UGC can be spontaneous, such as a customer tagging a brand in a photo, or encouraged through a branded hashtag, a challenge or a simple request after purchase. Reposting it with credit rewards the creator, shows real people using the product and gives the brand a steady supply of content it did not have to produce.
The term now has a second meaning. UGC creators are paid to make videos in the style of an ordinary customer, which brands use as ads. That content can work well, but it is advertising, not proof, and it should be labelled as such. In both cases, permission comes first: reposting someone’s photo or video without asking can breach their copyright and their trust.