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Engaging the services of a well-known social media celebrity can do wonders for advertising your brand. It can promote your brand to a new audience; strengthen its reputation amongst loyal customers and secure trust and brand loyalty from customers who respect the social media ‘influencer’ at the centre of the post. Many businesses are using such endorsement tactics, known as influencer marketing, to achieve this goal through mediums such as Facebook, Snapchat, and in particular, Instagram. However, in paying such ‘influencers’ to promote your product and brand, you need to consider whether or not they need to be disclosing to their followers that they are getting paid for their posts. Not doing this could leave you in breach of Australian Consumer Law. This article explores influencer marketing laws in more detail. It outlines examples of troublesome cases, how Australian law deals with such posts, and tips to ensure your business remains legally compliant.

Endorsements #fail

Many businesses have engaged in influencer marketing without requiring the influencers to disclose that they are being paid for such promotions.

Influencers often post a photo and a caption stating how great they find a particular product. Their followers then have no idea that the post is an advertisement, and the influencer has been paid to provide glowing recommendations.

Recently, Australia Post and Warner Bros. have come under the limelight for employing such tactics.

Australia Post

In January 2015, consumers caught out Australia Post for using Instagram influencers to promote their brand, without disclosing that the endorsements were paid.

Such influencers included Ashy Bines, Camilla Akerberg and Jeska Lee, who all posted photos of themselves at an Australia Post branch utilising their services and raving about it in the captions.

They were also caught deleting comments from followers who were critical about the lack of disclosure that the post was clearly a paid endorsement. Evidently, this lack of disclosure put Australia Post in a bad light with the audience it was trying to engage.

Warner Bros.

Warner Bros. has also faced issues of deceptive advertising in the US. It concerned their YouTube influencer campaign for the release of its video game, Middle Earth: Shadow of  Mordor.

Warner Bros. and Plaid Social Labs paid YouTube game enthusiasts to post videos promoting the game, without requiring them to state that it was a paid endorsement.

These videos amassed over 5.5 million views, and at no point was there a reference in the videos, or in the description box for the videos, that the Warner Bros. sponsored the videos.

The Federal Trade Commission (FTC) launched an investigation against Warner Bros for deceptive advertising and reached a settlement in July this year. For the next 20 years, Warner Bros. is required to:

  • Refrain from misrepresenting that an influencer is an ordinary consumer;
  • Include disclosures in YouTube videos and other media of all influencer marketing;
  • Advise each endorser in writing of their responsibility to disclose their connection to Warner Bros.;
  • Withhold payment to endorsers who fail to make such disclosures; and
  • Submit reports to the FTC of their compliance with the above.

Although an overseas matter, it provides some important considerations for retailers to be aware of in Australia.

Australian Law

Australian law also prohibits deceptive advertising through section 18 of the Australian Consumer Law (ACL).

The ACL stipulates that a person, individual or corporation must not engage in conduct which will mislead or deceive other people. It does not matter whether there was an intention to mislead the customer, rather that it did.

Therefore, the ACL can consider influencer marketing misleading under its provisions if the influencer does not disclose that they are receiving remuneration.

It can be misleading for followers if they believe the influencer is providing their honest, unbiased opinion about a product when in fact that view has been paid for by the business.

There have not yet been any specific cases around influencer marketing laws. However, case law regarding testimonials in Australia can provide some guidance on how the courts would interpret influencer marketing laws.

The case of ACCC v Advanced Medical Institute Pty Ltd highlights that the company requiring the misleading testimonial, the advertising agency that creates the campaign, and the celebrity providing the testimonial can all be held liable for misleading conduct.

The Australian Competition and Consumer Commission (ACCC) has provided some guidance on complying with the law and posting on social media. The deputy chair, Michael Schaper’s points on this topic can be summarised as:

  • It is not illegal to pay an influencer as long as third parties are aware of the endorsement;
  • You are on safe grounds as long as you disclose the commercial relationship; and
  • Not revealing the relationship is where the potential for liability arises.

Some tips to avoid any breach of the ACL are discussed below.

Avoiding Misleading Advertising

Many influencers have realised that it is best practice to disclose in some way in the post that it is a paid endorsement. The FTC, for example, suggests that endorsements on social media should come with the hashtags #paid, #spon or #sp to show followers that these posts are in fact ads and the influencers have been paid to provide that opinion.

As you can see, the best practice is full disclosure. To achieve this it is important to follow the steps below:

  • Have a clear agreement with your influencer or celebrity that requires them to provide such disclosure to receive payment;
  • Make sure that it is evident to them that they will receive payment only for their honest opinion of your product. They cannot be forced to provide a positive review if this is not the case;
  • Ensure that their post is not scripted or does not reflect their genuine views. A post should fit naturally with the reputation and style of that influencer; and
  • The disclosure should be prominent in the post (e.g. by using hashtags such as #ad, #sp, #paid or #spon).

Influencer Marketing Laws: What’s the Conclusion?

Influencer marketing laws is still a new area of advertising so it is important to be mindful of the guidance given by authorities such as the ACCC. Meeting legal requirements as a business in the world of social media advertising can be tricky. The example of Australia Post shows that a poorly thought out social media campaign, concerning its consideration of legal compliance, can significantly backfire on the brand and its reputation in the community. To make sure that your business and your brand is viewed positively, requiring full disclosure from your influencers is the best way to create a positive image for your targeted audience and achieve the desired outcome of social media advertising.

Have any further questions about influencer marketing laws? Get in touch with our expert advertising, marketing and consumer lawyers today. Call us on 1300 544 755.


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