Advertising through social media has become increasingly popular in recent years, with many companies opting to enter into ‘influencer agreements’ to advertise their products and services through social media as opposed to traditional advertising options such as print media. Questions have been raised in respect of whether the law in Australia is properly equipped to deal with this type of advertising, and to ensure that consumer interests are safeguarded.
In Australia, in addition to the laws set out within the Australian Consumer Law (ACL) in Schedule 2 of the Competition and Consumer Act 2010, the Australian Association of National Advertisers (AANA) has adopted a Code of Ethics as part of advertising and marketing self-regulation (Code). The Code (and the accompanying Practice Note) came into effect on 1 February 2021, implement new rules to ensure that advertisements and other forms of marketing communications are legal, honest, truthful and take into consideration the overarching obligation to avoid harm to the consumer and society and instill a sense of fairness and responsibility to competitors.
Amongst other requirements, the Code and the Practice Note set out the following important obligations in respect of influencer marketing:-
- Advertisers should be cognisant that, in seeking to make their advertising and marketing communication more engaging, they do not camouflage the fact that it is advertising; and
- Where an influencer or affiliate accepts payment of money or free products or services from a brand in exchange for them to promote that brand’s products or services, the relationship must be clear, obvious and upfront to the audience and expressed in a way that is easily understood (e.g. #ad, Advert, Advertising, Branded Content, Paid Partnership, Paid Promotion). Less clear labels such as #sp, Spon, gifted, Affiliate, Collab, thanks to… or merely mentioning the brand name may not be sufficient to clearly distinguish the post as advertising.
In light of the above, and the inconsistent manner in which influencer marketing has previously been monitored, the ‘self-regulation’ model is now frequently being bypassed as consumers and businesses who are doing the right thing with respect to their influencer advertising seek to refer breaches of the Code to the Australian Competition and Consumer Commission for investigation.
The maximum pecuniary penalty for a breach of the Australian Consumer Law increased on 1 September 2018 from $220,000 to $500,000 for an individual, and for a corporation from $1.1 million to the greater of $10 million dollars, three times the value of the benefit obtained from the contravention or offence (where the value can be calculated); and if the value of the benefit cannot be determined, 10% of the corporation’s annual turnover in the preceding 12 months.
Given the significant penalties involved, it is imperative that individuals and companies who are advertising through paid influencers are ensuring that their campaigns meet the requirements of the Code. Rose Litigation Lawyers can advise of all aspects of the Code and the Practice Note, and are able to assist with any dispute arising in respect of breaches of Influencer Agreements, breaches of the ACL and providing advice in respect of avoiding legal disputes relating to marketing and advertising through social media.