MPs are calling for more protection for social media influencers and the children who follow them.
The Digital, Culture, Media and Sport (DCMS) Committee says the growth of online culture has rapidly outpaced current employment and advertising regulations.
Their report details how some child influencers are at risk of exploitation.
They also warn that influencers are not complying with advertising rules.
DCMS Committee Chairman Julian Knight said: "If you dig below the shiny surface of what you see on screen you will discover an altogether murkier world, where both the influencers and their followers are at risk of exploitation and harm online."
'Lights, camera, inaction'
The Committee found the market for child influencers is booming, with many young people earning income through sponsorships and brand partnerships.
The report says many of these accounts on TikTok, YouTube and Instagram are being run and managed by their parents - which raised concerns that the children were being exploited to make money.
Posting content about children can also affect their privacy and bring security risks - something MPs say should be addressed, along with ensuring a right to erasure.
But it is not just children as influencers that is a concern - it is also children as viewers.
The report warns that those who are developing digital literacy are in particular danger online.
Influencer content on social media is becoming an increasingly popular media genre for children, particularly on YouTube. According to Ofcom, in 2021 up to half of children said they watched vloggers or YouTube influencers.
Disinformation and harmful messages are also a problem for those online and under 18, who are more vulnerable to embedded advertising.
The DCMS Committee recommends that the Advertising Standards Authority (ASA) should strengthen disclosure standards for adverts online targeting children.
Social media influencing is becoming a popular career choice. Of the 511 British children surveyed as part of the inquiry, more than 32% said they would consider becoming an influencer.
Mr Knight continued: "The explosion in influencer activity has left the authorities playing catch-up, and exposed the impotence of advertising rules and employment protections designed for a time before social media was the all-encompassing behemoth it has become today.
"This report has held a mirror up to the problems which beset the industry, where for too long it has been a case of lights, camera, inaction.
"It is now up to the Government to reshape the rules to keep pace with the changing digital landscape and ensure proper protections for all."
The Online Safety Bill is a landmark piece of legislation which aims to keep people safe on the internet.
The Government says it will encompass everything from eradicating hate speech, protecting young people from "eating disorder" content, clamping down on scammers and fining the big tech firms if they fail to comply.
The DCMS Committee recommends the Government use the Online Safety Bill to ensure that reporting and complaints mechanisms are tailored to meet the specific nature of harms faced by influencers.
The MPs say there should also be a comprehensive study into the UK's influencer ecosystem, so the Government can more effectively regulate the industry as it grows.
Influencers often spend a long time producing financially lucrative content for other people without fair reward, say the MPs, noting that most work for themselves, and so have uneven earnings and a lack of employment protections.
Low compliance rates
Influencers are still failing to clearly label their paid for or sponsored content, according to the report.
The MPs recommend more powers are given to the ASA to enforce the law. The body is currently not allowed to impose fines on those who do not comply,
The ASA said: "We will consider carefully the recommendations in the DCMS Committee Report on Influencer Culture that relate to advertising."
The Competition and Markets Authority told the inquiry that influencer compliance rates with UK advertising regulations are still unacceptably low.
In 2020, a monitoring exercise by the ASA found that just 35% of 24,000 marketing posts on the Instagram accounts of 122 UK-based influencers were clearly labelled as adverts..