Influencer’s Christmas cake took the biscuit, say Italian regulators

Legal experts in Italy have welcomed the government's new guidelines for the commercial activities of social media influencers and say it could be an important step towards European regulation of the industry.

It comes after the Italian Competition Authority found that top influencer Chiara Ferragni misled consumers in a charity campaign with a pandoro Christmas cake, where proceeds should have gone to a children's hospital in Turin.

The antitrust regulator found that the producer, Balocco, had only made a one-off $50,000r payment to the hospital prior to the campaign's launch.

The influencer was fined $1 million while food company Balocco was fined $420,000.‌

Ferragni released an apology video, admitting a "communication error" and donated $1 million to the hospital involved.

Matteo De Angelis, a Marketing Professor at Rome's Luiss University, said the real damage for Ferragni is still being realized, with brands such as Coca Cola withdrawing lucrative campaigns and her Instagram account shedding hundreds of thousands of followers.

"There are many estimates about the economic damage, 5 million, 6 million (euros), it is difficult to be precise. But for sure there is huge damage in terms of reputation and image."

The story continues to snowball, with prosecutors in Milan now investigating Ferragni and the Balocco president for alleged aggravated fraud.

In response to the controversy, Giorgia Meloni's government announced new laws to provide more transparency and protection for charities promoted on social media. Those who violate the regulations, face fines of up to $50,000.

‌Ferragni welcomed the changes, saying in a statement that she's "pleased that the Government wanted to quickly fill a legislative void."‌

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Lawyers say all parties involved will benefit from the new government guidelines.

‌"I think it's certainly useful and I think in the future this will reduce the possibility of being fined, both for influencers and also companies." says Francesco Anglani, partner at law firm BonelliErede

However, the world of social media advertising remains challenging and could require regulation at a European level.

"I think that in the future, the Italian competition authorities and other competition authorities in Europe will focus more on influencer marketing activities, it will become a top priority," said Anglani.

While Ferragni awaits the outcome of the fraud investigation, other charity endorsements have come under the spotlight, as the shine continues to fade on one of Italy's brightest social media stars.

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