Social Commerce Overhaul: From Seller Verification to Influencer Accountability
The regulatory gap created by social commerce:
Social commerce has blurred many of the distinctions on which traditional e-commerce regulation was built. A consumer may discover a product through an influencer, encounter promotional content on a social-media platform, communicate directly with a seller through the same platform, and complete the purchase without ever visiting a conventional online marketplace. The seller, the person promoting the product, the person paying for the advertisement, and the platform carrying the content may all be different parties. This structure creates a regulatory challenge because consumer protection laws have traditionally focused on businesses supplying goods or services and unlawful advertising, while digital-platform regulation has focused principally on platform operators. Social commerce sits between these regimes. Recent regulatory initiatives indicate that this gap is gradually being addressed—not through a single “social commerce” law, but through complementary regulatory work-streams involving the Electronic Transactions Development Agency (ETDA) and the Office of the Consumer Protection Board (OCPB).
ETDA: From online marketplaces to identifying sellers and advertisers
The regulatory framework for digital commerce has already moved beyond conventional marketplace websites. Under the Digital Platform Services (DPS) framework, ETDA regulates qualifying digital platform services and has progressively developed requirements and guidance concerning online marketplaces, product and seller information, advertising, notice-and-takedown mechanisms, and other aspects of platform governance. Social media is increasingly relevant to this framework because commercial activity can take place within services that were not originally designed as conventional marketplaces. ETDA has also identified social commerce as an area requiring further regulatory attention.
A particularly important development is the increasing emphasis on the identity and traceability of sellers and advertisers. ETDA’s existing advertising guidance recommends that platforms establish procedures for checking advertiser information and verifying identity, maintain relevant advertiser records, and use mechanisms such as watchlists, blacklists, and whitelists. It also addresses screening advertisements before publication and monitoring them afterward through reporting and flagging mechanisms. ETDA’s developing measures for social-media platforms build on this approach by contemplating risk-based identification and verification of users, sellers, and persons placing advertisements. The underlying regulatory objective is increasingly clear: commercial activity conducted through social media should not permit the persons behind a seller account or paid advertisement to remain effectively unidentifiable. For social-commerce businesses, advertiser and seller identification may therefore become an increasingly important part of the platform compliance infrastructure.
OCPB: Bringing influencers into the consumer-protection framework
A parallel development is occurring under consumer protection law. The OCPB has proposed a substantial amendment to the Consumer Protection Act aimed at modernizing the framework for digital commerce and contemporary advertising practices. One of its significant features is the proposed expansion of responsibility within the advertising ecosystem, including persons hired to advertise goods or services. If enacted in its proposed form, this could bring influencers, content creators, and other persons engaged to promote products more directly within the statutory consumer-protection framework. This is particularly important for influencer marketing, where the traditional distinction between an advertiser and the medium carrying an advertisement can be difficult to maintain. Influencers may create promotional content themselves, demonstrate products, repeat claims supplied by brands, integrate commercial messages into personal recommendations or entertainment, provide purchasing links, and participate in affiliate arrangements. The person communicating the advertising message can therefore play a much more active role in influencing the consumer’s decision than a conventional advertising medium.
The OCPB initiative addresses a different part of the social-commerce problem from ETDA’s platform regulation. ETDA’s developing framework focuses substantially on the platform and the identification and traceability of persons using it for commercial activity, while the OCPB proposal strengthens responsibility for the consumer-facing commercial message and the persons participating in communicating that message. The proposed Consumer Protection Act amendment remains draft legislation, so its final scope may change during the legislative process. Nevertheless, its direction is important for brands, agencies, influencers, and content creators because compliance may increasingly extend beyond the business that ultimately supplies the product.
Two regulatory layers across one transaction:
The interaction between these initiatives is perhaps the most significant feature of the emerging framework. Consider a typical social-commerce transaction: a brand engages an influencer to promote a product; promotional content appears on a social-media service; the content directs consumers to a seller operating through that platform or another online channel; and a consumer purchases the product after relying on representations contained in the promotional content. Different regulatory obligations can potentially attach at several points along that chain. The platform may increasingly be expected to identify sellers and advertisers, retain information permitting them to be traced, screen certain advertisements, monitor problematic content, and provide mechanisms for responding to complaints or unlawful activity. The seller or brand remains subject to applicable consumer-protection and product-specific requirements. At the same time, the OCPB amendment could place influencers and other persons hired to advertise more directly within the consumer-protection regime.
The emerging division can therefore be summarized as follows: ETDA is developing the infrastructure of accountability, while OCPB is extending accountability through the advertising chain. The distinction is not absolute. ETDA’s role extends beyond identity verification into advertising screening and monitoring, while OCPB already exercises broad authority over consumer-facing advertising. The regulatory regimes should therefore be understood as overlapping layers rather than completely separate jurisdictions. Together, however, they address a central weakness of social commerce: the difficulty of identifying and allocating responsibility among the multiple parties involved between the creation of an advertisement and the eventual consumer transaction.
From regulating the seller to regulating the commercial chain:
These developments point toward a broader change in the regulation of digital commerce. Traditional e-commerce could largely be conceptualized around the consumer, the online seller, and the marketplace facilitating the transaction. Social commerce introduces additional actors: platforms distribute commercial content, advertisers may be different from sellers, influencers and content creators communicate product claims, and transactions can move from public social-media content into private messaging or other channels. The emerging regulatory framework increasingly follows this entire chain. Instead of asking only who sold the product, regulators are developing mechanisms that can also address who promoted it, who paid for or arranged the advertisement, who communicated the claims, and which platform facilitated the commercial interaction.
For businesses, social-commerce compliance should therefore no longer be treated solely as an issue for the legal entity making the final sale. Brands will need to consider how influencers and advertisers are selected, instructed, and supervised; whether advertising and product claims can be substantiated; what information must be supplied to platforms; and how responsibility is allocated contractually among brands, agencies, influencers, and other participants. Influencer and advertising agreements may require greater attention to regulatory compliance, disclosure and approval procedures, substantiation of claims, record-keeping, corrective measures, content removal, and cooperation with platforms or regulators. Platforms face a different compliance trajectory, with increasing expectations around identification, verification, screening, monitoring, traceability, and intervention where commercial activity creates risks for consumers.
An emerging social-commerce framework:
There is not yet a single comprehensive regulatory instrument governing social commerce. Instead, a network of complementary rules is emerging to regulate different stages of the same commercial activity. ETDA’s DPS framework and related initiatives provide the platform-governance layer; developing seller and advertiser verification requirements strengthen identification and traceability; and the proposed Consumer Protection Act amendment would strengthen the consumer-facing advertising layer by potentially extending responsibility more directly to influencers and other participants in the advertising process. Viewed together, these developments suggest that social commerce is moving toward end-to-end accountability—from the identity behind an advertisement to the person delivering the commercial message and ultimately to the transaction with the consumer.
Key Takeaways:
The social-commerce regulatory framework is developing through several complementary initiatives rather than one dedicated law. ETDA is strengthening the platform side of the equation, particularly the identification and traceability of sellers and advertisers, while OCPB is seeking to strengthen responsibility on the consumer-facing side, including the role of influencers and other persons engaged in advertising. Businesses operating through social commerce should therefore look beyond seller compliance alone. Brands, sellers, advertising agencies, influencers, content creators, and digital platforms increasingly form parts of the same regulated commercial chain, and the compliance focus is shifting from responsibility for the final sale toward accountability throughout the process by which a consumer encounters, evaluates, and purchases a product online.
Author: Panisa Suwanmatajarn, Managing Partner.
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