In Short
- Affiliate Marketing Explained: Referral marketing where a commission or benefit is earned from referrals.
- Legal Requirements: You must disclose commercial relationships to avoid misleading or deceptive conduct and you must comply with ACCC guidelines
- Compliance Tips: Use clear disclosures near affiliate links and in terms and conditions.
Tips for Businesses
If you use affiliate marketing, ensure transparency by clearly disclosing any benefit you may receive. Place disclosures near links or prominently on the page. Additionally, draft a formal affiliate agreement to manage relationships and protect your business from potential legal issues. Implement regular compliance reviews and train your staff to maintain best practices.
Affiliate marketing is where a company or individual provides a referral to another business and receives a commission or benefit. These arrangements normally occur by including a link on a website, an article, a social media post or an application. Typically, the user will enter the referred business’ site through a unique link that allows the referred business to know where they came from, sometimes with information from cookies. Affiliate marketing is a growing industry in an age where we access almost every service online. The rise of social media influencers and content creators has further expanded affiliate marketing opportunities, making compliance even more critical. Australian regulators pay close attention to this form of marketing strategy.
This article will explain more about the affiliate marketing process, the laws that regulate affiliate marketing and your legal obligations if you choose to engage in it.
Why Use Affiliate Marketing?
For instance, a technology blogger reviews laptops and includes purchase links in their article. When readers click these links and make purchases, the blogger earns a commission. This arrangement benefits both parties: the blogger monetises their content whilst the retailer gains customers through targeted marketing. Beyond direct sales, affiliate marketing provides valuable data insights and enhances search engine visibility for partnering businesses. If you engage in affiliate marketing, you should also consider having an affiliate agreement with the other party.
Laws That Regulate Affiliate Marketing
Australia has some of the strongest consumer law protections in the world. Accordingly, it should come as no surprise that it covers affiliate marketing. Failure to disclose a benefit you receive by linking to a third-party site may constitute misleading and deceptive conduct. This is also the rationale behind influencers, content creators and other social media users disclosing paid promotions online.
Whilst many marketers use hashtags like “#Ad” or “#Affiliate”, these may not satisfy legal requirements if they appear unclear or buried amongst other hashtags. Regulators prefer clear, standalone statements.
Continue reading this article below the formMisleading and Deceptive Conduct
Under Australian Consumer Law, businesses cannot engage in conduct that is or is likely to mislead and deceive consumers. The ACCC has made misleading advertising and marketing practices in the digital economy a compliance and enforcement priority, with continued monitoring leading to potential enforcement action for non-compliance. Misleading and deceptive conduct can refer to:
- how you advertise your goods or services;
- how you describe goods or services; or
- failing to disclose a commercial relationship or the extent of benefits you receive.
Your Legal Obligations to Disclose
When engaging in affiliate marketing, the key legal obligation is disclosing the commercial relationship between you and the third party you are referring to. Your disclosure should ensure that the website visitor, social media platform user or application user knows the benefit you may receive. The disclosure should appear near the link or in a clear and conspicuous space on the page where you feature the third party’s product or service. If applicable, you should also mention it in your terms and conditions.
As a franchisor, you must not engage in misleading and deceptive conduct. We explain what it is and how to avoid it.
Key Takeaways
Affiliate marketing is a great way to promote your or a partnering business. However, you must disclose any benefit you may receive. Failure to do so may be misleading and deceptive conduct. Regulations around misleading and deceptive conduct under Australian Consumer Law aim to ensure the consumer is fully informed before purchasing. This means misleading and deceptive conduct is not only illegal but also bad business. Furthermore, having a clear agreement with your affiliate partners can prevent misunderstandings and ensure compliance with legal requirements. Transparency in your marketing practices builds trust and credibility with your audience, ultimately benefiting your business in the long run. Given the ACCC’s increased focus on digital marketing compliance, businesses should prioritise reviewing their disclosure practices and seek legal advice when establishing affiliate programmes.
If you need help understanding your legal obligations when doing affiliate marketing, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Yes, affiliate marketing is legal in Australia, but only where the commercial relationship between both parties is clearly outlined to the customer, including whether the referrer receives any benefit or commission due to the referral.
Your disclosure should ensure that the website visitor or application user is aware of the benefit you will receive due to the affiliate link to the third-party site or even that you may receive a benefit. The disclosure should appear near the link or in a clear and conspicuous space on the page where the third party’s product or service is featured. Avoid vague language like ‘sp’ or ‘spon’; use clear terms like ‘sponsored’ or ‘I earn a commission from purchases through this link. If applicable, it should also be mentioned in your terms and conditions.
The ACCC continues to monitor businesses and influencers for compliance with Australian Consumer Law. They have made digital marketing practices a priority and conduct regular sweeps of social media and online advertising. The ACCC may take enforcement action against businesses that engage in misleading or deceptive conduct, including inadequate disclosure of commercial relationships.
We appreciate your feedback – your submission has been successfully received.
