Users of Instagram, the viral photo and video-sharing app, would be well aware of the range of celebrity endorsements that appear. Many Instagram users scroll through images of celebrities posing with some product that they “just can’t get enough of” – think diet tea products, makeup, sportswear and vitamins.

But when does the maker of the product transform these images from a personal post to an advertising ploy? It is certainly difficult for an average consumer to know whether the endorsement is something that the brand paid for, or if the celebrity happens to like the product genuinely.

Celebrity endorsements can be extremely effective marketing, influencing the consumer’s decision to purchase the same protein powder or waist trainer. If it’s good enough for Kim Kardashian, it must be good enough for us too!

So how then are advertisers able to use these kinds of celebrity endorsements and remain compliant with online advertising laws? Below, we unpack celebrity endorsements in the age of Instagram and other social media platforms to better understand what businesses can and can’t do with celebrity endorsements.

Australian Law Concerning Instagram Endorsements

The Competition and Consumer Act 2010 contains the Australian Consumer Law and sets out strict requirements for online advertising, so as to ensure that advertisements are not misleading or deceptive.

Section 18 and 19 of the Act prohibit misleading or deceptive conduct and apply to all forms of advertising including testimonials from ordinary users as well as celebrities. Celebrity endorsements often come dangerously close to misleading and deceiving consumers by not disclosing whether or not the business paid for the endorsement of their product or service. The business would likely be in breach of the ACL if it would be misleading or deceptive not to disclose that the image was a paid endorsement. Further muddying the waters is whether it is the business’ or the celebrity’s responsibility to disclose that the endorsement was paid.

There have been many examples of when a business has been in breach of the ACL by using false testimonials of customers. However, many of the cases the courts heard predated social media and Instagram. For example, the judgment in the case of ACCC v Advanced Medical Institute Pty Ltd (no 3) was in 2006 and involved famous Australian game show host, Ian Turpie. AMI printed newspaper ads that depicted Turpie claiming that ‘impotence nearly ruined his life’ until he tried AMI’s nasal spray. It was later revealed that AMI never treated Turpie and he had never made the statement. Rather, AMI had just paid him to make the endorsement and appear in their ads. The Court held that the testimonial was misleading and deceptive because it was paid for and was not genuinely true, consequently breaching the ACL.

Recent Examples

Understandably,it is increasingly difficult to ensure that ads are genuine and not misleading. Businesses want the endorsement to appear as natural as possible to create the impression that the celebrity uses the product in their everyday lives, right between their posts about going shopping or getting their hair done.

In December 2014, Australia Post ran into dangerous territory when they were exposed for paying social media celebrities to promote Australia Post products, without disclosing that they had paid for the endorsements. There were images of celebrities turning up to the Post Office using their new MyPost system and raving about its business efficiency. Nowhere in the post (pun intended), was it revealed that this was a staged endorsement. The Australian Competition and Consumer Commission (ACCC) is the body that regulates business compliance with the ACL. It guidelines clearly state that online reviews, testimonials or endorsements should disclose any commercial relationship that the individual has with the business to promote transparency.

Similarly, in 2012, the South Australian Tourism Commission (SATC) paid celebrities to tweet about Kangaroo Island. Like the Australia Post endorsements, these tweets did not come with any disclosure that the celebrities received payment. The ACCC looked into these comments and decided that because they weren’t exactly ‘untrue’, the SATC had not engaged in misleading or deceptive conduct by asking celebrities to tweet about Kangaroo Island. However, they did note that it is important that all online reviews, endorsements, etc. are truthful and clearly disclose any affiliations with a brand or business to ensure they are not walking a fine line between compliance or breaching the ACL.

Ensuring Compliance

It is not to say however that businesses can’t approach celebrities or influencers to promote their brands. Rather, businesses should be wary of the legal issues involved so as to ensure compliance with the ACL when advertising online or using social media. It is possible to remain compliant while still creating an effective advertisement. One example is where celebrities use the hashtags ‘#sp’, ‘#ad’ or ‘#sponsored’, to indicate something it is a sponsored post.

Key Takeaways

While it is not a legal requirement in Australia for sponsored posts to have clear markings like this, it does help to alleviate any issues with the social media post, including misleading or deceptive conduct. It is also important to make sure that any statement a celebrity makes in the post is true and indicates their accurate assessment or feelings towards the product or your business. Ensuring they have tried the product before promoting it will certainly help.

Regarding compliance, Australian law is still unclear on exactly how to deal with advertising on social media platforms, but following these guidelines will contribute to protecting your business and your reputation. Questions about your advertisements or complying with the ACL? Get in touch with our consumer lawyers on 1300 544 755.

Bianca Reynolds

Ask Bianca a Question

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.