Two apparently unconnected developments this week suggested the party may be coming to an end for influencers. The first was the news that the Revenue has its sights on social media content creators, who are about to learn there is no such thing as a free lunch. Or Air Fryer, weekend break or lifetime supply of porridge.
It recently issued 142 “level one” letters of reminder to influencers that they need to pay income tax on their earnings – and that’s the case whether those earnings involve old-fashioned lucre, a new pair of leggings or that entire kitchen they were #kindlygifted. A subsequent 78 “audit compliance intervention-type approach” letters went to influencers at risk of under-declaring their income.
There are good reasons why it has taken the tax authority time to get to grips with the influencer industry. It is, by definition, about as transparent as the €400 face cream some of them are shilling. Influencers are not always paid in cash; sometimes they operate in a barter system in which they trade eyeballs for freebies. Contracts are not always involved. Sometimes gifts are given with no explicit expectations of anything in return — but maybe there’s an implicit understanding. It is not always clear what constitutes an advert, versus a review, versus an affiliate link, versus something the influencer paid for, but is hoping might bag them a sponsorship — it’s not even clear if the influencer knows.
Tax adviser Alan Purcell gave the example this week of a ‘free’ hotel stay worth €800 which ends up costing a €400 tax bill
But if it is a Wild West when it comes to regulation, it is also shockingly lucrative. The global influencer economy is now worth an estimated $24 billion. And so it shouldn’t come as much surprise to learn that the Revenue is after its slice. Revenue Commissioners chairman Niall Cody told a recent debate of the Public Accounts Committee that the tax authority has begun gathering information from sponsors. “We are getting third-party information in. They [influencers] get money from somebody. We get data from the parent entity,” he said. “We pay close attention to any business line.”
Tax adviser Alan Purcell gave the example this week of a “free” hotel stay worth €800 which ends up costing a €400 tax bill. The response from some of the influencers he has spoken to is “I wouldn’t have done that if I’d known” — a defence which is unlikely to wash with the tax inspector.
The second portent that the end of the age of frenetic consumerism is in sight was the announcement from some big online retailers that they are tightening the very permissive “no quibbles” returns regime, and bringing an end to the returns wheeze.
The wheeze is straightforward: shoppers order a haul of clothes in various sizes to try on at home — and if they’re influencers they’ll inevitably shoot a #tryonhaul reel while they’re at it and encourage others to shop via the link in their bio. Some buyers even wear it for a night, tucking the tags discreetly inside, before returning it for a full refund — a practice so widespread it even has its own verb, “wardrobing”.
Fast fashion retailers have mostly turned a blind eye to this because their business model has been so profitable they can afford to. But with rising costs, it is becoming a luxury they can’t afford. EU laws that give you 14 days to change your mind on online purchases were never designed to encourage people to buy a dress in eight different sizes and colours and return seven of them.
The practice is not only killing high street shopping, it is a looming environmental catastrophe. Figures from the US reveal that about 14.5 per cent of goods bought online are returned and only about half of those – known in the business as “the uglies” can be resold; in 2023 alone, $743 billion (€690 billion) worth of merchandise was returned to US retailers. A 2023 report by the British Fashion Council found that 3 per cent of UK returns are not resold, and only 25 per cent of those are recycled. The rest are dumped or burned.
Depressingly, much of what clothing shoppers hang on to ends up in landfills anyway — more than half of fast fashion purchases are discarded in less than a year, according to the Ellen MacArthur Foundation
Sharon Cullinane, a professor at the University of Gothenburg who has studied what happens to returned goods found that many items arrive back to their point of origin only to be sent on to a low-cost European country to be repackaged. “We could be talking a freight trip of hundreds, maybe even thousands, of miles,” she says. Now some online shopping sites are clamping down, in the form of account deactivations for shoppers who order and return “loads ... way, waaay more than even the most loyal Asos customer”, as the retailer’s fair use policy puts it.
Depressingly, much of the clothing shoppers hang on to ends up in landfills anyway — more than half of fast fashion purchases are discarded in less than a year, according to the Ellen MacArthur Foundation. We throw away 12kg of clothes every year, says the European Commission. The EU has set a goal that by 2030 imported textile products must be “long-lived and recyclable, to a great extent made of recycled fibres”.
None of this is before time. Nobody should feel guilty about their occasional bout of retail therapy, and influencers are as entitled to a living as anyone else. Some, it is worth pointing out, are champions of wearing what you already own. But mostly what they’re about is influencing you to spend more on things you don’t need. That is, after all, the job title.
The frenetic pace of consumerism represented by all those #tryonhaul and #linkinbio hashtags, the exhortations to “use code BURNINGPLANET2024″, all those parcels piling up, all those return labels and delivery vans, is unsustainable — a symptom of a crass, throwaway consumerist culture that none of us can afford.