellectual property from unauthorized use through contractual arrangements. Influencers should avoid infringing on trademarks when promoting products.

5.Contractual Agreements and Legal Liabilities
Contracts between brands and influencers are essential for defining the scope of work, compensation, content requirements, timelines, and other terms. Clear written contracts help avoid misunderstandings and protect all parties involved. These contracts should include the following key provisions:

  • Terms and Conditions: Contracts should specify deliverables, payment schedules, content rights, and usage restrictions.
  • Breach of Contract: Both influencers and brands should be aware of their contractual obligations. Breaches may lead to legal disputes and claims for damages. Brands should include clauses that protect them against potential non-performance by influencers.

6.Social Media Platforms and Terms of Service
Influencers and advertisers must adhere to the terms of service of platforms like Instagram, Facebook, X (formerly Twitter), and TikTok. These platforms have specific rules regarding advertising, promotions, and sponsored content.

  • Platform Rules on Sponsored Content: Most platforms require influencers to disclose when content is sponsored or when they are paid to promote a product. Influencers must comply with these rules to avoid sanctions such as account suspension or banning.
  • Platform Liability: Brands and influencers must understand the platform’s role in digital advertising. While platforms provide the medium, they may not always enforce advertising laws. However, they can remove content that violates policies or legal standards.

Conclusion
As influencer marketing and digital advertising continue to grow in Nigeria, understanding the legal landscape is crucial for businesses, influencers, and marketers. Adhering to advertising, consumer protection, data privacy, and intellectual property laws can mitigate legal risks and ensure that marketing campaigns are conducted ethically and transparently. The foregoing is, however, not exhaustive, and we advise seeking legal counsel to effectively navigate legal aspects of influencer marketing and digital advertising.

AI ADOPTION IN NIGERIA: LEGAL CONSIDERATIONS FOR NIGERIAN BUSINESSES

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BY ADERONKE ALEX-ADEDIPE AND QASIM OGUNJIMI

AI ADOPTION IN NIGERIA LEGAL CONSIDERATIONS FOR NIGERIAN BUSINESSES

INTRODUCTION

As artificial intelligence (AI) continues to revolutionize industries worldwide, its adoption among Nigerian businesses is gaining significant momentum. In Nigeria, businesses across various sectors, including finance, healthcare, and digital services, are increasingly adopting AI technologies to improve operational efficiency, drive innovation, and gain a competitive edge in both local and global markets. While the benefits of AI adoption are vast and transformative, they also bring forth significant legal and governance challenges. The absence of comprehensive regulatory frameworks, concerns over data privacy and protection, and the need for ethical guidelines present challenges that Nigerian businesses must navigate carefully when adopting AI.
This newsletter highlights the legal considerations surrounding AI adoption; the importance of robust governance, accountability, and ethical practices for businesses in Nigeria and beyond.

Legal Considerations for AI Adoption
To effectively navigate the legal aspects of AI adoption, Nigerian businesses should consider these major factors;

1. Regulatory Compliance:

Despite the absence of specific AI regulations, various existing laws may indirectly influence AI deployment and use in Nigeria. Some of the provisions of these regulations are analysed below;

Data Protection: For example, the Nigerian Data Protection Act (NDPA) provides that a data subject shall not be subject to a decision based solely on automated processing of personal data except where there is human intervention, and the logic of the decision made is capable of being contested. The implication of this provision is that entities using AI to process personal data must ensure human oversight in their process. Additionally, the Nigeria Data Protection Commission (NDPC) has also issued a draft General Application and Implementation Directive (GAID), which requires data controllers or processors using emerging technologies, including AI, for personal data processing to consider the NDPA, public policy, and other regulatory instruments. When using emerging technologies, the GAID requires data controllers and processors pay particular attention to the various rights of data subjects and the implementation of privacy by design.

Consumer Protection: Similarly, the Federal Competition and Consumer Protection Act (FCCPA), which aims to prevent unfair trading practices and protect consumers, applies to businesses using AI in marketing or customer interactions. For instance, businesses employing AI-driven targeted marketing strategies must ensure that the algorithms do not engage in deceptive practices that mislead consumers about product features, pricing, or availability. Additionally, AI systems that automate customer service interactions must be designed to treat all customers equitably. If an AI system inadvertently discriminates against certain groups—whether through biased training data or algorithmic errors—it could lead to unfair treatment of consumers, violating the principles of the FCCPA. Thus, businesses must implement measures to identify and rectify biases within their AI systems to ensure compliance with FCCPA.

Digital Advisory: The Securities and Exchange Commission (SEC) Rules on Robo-Advisory Services (the “SEC Rules”) seeks to regulate digital advisory services- i.e the provision of investment advice using automated, algorithm-based tools which are client-facing, with little or no human adviser interaction in the advisory process. These rules mandate that Robo-Advisors (i.e a person who provides digital advisory services) implement measures to mitigate bias in their algorithms and ensure that clients are fully informed about the assumptions, limitations, and risks associated with the AI technologies used in providing advisory services.

In summary, while specific AI regulations are still forthcoming, businesses must comply with the NDPA, FCCPA and other applicable laws when developing and deploying AI technologies. Engaging legal counsel to navigate these complexities can significantly help in ensuring compliance and responsible AI adoption.

2. Contractual Framework: When integrating AI technologies into their system, businesses must establish clear contractual framework to govern their relationship with AI developers or service providers. This framework is essential for mitigating risks and protecting the interests of all parties involved. Some of the key components of the contracts include defining liability for any malfunctions or errors, and specifying ownership rights regarding data, algorithms, and any outputs generated by the AI systems. Additionally, businesses should outline performance expectations in service level agreements (SLAs), covering aspects such as accuracy, reliability, and compliance with applicable regulations.

3. Governance Framework: Implementing a comprehensive governance framework is essential for organizations adopting AI technologies, as it establishes the structures and processes needed to manage risks and ensure compliance with applicable laws and international best practices. This framework should include policies that outline the responsible use of AI, and processes to regularly evaluate the functionality and effectiveness of AI systems. Another component of this governance framework involves conducting regular risk assessments to identify vulnerabilities within AI systems and evaluate the potential impact of such vulnerabilities vis-a-vis compliance requirements.

4. Transparency and Explainability: Transparency is a fundamental principle that organizations must prioritize when adopting AI technologies, particularly as these systems increasingly influence decision-making processes. Businesses must ensure that their operations involving AI are clear and understandable to stakeholders, including consumers, regulators, and employees. For example, under the SEC Rules, Robo Advisers are required to disclose, in writing, to their clients; assumptions, limitations, and risks of the algorithms; circumstances under which the Robo Adviser may override the algorithms or temporarily halt the Robo Advisory Service; and any material adjustments to the algorithms

Conclusion
In conclusion, as Nigerian businesses increasingly embrace AI technologies, understanding the associated legal considerations is crucial for successful adoption. With focus on the legal considerations explored in this newsletter, businesses may leverage the benefits of AI while maintaining regulatory compliance, upholding ethical standards and safeguarding their reputations.