Influencer Marketing Legal Risk: ASA Rules, Disclosure Gaps, and Essential Contract Clauses

Introduction: Why Brands and Influencers Cannot Ignore the ASA

Influencer marketing continues its rapid growth, but it remains subject to strict advertising rules and regulations. As a result, both influencers and brands are facing heightened scrutiny from the Advertising Standards Authority (ASA).

Here, our managing partner, Alessandra, explains the main legal and commercial issues that influencers and brands need to consider before entering into partnerships, highlights recent breaches of advertising codes, and provides an overview of the key clauses that should feature in robust influencer contracts.

ASA Disclosure Rules: Why 'Affiliate Marketing' Needs 'Clear and Prominent' Labelling

According to the ASA’s guidance, when an influencer and a brand become commercially connected – including through gifts, discounts, or financial payment – any content featuring the brand must be clearly labelled as an advertisement. This is a non-negotiable requirement under UK consumer protection law. Its purpose is simple: to allow consumers to make informed choices. Without this transparency, advertisements risk misleading them.

Case Study: Why 'Aff' is Insufficient for Affiliate Links

The ASA is constantly reviewing new methods of subtle promotion, and its rulings provide critical benchmarks for disclosure.

In a recent, high-profile ruling, the ASA found that an influencer had breached the advertising rules when she included an affiliate link on her Instagram story promoting an infant formula product sold by Sainsbury’s. Since the influencer would earn commission when the product was purchased through the link, the post qualified as an advertisement.

The critical issue was the disclosure method. While the influencer did include the term ‘Aff’ in her post, the ASA firmly held that this wording did not sufficiently identify the link as an advertisement. For most consumers, the term 'Aff' is ambiguous and does not communicate the commercial nature of the post.

To satisfy the clear and prominent disclosure requirement, influencers must use unambiguous identifiers like ‘#ad’, ‘#sponsored’, or ‘[AD]’ positioned visibly at the beginning of the post. Crucially, the disclosure must be clear upfront so consumers can see the commercial intent before they engage with the content.

ASA Report Reveals Compliance Gaps: Why Brands Face Significant Regulatory Risk

Earlier this year, the ASA published a crucial report on influencer advertisement disclosure, conducting a rigorous examination of how frequently creators adhere to transparency rules when their posts are promotional. This report serves as a definitive yardstick for measuring influencer marketing compliance in the UK.

The Staggering Scale of Disclosure Failure

The scale of the audit was extensive: the ASA analysed over 50,000 pieces of content across major social media platforms. The findings reveal pervasive compliance gaps within the influencer marketing ecosystem, confirming that disclosure failure is a systemic problem, not an isolated incident.

The data breaks down the compliance landscape for influencer advertisements as follows:

This means that for every ten pieces of paid content a brand commissions, up to four posts are non-compliant, directly increasing the risk of ASA enforcement action.

The High Stakes of Disclosure Failure for Corporate Responsibility

The report unequivocally underscores the dual responsibility held by both creators and the companies they partner with. It is not enough for brands to simply request a disclosure; they must have robust contractual systems in place to monitor and enforce compliance.

Failure to disclose a commercial relationship leaves both parties vulnerable to serious consequences:

• Direct Regulatory Action: The ASA will pursue action against both the influencer and the brand. This can lead to public shaming on the ASA website, mandatory removal of non-compliant content, and referrals to statutory bodies like Trading Standards for further investigation.

• Reputational Harm: When a brand is publicly censured for deceptive advertising practices, the damage to consumer trust is immediate and long-lasting. This exposure creates a significant marketing risk mitigation challenge.

• Wasted Spend: Content that is taken down or ruled non-compliant represents a complete loss of marketing investment and time.

LegalLens helps close these compliance gaps by providing the necessary contractual oversight and regulatory standards required to protect your brand from the significant risks detailed in the official ASA report.

Beyond DMs: The Legal Necessity of Robust Influencer Contracts

As the influencer market scales, relying on informal email agreements is a recipe for disaster. It is critically important for both brands and influencers to execute a robust, legally sound contract. This document does more than just outline tasks – it provides legal certainty, defines commercial liabilities, and protects against significant financial and reputational risk.

The High Cost of Ambiguity: The Made by Mitchell Saga

The widely publicised Made by Mitchell (MBM) saga in 2023 serves as a chilling case study in the dangers of inadequate contractual protection. Malachi – an aspiring make-up artist – won a contest and was promised a collaboration with MBM.

The fundamental issue was the absence of an adequate contract. This legal vacuum led to:

• Breakdown in Communication – Undefined roles and expectations.

• Unmet Expectations – Disagreement over deliverables and timeframes.

• Legal Uncertainty – No clear mechanism for dispute resolution or termination.

• Reputational Backlash – The public dispute attracted unwanted, negative attention online, damaging the brand's integrity.

The fallout between Malachi and MBM emphasises a core legal principle: a comprehensive contract is the essential tool for proactive brand risk mitigation in the creator economy.

5 Critical Legal Clauses for Every Influencer Agreement

To avoid common pitfalls and ensure legal compliance, every influencer agreement must clearly define the following core clauses. These terms protect the brand's investment and legal standing:

Contract Clause

Legal Purpose and SEO Focus

1. Scope of Work & Deliverables

Purpose: Defines the exact legal obligation of the influencer. Avoids disputes over non-performance or unexpected extra demands.

Detail: Number of posts, platforms, minimum duration of content life, mandatory hashtags (e.g., #ad), and specific deadlines.

2. Intellectual Property (IP) Rights & Licensing

Purpose: Clarifies who owns the content and how the brand can reuse it, avoiding costly copyright infringement claims.

Detail: The influencer usually retains copyright, but the brand must secure a clear, specified licence (e.g., perpetual, worldwide, for paid media use).

3. Exclusivity & Conflict of Interest

Purpose: Protects the brand’s competitive market position by preventing the influencer from promoting a direct competitor.

Detail: Defines the precise period (time and duration) and the specified list of competitor brands or categories the influencer cannot work with.

4. Fee Arrangements & Indemnity

Purpose: Ensures transparency in payment and addresses financial risk arising from non-compliance.

Detail: Specific payment structure (flat fee, commission, product value), payment schedule, and an indemnity clause requiring the influencer to cover the brand's costs (e.g., legal fees) if their content causes a breach of law (like disclosure failure).

5. Termination & Morality Clauses

Purpose: Grants the brand the necessary legal right to end the relationship early under defined conditions, protecting brand reputation.

Detail: Grounds for immediate termination (e.g., breach of contract, failure to post, or a morality clause allowing termination if the influencer’s public conduct harms the brand’s image).

Partner with LegalLens: Influencer Contract Law Specialists

LegalLens is your trusted partner in navigating the complex regulatory and contractual landscape of the creator economy. We specialise in drafting simple, transparent, and robust influencer agreement templates that are fully compliant with ASA and UK consumer protection laws.

Whether you are a brand looking to standardise your contract templates to eliminate compliance gaps or an influencer needing a legal review for your next big deal, we ensure you are protected and profitable. We make influencer legal risk management simple – talk to us today.

Frequently Asked Questions (FAQs)

What is the ASA’s main rule for influencer advertising disclosure?

The ASA's primary rule, under the CAP Code and consumer protection law, is that all content resulting from a commercial relationship between an influencer and a brand must be clearly and prominently labelled as an advertisement. This means the disclosure must be unambiguous and visible before the consumer engages with the content (e.g., before clicking a link or swiping up).

Does using ‘Aff’ or ‘Affiliate Link’ meet ASA disclosure requirements?

No. Recent ASA rulings have determined that abbreviations like 'Aff' are not sufficiently clear or prominent to meet the required standard. For paid content, the ASA requires unambiguous identifiers such as ‘#ad’, ‘#sponsored’, or ‘[AD]’ to ensure immediate and obvious disclosure of the commercial relationship.

Who is legally responsible if an influencer fails to disclose a paid partnership?

Both the brand and the influencer share legal responsibility. The ASA can take action against both parties. Brands have a responsibility to have systems and contracts in place to ensure and monitor that their content complies with advertising rules. Failure to do so exposes the brand to reputational harm and regulatory action.

Why is an influencer contract legally necessary for a brand?

A contract is necessary to protect the brand’s financial investment and legal standing. It provides legal certainty by defining deliverables, usage rights (IP), payment terms, and most critically, including a morality clause and termination rights. These clauses allow a brand to mitigate reputational damage and legal risk if the influencer breaches the agreement or acts inappropriately.

What is the most critical clause in an influencer contract for brands reusing content?

The most critical clause is the Intellectual Property (IP) Rights and Licensing section. Unless explicitly defined in the contract, the influencer retains copyright ownership. Brands must ensure they secure a broad, clearly defined licence (e.g., a perpetual, worldwide license) that permits them to reuse the content in their own marketing, advertising, and websites without risking copyright infringement claims.

What is a ‘Morality Clause’ and why must it be in an influencer agreement?

A Morality Clause grants the brand the explicit legal right to terminate the contract immediately if the influencer engages in conduct that harms the brand's reputation, such as criminal behaviour, offensive language, or content that contradicts the brand's values. This is essential for brand risk mitigation.