ACCC recently announced its intention to review at least 100 businesses looking for misleading online reviews and testimonials. The ACCC advised in the media release that misleading advertising by influencers on social media will also be considered in a second sweep where they will focus on identifying posts that fail to clearly disclose advertising or sponsorship.
These activities come as no surprise to us as the ACCC confirmed earlier this year that influencers who don’t disclose commercial relationships including paid promotions is a compliance and enforcement priority for the ACCC for 2022 / 2023.
The ACCC is also currently considering whether consumers are faced with potentially misleading and / or deceptive claims through sponsored ads or posts featuring influencers, and whether this has increased or decreased over time, as well as whether businesses are impacted by misleading and / or deceptive claims through sponsored ads or influencer posts as part of its Inquiry into markets for the supply of digital platform services.
Which industries are being targeted in the sweep?
The ACCC expressed an intention to target areas in which they consider consumers most commonly rely on reviews. These include household appliances, electronics, fashion, beauty products, food and restaurants, travel services, sport, home improvement, kitchenware, health products, furniture and bedding.
The ACCC has previously stated on their website that they are more likely to pursue cases of false, misleading or deceptive conduct in relation to social media sites if there is the potential for widespread public detriment if the statement is relied on, the conduct is particularly blatant or it is by a business that has come to their attention previously. Those are the businesses we would therefore expect to be within their immediate sights.
What happens if a breach of the law is identified?
Significant penalties apply in relation to false or misleading representations about goods or services. The ACCC can require that any claims on social media pages be substantiated, and commence proceedings where a breach of the Australian Consumer Law has been identified. A breach of the Australian Consumer Law provisions can result in damages, injunctions, publication orders and other remedial orders. Pecuniary penalties, fines and infringement notices can also apply for a breach of section 29 of the Australian Consumer Law in relation to false or misleading statements about goods or services.
Infringement notices can be issued by the ACCC when it has reasonable grounds to believe a person or corporation has contravened certain consumer protection laws. Infringement notices currently sit at $13,320 for a corporation (or $133,200 for a listed corporation) and $2,664 for an individual in relation to each alleged contravention.
Pecuniary penalties are amounts imposed and collected by civil courts. The maximum pecuniary penalty applicable for section 29 of the Australian Consumer Law offences is currently $2.5 million for an individual and for a corporation, the greater of:
- $50 million;
- if the court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the commission of the offence – three times the value of that benefit; or
- if the court cannot determine the value of that benefit – 30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
What does this mean for industry participants?
If brands, influencers or agencies have been doing the wrong thing, and relying on an assumption that the regulator is not actively monitoring this conduct, they may be surprised to find themselves faced with the consequences of those actions.
What should industry participants do next?
It would be wise to audit any existing use of reviews and testimonials, as well as content created as part of influencer marketing campaigns to ensure that it complies with the relevant laws and advertising codes.
For upcoming campaigns, advice should be sought on steps that can be taken to ensure compliance with the relevant laws and codes, as well as steps to manage the risk associated with any non-compliant advertising.
For more information about meeting your legal requirements for your influencer marketing campaigns, as well as use of your reviews, contact us.
Information contained within this blog post is intended to be general information only and is not in any way intended to constitute legal advice. You should not act or rely on any information found in this blog post without obtaining prior advice specific to your circumstances.
