Due to the development of digitalization which has led to the emergence of various new advertising opportunities on the internet, including advertising on social media, internet advertising is becoming increasingly prevalent, taking up a larger share of advertising and slowly pushing traditional channels such as television or radio advertising aside. The reason for the rapid growth of internet advertising is, among other things, that it allows for individual access to users and that ads can be targeted to specific user groups.
The trend of increasingly prevalent internet advertising is also followed by the financial industry, which uses social media to promote its products and services. Because internet advertising is experiencing tremendous growth and has increasing importance, from the perspective of consumer protection, as well as other internet users who do not fall under the category of consumers, who are increasingly exposed to this form of advertising, its legal regulation is also significant.
Regulation in Croatia
The legal regulation of internet advertising is complex because various entities engaged in internet advertising have activities and operations that are generally regulated differently. For example, the Media Act (NN 59/04, 84/11, 81/13, 114/22) and the Electronic Media Act (NN 111/21, 114/22) regulate the advertising of traditional media, which, in addition to distributing their program content via the internet, also use it for advertising.
In addition to the media, other entities whose activities are regulated also engage in internet advertising, and the legislative framework for their advertising is provided by the Electronic Commerce Act (NN 173/03, 67/08, 36/09, 130/11, 30/14, 32/19), which prescribes rules for concluding contracts in electronic form – which includes concluding contracts via the internet, as well as rules for advertising via the internet. This law prescribes obligations for entities that have regulated activities and that advertise products and services via the internet in such a way that they are required to ensure that every piece of information from the advertisement clearly and unambiguously meets the following conditions: that the advertisement can be clearly identified as such at the moment the user sees it, that the person on whose behalf the advertisement is composed can be clearly identified, that it can be clearly determined from the advertisement that it is a call to purchase a product or service, including a call to use discounts and gifts, as well as that the conditions that must be met to conclude the contract must be easily accessible and presented clearly and unambiguously.
Obligations of Influencers and Penalties
Finally, advertising on the internet, especially on social media, can also be done by individuals who do not engage in registered activities, and these are mainly influencers. The role of influencers in advertising products and services via the internet, especially on social media, is becoming increasingly significant as more and more entities, including financial institutions, incorporate influencer marketing into their marketing strategies and allocate substantial funds for advertising through this channel.
Influencers who advertise products and services are required to register their activities with the relevant authority primarily to regulate their tax status. Namely, according to the Law on the Prohibition and Prevention of Unregistered Activities (NN 61/11, 66/19), a participant in the performance of unregistered activities is considered to be an individual who publishes a voice in any way available to the public, which includes advertising via social media. According to the provisions of this law, influencers are required to collect data on the identity of the advertiser and, if necessary, provide that data to the responsible authorities. It is interesting to note that if they engage in advertising activities without regulating their status, influencers commit an offense, and in addition to monetary fines, they may also face administrative measures prohibiting them from conducting activities, closing premises, and seizing the equipment they use to conduct activities until they fulfill the registration obligation with the responsible authorities.
Advertising Financial Services
Financial advertising is the advertising of financial services as specific types of financial products and services, which are legally defined as services that have the nature of banking, credit, or insurance services, personal pension services, investments, or payments. The sale of financial services via the internet at the level of the European Union is regulated by the Directive on Distance Marketing of Financial Services for Consumers from 2002, the provisions of which have been implemented into our legislation by the Consumer Protection Act (NN 19/22, 56/23), the Consumer Credit Act (NN 75/09, 112/12, 143/13, 147/13, 09/15, 78/15, 102/15, 52/16, 128/22), and the Payment Transactions Act (NN 66/18, 114/22).
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The provisions of these laws prescribe consumer protection when concluding consumer contracts whose subject matter is financial services, specifically those concluded at a distance via the internet in such a way that there is an obligation to inform consumers before concluding a distance contract about the financial service, the service provider, the contract, legal remedies, as well as the consumer’s right to unilaterally withdraw from the contract. However, these provisions do not directly regulate the advertising of financial services via the internet, which is why the advertising of financial services on social media is subject to the provisions of the Media Act, the Electronic Media Act, the Electronic Commerce Act, and the Law on the Prohibition and Prevention of Unregistered Activities, which generally regulate the advertising of all products and services on the internet.
