Article by: Marshalls+Dent+Wilmoth
2023 crackdown on social media influencers signals a new era of transparency requirements for commercial arrangements.
In early 2023, the Australian Competition and Consumer Commission (ACCC) launched a sweep, targeting influencer activity on social media platforms. It was part of the ACCC’s agenda to identify deceptive marketing practices across the digital economy. Read on to learn more about the legal implications of the ACCC’s crackdown on social media influencers.
Background to the ACCC crackdown
Global growth in social media marketing has been exponential, especially because it often includes PR firms, branding experts and other digital marketing services. This growth, combined with the effectiveness and directness of influencer marketing, prompted the ACCC to examine whether the area needs more specific regulatory controls.
The ACCC’s influencer sweep followed public feedback about problematic influencer posts, for example, those that failed to disclose sponsorships or product endorsements. The public’s feedback identified 118 influencers, mainly in the following industries:
The sweep focused on social media platforms including Instagram, TikTok, Snapchat, YouTube and Facebook. It sought to identify posts that:
- Contained incorrect statements
- Gave false or misleading impressions about a product, service or brand
- Omitted important information such as commercial arrangements or incentives
- Failed to clearly or prominently show the commercial arrangement to the reader.
Are the existing laws effective?
The Australian Consumer Law (ACL) currently regulates influencer activities. Section 18 says A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
However, the Report highlighted several concerning findings, including:
- 85% of respondents had difficulty working out whether a social media post was an advertisement or promotion
- Influencers exercised significant editorial control over promotional posts
- Influencers often presented themselves as ordinary people, creating authentic posts.
- Identifying the posts as promotional was seen as contrary to this.
It means that some aspects of influencer marketing have flourished despite breaching legal requirements.
What are the findings and recommendations?
The most compelling findings were that influencer posts often failed to disclose commercial arrangements. And where disclosure had been made, some posts showed manipulative marketing tactics, such as not making the disclosure obvious to the reader.
The Report indicated the ACCC’s intention to continue monitoring influencer posts. It also flagged follow-up activities to improve disclosure compliance and education among social media marketers, including:
- Marketing firms
- Social media platforms.
In other words, the ACCC’s view is that the industry needs meaningful reform through increased regulation.
The Report coincided with increasing consumer vulnerability. For example, the ACCC reported that in 2022, Australians lost $3.1 billion to scams, an 80% increase from the previous year. At the same time, consumers are experiencing other financial pressures, such as consecutive interest rate rises and increased energy and living costs. So consumer protection is a priority.
Some of the Report’s big-picture recommendations included:
- An economy-wide ban on unfair trading practices
- Establishing prevention and removal measures for scams, harmful apps and fake reviews
- Implementing mandatory codes of conduct for digital platforms based on existing laws
- Establishing an independent digital ombudsman to manage complaints.
What’s the likely impact of the crackdown?
The crackdown came a few months after ACL penalties were increased for conduct including:
- Misleading and deceptive representations
- Unconscionable conduct (undue influence, pressure or unfair tactics)
- Supplying unsafe products.
Possible penalties now include:
- Business fines of up to $50 million or (if the value of the breach can’t be calculated) the equivalent of 30% of turnover during the relevant period
- Individual fines of up to $2.5 million
- Other penalties.
Also, from November 2023, new unfair contract laws will come into force in Australia. They will apply to various situations, including small businesses that rely on standard-form contracts. Contract terms may be unfair if they:
- Give one party a significant and unfair advantage over the other party; or
- Have the potential to cause financial harm to the disadvantaged party.
The ACCC’s message is clear: Consumer protection is a priority.
What should I do now?
If you’re a social media influencer with promotional arrangements, you must immediately act to ensure legal compliance. Take action regardless of the size or scope of your business.
We recommend the following:
1 Social media post audit
Start by auditing your social media posts, preferably for the past year. Consider the following questions:
- Have I accepted payment, free products or free services in exchange for social media posts to promote a brand?
- If yes, have I clearly identified the posts as promotional?
If your promotional posts aren’t clearly identified, we recommend adding hashtags. They should be easy to find and easy to read. Examples include:
2 Website audit
Then, you should audit your website content and add a promotion or sponsorship statement to relevant website pages. For example:
This post is sponsored by [name of brand].
Put the statement near the top of the page rather than at the bottom. It allows the reader to decide whether to continue reading in light of the commercial arrangement.
3 Seek legal advice
Once you’ve checked your online content, seek our legal help to review your contracts. Ensuring they’re legally compliant is critical, especially if you use a proforma contract agreement. As part of our review, we’ll check whether the contract is fair, for example, whether both parties have:
- Options for ending the contract
- Potential penalties for breaking or ending the contract
- The ability to change the contract terms.
We can also help you to:
- Develop a plan for managing all future promotions
- Work out how to effectively conduct ongoing content reviews for legal compliance
- Consider the legal impact in other areas, for example:
- Giveaways and competitions
- Intellectual property rights
- Taxation obligations.
The final word
As the commercial possibilities of social media marketing have been explored and harnessed, it was only a matter of time before influencer activity came under increased scrutiny. The ACCC has established its agenda and indicated its intention to hone in on this activity. More regulation will likely follow.
As an influencer, you must start reviewing, hashtagging and querying your content. What’s missing? What can be clearer? Is anything unfair for one party? This analysis should become a regular activity, underpinned by expert legal advice.
Source: Marshalls+Dent+Wilmoth lawyers
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