#INFLUENCED: REGULATING ACTS OF SOCIAL MEDIA INFLUENCERS IN

MARKETING AND PROMOTION IN RELATION TO REPUBLIC

ACT 7394 OR THE CONSUMER ACT OF THE

PHILIPPINES OF 1991

A Thesis
Presented to the
College of Law
University of Batangas
Lipa City

In Partial Fulfillment of
the Requirements for the Degree of
Juris Doctor

ANN CATHERINE REYES CALINGASAN

2023
 APPROVAL SHEET
This thesis titled, #INFLUENCED: REGULATING ACTS OF SOCIAL MEDIA
INFLUENCERS IN MARKETING AND PROMOTION IN RELATION TO REPUBLIC
ACT 7394 OR THE CONSUMER ACT OF THE PHILIPPINES OF 1991 prepared
and submitted by Ann Catherine R. Calingasan in partial fulfillment of the
requirements for the degree Juris Doctor has been examined and is hereby
recommended for acceptance and approval.

Atty. Edna C. Del Rosario Atty. Maria Concepcion Hernandez-Beloso, J.D.

Thesis Professor Thesis Adviser

PANEL OF EXAMINERS
Approved by the Committee on Oral Examination with a grade of ________

Atty. Hernando S. Perez, Jr.

Chairman

Judge Elmer Alea Atty. Rachelle Alma Panganiban

Member Member

Accepted and approved in partial fulfillment of the requirements for the

degree Juris Doctor.

Atty. Hernando S. Perez, Jr.

Dean, College of Law

Date: _________
 ABSTRACT

Title: #Influenced: Regulating acts of Social Media Influencers in Marketing and

Promotion in relation to Republic Act 7394 or The Consumer Act of the Philippines of
1991
Author: Ann Catherine R. Calingasan
Degree: Doctor of Jurisprudence
Year: 2022-2023
Adviser: Atty. Maria Concepcion Hernandez-Beloso, J.D.

Summary
Before the rise of social media, marketers began to adopt online advertising

beginning with placing online ad banners on a specific website, then came social

media platforms with a wider audience reach. Advertisements were placed on

different social media platforms until traditional television or print advertisements

have been overpowered by advertisements made by social media influencers who

created a brand of their own establishing media reach and interactive engagement

with their audience making them a better choice for promoting products and

services.

The rise of influencer marketing placed trade commissions and advertising

boards of different states to be on guard to continuously promote and safeguard the

interests of the consumers not to be misled by fraudulent or false advertisements

caused by non-disclosure of paid promotions and advertisements or lack of

declaration of risks of the product or service. Hence, regulatory measures and

guidelines for social media influencers dealing with paid promotions and

advertisements are needed.

This study sought to determine the necessity of adopting regulatory measures

for influencer marketing and promotions in compliance with domestic and

international laws for the protection of consumers or followers. Hence, answering the

following questions:

1. How is influencer marketing and promotion currently defined and regulated

under:

a. Domestic Laws (1987 Philippine Constitution, Consumer Act of the

Philippines, and RMC 97-2021)

b. International Laws (United Nations Guidelines for Consumer

Protection, Guideline on Commercial Advertisement and Unfair

Commercial Practices Made by Social Media Influencers; Truth in

Advertising; FTC’s Guides Concerning Use of Endorsements and

Testimonials in Advertising; Korean Advertising Act; and United

Kingdom Advertising Codes of Practice)

2. How do influencers commit misleading or fraudulent practices in online

marketing and promotions?

3. How may consumers or followers be affected negatively by the misleading

and fraudulent practices of influencers?

 4. How may regulatory measures be adopted to safeguard the interests of

consumers and followers against misleading or fraudulent practices in online

marketing and promotions?

A descriptive research design was used by the researcher to obtain

information on the feasibility of adopting measures to regulate influencer

marketing and promotions in compliance with truth in advertising by

examining primary and secondary sources.

The data was gathered through the collection of relevant laws, news

articles, and studies harmonized and examined to understand and support

the need for the adoption of measures to regulate influencer marketing and

promotion in compliance with truth in advertising and disclosure of paid

promotions. No survey questionnaires were distributed in the conduct of the

study.

Summary of Findings

1. The following are the laws that define and regulate influencer marketing

and advertisements:

a. The 1987 Philippine Constitution provides a safeguard for consumers

from trade malpractices and regulates the advertising industry

protecting them from fraudulent and misleading advertising;

b. Republic Act 7394 or the Consumer Act of the Philippines and its

Implementing Rules and Regulations (IRR) protecting the interest of the

 consumer, promoting the general welfare, and establishing standards of

conduct for business and industry;

c. Revenue Memorandum Circular No. 97-2021 regulating and clarifying

the tax obligations of all social media influencers for income derived

from creating online content and posts;

d. United Nations Guidelines for Consumer Protection (UNGCP)

establishing a benchmark for good business practices for online and

offline activities with consumers;

e. Federal Trade Commission Act, Korean Fair Trade Commission, and

the United Kingdom Advertising Standards Authority creating guidelines

and endorsement guides for disclosure of paid promotion and

advertisements by social media influencers through influencer

marketing.

2. Misleading and deceptive online practices or promotions may be done

through false advertisements which are misleading in material respect

taking into account not only representations made or suggested by

statement, word, design, device, sound, or any combination thereof, but

also the extent to which the advertisement fails to reveal facts material.

3. Non-disclosure of paid promotions and advertisements by the influencers

can hurt consumers due to misleading and fraudulent practices by

creating a perception for the consumers that these influencers attest to

 the products because they use them and not because they have been

paid or sent a product to advertise.

4. Regulatory measures to prevent and safeguard the interest of the

consumers against misleading and fraudulent advertising practices may

be done through a legislative act adopting regulatory measures to provide

definitions and regulations for influencer marketing in the Philippines as

well as regulating social media influencers’ disclosure on paid

advertisements or promotions relevant to consumer protection in the

modern age.

Conclusion

1. There is no universal definition and standard regulation for influencer

marketing both in international and domestic laws.

2. There is insufficiency in the Consumer Act of the Philippines and its IRR

for influencer marketing regulating social media influencers.

3. Existing domestic laws are not enough safeguards to shield consumers

from the negative impact of misleading and fraudulent practices of

influencers.

4. The adoption of regulatory measures for social media influencers and

influencer marketing is the best way to safeguard the interests of

consumers.

Recommendations
 A standard definition of influencer marketing and regulations on the acts of

social media influencers should be adopted based on the existing studies and

literature with the Philippines adopting a framework and enacting regulations on the

disclosures of paid or sponsored advertisements of social media influencers.

 ACKNOWLEDGMENT

This paper was made in the most difficult time of my life; with the pandemic,

an almost redirection, the election, and losing a loved one.

To our Almighty Father, for never letting go and not ceasing to give me hope.

To the Holy Family, my dearest angels and saints, who prayed and

interceded for me countless times.

To Inay, losing you was difficult, but you have given me strength to push

through.

To my family, relatives, and friends, you have been great pillars during this

time and always the calm for every storm.

To my thesis adviser, Atty. Maria Concepcion Hernandez-Beloso, without

whom this paper would not have seen the light of day. Thank you for being so

patient, understanding, and kind.

To Atty. Edna, Dean Randy, and President Nani, you took care of us dearly in

our law school journey.

To my panelists and law professors, for sharing your knowledge and

expertise to help me grow and get where I am today.

 TABLE OF CONTENTS

I. CHAPTER I THE PROBLEM AND ITS BACKGROUND 1

A. Introduction 1

B. Statement Of the Problem 4

C. Conceptual Framework 5

D. Assumptions of the Study 8

E. Significance of the Study 9

F. Scope and Delimitations 9

G. Definition of Terms 10

II. CHAPTER II REVIEW OF RELATED LITERATURE AND STUDIES 13

A. Related Literature
13
1. Rise of Social Media as a Marketing Platform

2. The Emergence of Social Media Influencers 17

B. Related Studies
22
1. Influence on Consumer’s Decision Making

2. Disclosures for Advertisements 24

3. Disclosures for Advertisements Statistical Analysis of

28
Consumer Behavior Influenced by Social Media Influencers

C. Synthesis 32
III. CHAPTER III RESEARCH METHODOLOGY 34

A. Methods of Research 34

B. Data and Reference Sources 35

C. Collection Techniques 35

D. Analytical Treatment of Data 35

IV. CHAPTER 4
PRESENTATION, ANALYSIS, AND INTERPRETATION OF 37
DATA

1. Defining and Regulating Influencer Marketing 37

A. Domestic Laws 37

B. International Law 41

C. Foreign Laws 43

2. Misleading or Fraudulent Practices in Online Marketing and

45
Promotions

3. Negative Impact on Consumers or Followers caused by

64
Misleading and Fraudulent Practices

4. Adoption of Regulatory Measures to Safeguard the Interests of

Consumers and Followers Against Misleading or Fraudulent

73
Practices in Online Marketing and Promotions
V. CHAPTER 5
SUMMARY OF FINDINGS, CONCLUSIONS, AND 86
RECOMMENDATIONS

A. Summary of Findings 86

B. Conclusions 88

C. Recommendations 90

VI. BIBLIOGRAPHY

VII. APPENDIX

VIII. CURRICULUM VITAE

 CHAPTER I
THE PROBLEM AND ITS BACKGROUND

A. Introduction

The world of advertising and marketing products has come a long way, from a

simple word-of-mouth tactic to digital advertising. Companies back then relied heavily

only on word-of-mouth tactics, known to be the most effective way of marketing their

product which remains true until now. It requires companies to produce great products

to make sure that consumers will be able to spread how amazing and effective their

product is.

Then came print media. Consumers can see different brochures, leaflets,

posters, billboards, and newspaper advertisements for the product mostly coupled with

the country's famous artists endorsing the product. Later, radio and television

commercials started airing, people see the product come to life as their favorite artist

use it in a 15 or 30-second commercial clip.

Companies started seeing how consumers rely on trust from their favorite artist

who endorses the product without really knowing whether they use it or not. Until today,

consumers relied on celebrities' choice of products for their personal and family use. But

celebrities are now divided into celebrities as traditionally known and celebrities on

YouTube and other social media platforms are also known as social media influencers.
 Companies that used online advertisements and bloggers are starting to write

product reviews, whether of their own volition or partnering with the company to write a

review about the product. In 2005, YouTube started booming; people were free to

create their channels and upload their video content. It did not, however, always begin

to create lifestyle content advertising a product. A simple content creator who wanted to

upload videos about daily activities created an impact. Blogs came to life and became

vlogs or video logs. People started supporting them and they created an impact on

society in general, making them social media influencers.

Some known artists in the entertainment industry also jumped in as social media

influencers making their YouTube channels boom faster than ordinary social media

influencers who made an extra effort in making their channels known when they were

just starting. These social media influencers are heavily supported by many because

people relate to them on a personal level, or they create entertaining videos or tutorial

videos.

At first, influencers would mention products that they use as part of their video

trying to introduce their authentic self or as part of their tutorial videos, especially

makeup tutorial content. Advertisements of a product would pop up at the beginning,

middle, or end of the video. But companies started seeing an opportunity to collaborate

with these influencers because their viewers trust their choice of product seeing how

authentic they are and believing that they truly use them.
 Because of the trust that viewers give to influencers as they become product

consumers, companies started collaborating by sending products and later making their

content as a paid advertisement. Now, influencers not only earn from creating and

uploading content upon being viewed by many, but they also earn from paid

advertisements. Different countries, including the United States of America (USA) and

the United Kingdom, made clear and strict regulations on Truth in Advertising as

regulated by the Federal Trade Commission (FTC) and Advertising Standards Authority

(ASA), respectively. In South Korea, they made specific regulations on social media

influencers' advertising or endorsing a product.

The regulations particularly focus on truth in advertising and disclosing paid

products because this will let viewers know that they are getting incentives for

promoting the product, hence, they would be more vigilant about whether to believe in

the influencer's claim or not. Further strengthening existing laws on advertising requires

advertisers to make statements about a product only proven to be true, tested, and not

to make any statement that may be false or misleading.

In the Philippines, truth in advertising is embodied in Republic Act 7394 or the

Consumer Act of the Philippines of 1991 (Consumer Act) as a legal basis for consumer

protection. It regulates advertising and sales promotion of products, especially food or

consumable products which may be dangerous to the consumer. Article 110 of the

Consumer Act in particular makes false, deceptive, or misleading advertisements

unlawful including their dissemination and the failure to reveal material facts.
 But the easy access granted by social media also offers easy access to different

videos uploaded by a friend of a friend or even those unknown to an individual because

it is shown publicly. Even when they do not particularly want to be or did not expect to

be famous on the internet, they become influencers through content creation. For some

who suddenly went viral, they would opt to continue creating content, while for others, it

becomes a one-time big time.

In the rise of social media influencers in the Philippines, the Bureau of Internal

Revenue (BIR) issued Revenue Memorandum Circular No. 97-2021 (RMC 97-2021) on

taxing any income received by social media influencers whether it be from YouTube,

sponsored blogs, becoming brand representatives, promoting own products, or online

courses and sales. However, both the Consumer Act and RMC 97-2021 fall short in

regulating the conduct of social media influencers to make sure that they adhere to truth

in advertising and in disclosing paid promotions and advertisements protecting the

viewers and consumers from misleading and fraudulent information about the product.

B. Statement of the Problem

This study aims to determine the necessity of adopting regulatory measures for

influencer marketing and promotions in compliance with domestic and international laws

for the protection of consumers or followers. Hence, the study aims to answer the

following questions:

1. How is influencer marketing and promotion currently defined and regulated

under:
 a. Domestic Laws (1987 Philippine Constitution, Consumer Act of the

Philippines, and RMC 97-2021)

b. International Laws (United Nations Guidelines for Consumer Protection,

Guideline on Commercial Advertisement and Unfair Commercial Practices

Made by Social Media Influencers; Truth in Advertising; FTC’s Guides

Concerning Use of Endorsements and Testimonials in Advertising; Korean

Advertising Act; and United Kingdom Advertising Codes of Practice)

2. How do influencers commit misleading or fraudulent practices in online

marketing and promotions?

3. How may consumers or followers be affected negatively by the misleading and

fraudulent practices of influencers?

4. How may regulatory measures be adopted to safeguard the interests of

consumers and followers against misleading or fraudulent practices in online

marketing and promotions?

C. Conceptual Framework

This study intends to protect viewers turned consumers of products as advertised

by social media influencers through influencer marketing making sure that social media

influencers are complying with truth in advertising and be mandated to disclose paid

products and promotions. This study aims to create a safeguard for consumers from

being misled and defrauded by false advertisements and claims by influencers as

revealed in their social media platforms as part of their content. Analysis of adopting

measures to regulate influencer marketing and promotions in compliance with truth in

advertising shall be discussed.

Input
 1987 Philippine Constitution, Consumer Act of
the Philippines, and RMC 97-2021
 United Nations Guidelines for Consumer
Protection, Guideline on Commercial
Advertisement and Unfair Commercial Practices
Made by Social Media Influencers; Truth in
Advertising; FTC’s Guides Concerning Use of
Endorsements and Testimonials in Advertising;
Korean Advertising Act; and United Kingdom
Advertising Codes of Practice
 Applicable local and foreign jurisprudence

Process
 Empirical Research
 Analysis of Advertising Laws as well as
Guidelines and Regulations on Endorsing
and Advertising by Social Media Influencers
 Consequences of Fraudulent, Misleading,
and False Advertisement in Influencer
Marketing and Promotions
 Output
 Adopting measures to regulate influencer
marketing and promotions in compliance
with Truth in Advertising and disclosing paid
promotions and advertisements for social
media influencers

The research problems are to be answered through the application of domestic

laws on the protection of consumers as well as the revenue regulation for social media

influencers together with international laws on the guidelines for social media marketing

and regulating influencers’ endorsements by disclosing paid advertisements. Empirical

research regarding the existing trends and current conditions in the Philippines will help

create the legal framework for the adoption of regulatory measures on influencer

marketing and promotions.

D. Assumptions of the Study

The researcher made the following assumptions for this study:

 1. The number of influencers in the Philippines has significantly increased

in number, thereby achieving a critical mass ripe for the imposition of regulatory

measures;

2. Jurisdiction over the person (influencer) may be exercised by Philippine

authorities;

3. Misleading or fraudulent advertising practices may be regulated and

penalized through a legislative act;

4. Marketing is imbued with the public interest, hence consumers are

protected by domestic and international laws;

5. Consumer rights are protected for both online and offline commercial

activities;

E. Significance of the Study

This study aims to safeguard the public from fraudulent, false, and misleading

advertisements or endorsements by social media influencers. Specifically, the results of

the study will benefit the following:

1. The viewers turned into consumers who rely heavily on social media

influencers’ reviews of a certain product or service.

 2. The legislative department, as a basis and possible material in the creation of

Truth in Advertising for Social Media Influencers.

3. The government agencies on advertising; including ADBOARD Advertising

Content and Regulations Committee, Department of Trade and Industry, and

Philippine Food and Drug Administration as a basis for the creation of guidelines

to regulate advertisements and endorsements by influencers.

4. Future researchers and law students, as a form of reference for future studies

involving influencer marketing and truth in advertising.

F. Scope and Delimitation of the Study

This study covers the adoption of regulatory measures for influencer marketing

and promotions in compliance with truth in advertising and disclosure of paid products

and promotions.

The discussion covers domestic laws protecting consumers under the 1987

Philippine Constitution and the Consumer Act of the Philippines; as well as Revenue

Memorandum Circular 97-2021 regulating the imposition of tax against social media

influencers earning through different social media platforms. It will also cover

international laws such as the United Nations Guidelines for Consumer Protection and

guidelines set forth by the USA, UK, and South Korea for truth in advertising as well as

disclosure of paid advertisements to social media influencers.

 This study shall be limited to the root of adopting measures on influencer

marketing and promotion in the Philippines because of the consequences it may bring

to the consumers if influencers are not complying with truth in advertising and

disclosure. This study shall not include regulations on the online raffle, prize-giving, and

online contests as another regulation address them, particularly DTI-DAO 10-02 Series

of 2010 Addenda on Chapter IV Sales Promotion, DTI-DAO 01-A Series of 2000

Schedule of fees for Sales Promotion, DRI-DAO 2 Series of 1993 or IRR on Sales

Promotion of the Consumer Act of the Philippines, and DTI Sales Promotion Permit

Process.

G. Definition of Terms

Advertisement. Promotions through any form of a mass medium, subsequently

applied, disseminated, or circulated as an advertising matter for a product or service.

Advertiser. Company or enterprise providing products to an influencer for

promotional campaigns or programs or the sponsor of the advertisement on whose

account the advertisement is prepared, conceptualized, or disseminated.

Content Creator. Any individual who engages in creating content for an

audience to consume.

Disclosure of Paid Product or Promotion. The act of declaring and specifying

that the content is a paid promotion or that the product advertised has been paid for or

sent by the advertiser.

 Fake Followers. Fake social media profiles that are set up with the intention of

mass following, boosting likes and views.

False Advertisement. Fraudulent, deceptive, or misleading product descriptions

and claims on a certain product including the omission of material facts.

Influencer Marketing. Social media marketing where endorsements and

promotions are made by influencers.

Kidfluencers. Children who have been posted online on different social media

platforms generating large numbers of viewers and followers, often earning money for

sponsored content.

Paid Product. Influencers are paid to review certain products for the advertising

agency and the products used come from the advertiser.

Paid Promotion. Influencers are paid to promote products of the advertiser and

products, or services are not paid by the advertiser.

Social Media Influencer. Content creator performing as blogger, vlogger, or

influencer in general on social media sites and platforms including but not limited to

YouTube, Facebook, Instagram, TikTok, Twitter, Reddit, and Snapchat.

Truth in Advertising. Being truthful and accurate about products and services

offered without omitting material facts or declaring false claims or misrepresentation.