Online bloggers or journalists that attain a certain status or level of popularity have become known as social ‘influencers’ because of their cult-sized followings. Businesses are seizing the opportunity to use these online influencers and portal for promoting their products, as was the case with Australia Post in 2014 when they paid various Instagram ‘influencers’ to advertise a number of their products.

Where did Australia Post go wrong?

Unfortunately for Australia Post, these Instagram users failed to disclose that they were receiving payment for advertising the various products. This meant that Australia Post, whether intentionally or inadvertently, had breached the Australian Consumer Law (ACL) relating to online reviews and endorsements.

According to the provisions of the ACL, failure to make full disclosure of any paid endorsements is usually conduct that falls within the definitions of misleading and deceptive. If this conduct is not rectified, those in breach of the ACL could face serious penalties,  financial and punitive.

These provisions apply across the board to all businesses that ‘engage in trade or commerce’.

What was Australia Post’s defence?

Australia Post was contracting with a creative agency, Moda. This agency was paying these influential Instagram users to advertise the Australia Post’s products. Their defence for non-disclosure was issued in the statement “Australia Post requires our suppliers to comply with Australian Competition and Consumer Commission (ACCC) guidelines for online reviews.”

Moda claimed that there was a disclaimer on the website which adequately disclosed the commercial relationship between Australia Post and the Instagram Influencers. Australia Post claimed that they unaware their conduct was in breach of the ACL by not ensuring the Instagram Influencers disclosed the commercial relationship. Unfortunately, the ACL does not require knowledge or intention when it comes to liability. It is the responsibility of the company to make sure that its agents are not breaching the ACL in their conduct.

Deleting Comments

Another fact that worked against Australia Post was that the paid Instagram Influencers had deleted comments critical of the fact that no disclosure had been made about this commercial relationship. Deleting negative comments or feedback from consumers is considered deceptive and misleading as it does not reflect the consumer’s experience of the product. Once again, the Australian Post had breached the ACL.

Transparency is key

Paid endorsements are effective and impacts how consumers perceive a product when they make choices about what to purchase. Consumers need to know who is paying whom so that they are not misled into believing certain companies or individuals endorse one another regardless of the financial incentive.

Reviews must be accurate

When a review appears to be a genuine but turns out to be a reflection of a commercial relationship, consumers can be misled.  The same can be said for reviews that are created by rival businesses trying to create a negative perception for other businesses. Third parties being asked to promote a business or badmouth a competitor are also breaching the ACL by creating inaccurate reviews. It is also likely to mislead consumers when individuals are paid to become ambassadors of a brand of which they have little to no experience using as a genuine consumer, or of which they inflate their overall experience in the event that they have used the product.

Deleting or tweaking reviews

By choosing what feedback to keep and what to remove to promote desirability, the overall impression and perception that consumers come to when making their own assessment about a product becomes distorted.

Conclusion

If you’re careful to manage your businesses advertising practices and follow the above guidelines, you are unlikely to be in breach of the regulations imposed by the ACL regarding online endorsements. Have a lawyer advise you on these requirements whenever you’re in doubt. LegalVision has a team of online lawyers that will ensure you are complying with the ACL in relation to an advertising commercial arrangement.

Next Steps

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