The ACCC has social media influencers in its sights

Early last year, the Australian Competition and Consumer Commission (ACCC) conducted an internet ‘sweep’ of 118 individual influencer accounts across Instagram, TikTok, Snapchat, YouTube, Facebook and Twitch.

The sweep targeted seven sectors in which influencer marketing is particularly widespread, and consumers commonly rely on influencer endorsements to make purchasing decisions. Those sectors are:

• fashion
• beauty and cosmetics
• food and beverage
• travel and lifestyle
• health, fitness and wellbeing
• home and parenting
• gaming and technology.

As a part of the sweep, the ACCC invited consumers, businesses and other industry participants to provide examples and information about misleading conduct by social media influencers. The feedback centred on the non-disclosure of commercial relationships in posts made by influencers. Prior to conducting the sweep, the ACCC received over 150 tip-offs from consumers about influencers who do not disclose advertising in their posts.

The Australian Consumer Law

Under the Australian Consumer Law (ACL), which is a part of the Australian Competition and Consumer Act 2010, businesses cannot mislead or deceive consumers. This prohibition applies to social media influencers as well as to brands, advertising agencies and marketers using influencers for online advertising and promotion. Examples of misleading and deceptive conduct by social media influencers and brands identified by the ACCC include:

• making incorrect statements about the relationship between a social media influencer and a brand, product or service
• omitting key information in social media posts, such as underlying commercial relationships, sponsorships or other incentives received to promote a brand, product or service
• disclosing brand relationships in a way that is vague, confusing or obscure.

The report released last month shows that the ACCC is concerned that “this conduct is becoming more pervasive over time as the influencer industry continues to grow”. The regulator also states that “by partnering with an influencer to promote goods or services [a] brand is able to use the influencer’s social capital to persuade consumers to buy items they might not otherwise have purchased”.

Key issues identified in the ACCC sweep

The sweep identified the following key issues in respect of compliance with the ACL:

• non-disclosure of brand relationships in social media posts: The most common issue was social media influencers not disclosing whether they were receiving payment, gifts or other incentives to promote brands, products or services in posts
• vague or confusing disclosure of brand relationships: Examples of vague or confusing terms used to describe brand relationships include ‘sp’, ‘spon’, ‘sponcon’, ‘collab’, ‘creativepartner’, ‘ambassador’, and similar abbreviations. The ACCC considers these terms confusing to consumers and unlikely to offset any misleading impression created by an influencer’s post. The ACCC is also concerned that many influencers format their posts so that the disclosure is difficult for consumers to notice
• false or inaccurate statements about a brand, product or service: Throughout the ACCC sweep there were concerns that some influencers may be making incorrect statements about brands, products or services, including incorrect statements that influencers had purchased items themselves (when the items had been gifted), that influencers had organically selected items as a ‘favourite’ (when the items has been pre-selected), and that influencers had a particular history or experience with a product (which they in fact didn’t have)
• other types of concerning conduct: Other examples of concerning conduct identified by the ACCC which may breach the ACL included multi-level marketing schemes (for example, encouraging followers to sign up to sell wellbeing programs and recruiting others to do the same to earn commissions from sales), and subscription traps (for example, promoting free trials of services such as fitness programs which later convert into paid subscriptions and are difficult to cancel).

Action proposed by the ACCC

In its report, the ACCC stated that its internet sweep had identified several high-level concerns across the examined sectors. As a result, it will be undertaking education, compliance and enforcement activities, and will release updated guidance material for influencers, brands and advertisers.

It is also clear that the ACCC will likely take enforcement action against social media influencers and brands whose activities breach the ACL. Large penalties can apply to breaches of the ACL and, perhaps more importantly, serious adverse reputational damage is likely to be suffered by a brand found to have misled or deceived consumers.

Social media influencers and brands in the sectors examined by the ACCC, in particular, would be wise to ensure that their advertising, marketing and promotional activities are fully compliant with the law.

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Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Ian Robertson AO

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