In a world of “gramming”, “sharing”, “tweeting”, “posting” and “liking”, endorsing a product or service is a lot easier that it used to be. Sometimes, it is just a click away. After the negative attention Australia Post received for paying for social media endorsements, without disclosing their commercial agreement, the law surrounding paying influencers has become highly topical. Given the abundance and variety of social media as affordable and effective promotion outlets, businesses and brands are building commercial relationships with high-profile individuals, bloggers, Instagrammers, journalists and other media influencers, in order to gain credibility and popularity for their brand. This article explains how the law reacts to these types of relationships and how to pay for endorsements within the legal boundaries.
Social Media Endorsements and the Law
Social media outlets are a gold mine for promoting your brand. They are particularly beneficial when backed by influencers, like the Kardashians or Selena Gomez. However, advertisements posted on social media may still be subject to legal ramifications. The Australian Consumer Law (ACL) applies to online influencers in the same way as any other advertisement space.
Promoting a product or a service may breach the ACL, specifically:
- section 18 prohibits engaging in misleading or deceptive or conduct for commercial purposes; and
- section 29 prohibits making false or misleading representations for commercial purposes, including testimonials.
There are also other regulatory frameworks that you might need to consider when it comes to influencer advertising.
It is important to be aware of the different regulations, especially if you are in a specific industry. For example, if you are supplying therapeutic goods and would like to engage an influencer for advertising reasons, having a clear understanding of what is expected under the Therapeutic Goods Advertising Code will be useful. This is important to avoid being in breach of any law and/or incurring penalties.
Transparency about Commercial Relationships
There is no law against paying someone to promote your product or service. However, if an endorsement is likely to confuse the public as to whether the content was genuine or sponsored, this may be misleading. In order to avoid breaching the law, disclosing commercial arrangements with influencers is paramount.
Continue reading this article below the formPublishing Misleading Reviews
Reviews are not only misleading when they are factually incorrect. Suppose an influencer gives the appearance of impartiality when, in fact, the company is sponsoring them. This may also mislead the consumer. In effect, this means that any review an influencer posts must reference the commercial relationship.
Omission of Reviews
Selectively removing or amending negative posts is misleading. Choosing which reviews to display manipulates the overall impression of your product or service and misleads consumers.
The ACCC warns businesses that it is their responsibility to monitor their social media pages. This includes the posts influencers and consumers upload which the company knows or should know is false or misleading. The ACCC can require businesses to substantiate their claims or posts relating to their products or services. Furthermore, it can take court action or issue an infringement notice where it identifies a breach of the law.
Case Study: Australia Post
As a result, Australia Post breached the ACL rules on online endorsements and reviews. Australia Post argued that it was the responsibility of their talent management agency, Moda Creative, who managed the influencers, to verify that the appropriate disclaimer was evident with each endorsement. However, the ACL imposes the obligation on companies, which includes ensuring their agents are complying with the law. Australia Post also breached the ACL by removing negative posts when it was revealed that one of the influencers was deleting posts.
The Hashtag Hero
Cases like Australia Post should not deter you from using social media to promote your brand. Business owners should utilise all the resources they have to build their name and reputation. Accordingly, social media platforms are often the most accessible, affordable and effective way of doing that. It may seem like splashing ‘paid advertisement’ across a post defeats the purpose of promotion. However, a simple hashtag like #sponsored or #ad can save you from the ACCC’s watchful eyes according to the Interactive Advertising Bureau. This does not mean that you can bury the hashtag in the middle of a long post. As long as it is identifiable to a consumer, it should satisfy the disclosure requirements.
That said, it is important to note that it may not be sufficient to use abbreviated or less common labels such as #sp, #Spon, #gifted, #Affiliate, and #Collab to disclose an instance where a benefit has been received. Simply tagging the brand is also not sufficient.
What Else Can Businesses Do?
Every business is different in one way or another. The appropriate steps to take in order to avoid an issue with the ACCC depends on the nature of your business and the way you operate. However, here are some general guidelines, which may assist you when engaging influencers to endorse your products or services:
- create a company policy for social media and any commercial relationships with influencers;
- ensure your staff, agents, marketing team and any other relevant individuals, are aware of the disclosure requirements for paid endorsements;
- include rules for users who post or upload content to your website in your website’s terms of use; and
- regularly monitor posts and uploads on your website or any social media sites on which your products or services are referred.
As a franchisor, you must not engage in misleading and deceptive conduct. We explain what it is and how to avoid it.
Key Takeaways
Engaging social media influencers to market your products or services can be commercially beneficial. However, it is important you comply with the ACL and ACCC requirements when doing so. When in doubt, disclose. Ultimately, if you are transparent in your commercial relationships and follow the ACCC guidelines, you are likely to satisfy the ACL rules.
If you have any questions about advertising laws and how to be compliant with them, speak with one of LegalVision’s advertising, marketing and consumer lawyers by contacting LegalVision today. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us on 1800 534 315 or visit our membership page.
Frequently Asked Questions
You should ensure that you do not publish misleading reviews or omit reviews that you deem unfavourable to your brand. You should also ensure that clear disclosure has been made and that you have complied with the relevant guidelines, especially if you are in a specific industry such as therapeutic goods.
Having a company policy for social media advertising, monitoring posts uploaded or content created on your social media platform and ensuring that the relevant individuals are aware of disclosure requirements are a few aspects to consider when engaging an individual to advertise your products on social media.
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