In an effort to increase confidence and trust in influencer marketing, the Australian Influencer Marketing Council (“AIMCO”) launched Australia’s first Influencer Marketing Code of Practice (“the Code”) on 1 July 2020. Twenty-five leading businesses working in the Australian Influencer Marketing sector were named in the Code as founding members.
In this Blog Post, we discuss how Influencer Marketing is regulated in Australia and where the new Code fits into that regime.
Self-Regulation
Australia has adopted a model of self-regulation of advertising and marketing communications. The Australian Association of National Advertisers (AANA) oversees a self-regulated program and is the first point of contact for advice on marketing and communication queries.
AANA Code of Ethics and AIMCO Australian Influencer Marketing Code of Practice
The Code of Ethics adopted by the AANA applies to all advertisers and marketers who promote brands, products or services to Australian audiences, including through Influencers.
Section 2.7 of the Code of Ethics requires advertising and marking communication to be clearly distinguishable as such to the relevant audience. This in effect requires that Influencers sufficiently disclose to their audience the sponsored nature of a post. A small number of Influencer posts have been the subject of complaints since section 2.7 of the Code of Ethics was introduced on 1 March 2017. These include for example, one case involving Eco Tan and Kat Risteska and another case involving Mercedes-Benz Aust/Pacific P/L and Pip Edwards.
Prior to introduction of the Influencer Marketing Code of Practice, there was no specific way in which Influencers were required to label their posts to disclose their sponsored nature, it simply had to be clearly distinguishable as advertising and marketing communication.
The Influencer Marketing Code of Practice now makes it clear what constitutes sufficient disclosure when it comes to influencer marketing and all Influencers and Brands using Influencers to promote their products or services should now look to the Influencer Marketing Code of Practice for guidance on how to disclose the sponsored nature of their posts.
Complaints to Ad Standards Community Panel
If anyone suspects that a social media post fails to disclose the sponsored nature of the post, they can make a complaint to the Ad Standards Community Panel. It will then be investigated and recommendations made. The Ad Standards Community Panel can also refer the matter to the Australian Competition & Consumer Commission (ACCC), whose primary responsibility is to ensure that individuals and businesses comply with Australian competition, fair trading and consumer protection laws.
Australian Consumer Law
Whilst the model of self-regulation exists in Australia, the overarching laws in the Australian Consumer Law (ACL) set out in Schedule 2 of the Competition and Consumer Act 2010 also always apply.
Under the Australian Consumer Law, a person must not:
- Section 18 ACL – in trade or commence, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
- Section 29 ACL – in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
a) Make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;
b) make a false or misleading representation that services are of a particular standard, quality, value or grade; or
c) make a false or misleading representation that goods are new; or
d) make a false or misleading representation that a particular person has agreed to acquire goods or services; or
e) make a false or misleading representation that purports to be a testimonial by any person relating to goods or services; or
f) make a false or misleading representation concerning:
i) a testimonial by any person; or
ii) a representation that purports to be such a testimonial;
relating to goods or services; or
g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or
h) make a false or misleading representation that the person making the representation has a sponsorship, approval or affiliation; or
i) make a false or misleading representation with respect to the price of goods or services; or
j) make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods; or
k) make a false or misleading representation concerning the place of origin of goods; or
l) make a false or misleading representation concerning the need for any goods or services; or
m) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy; or
n) make a false or misleading representation concerning a requirement to pay for a contractual right that:
i) is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy; and
ii) a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law).
ACCC enforcement of Australian Consumer Law
The ACCC can require that any claims on social media pages be substantiated and commence proceedings where a breach of the ACL has been identified. A breach of the ACL 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 ACL (set out above).
The maximum pecuniary penalty applicable for section 29 of the ACL offences was increased on 1 September 2018 from $220,000 to $500,000 for an individual (often an influencer) and for a corporation (often a brand engaging an influencer) from $1.1 million to the greater of:
- $10 million
- three times the value of the benefit obtained from the contravention or offence (where the value can be calculated); or
- if the value of the benefit cannot be determined, 10% of the corporation’s annual turnover in the preceding 12 months.
It was subsequently increased again from 10 November 2022, and a body corporate is now punishable on conviction by a fine of not more than the greater of the following:
- $50,000,000;
- 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—3 times the value of that benefit;
- 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.
An offence by a person other than a body corporate is now currently punishable on conviction by a fine of not more than $2,500,000.
Many of the risks for the brand are also risks for any agency involved in creating the campaign. If found to be liable as an accessory to a breach of section 18 of the ACL, an agency may be ordered to pay damages. If found to be liable as an accessory to a breach of section 29 of the ACL, it may also be fined.
The ACCC has advised that it is 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.
Having the right contracts in place helps to manage your risk, but having your team know how to use and negotiate them can take some training.
Social Media Platform Terms and Conditions
Each social media platform has its own terms and conditions with which it’s users are required to comply and failure to comply with those terms and conditions have serious consequences, including loss of their account. Instagram for example requires that its users cannot do anything unlawful or misleading and they cannot violate (or help or encourage others to violate) their terms or policies. Instagram also requires that users engaging in influencer marketing campaigns use their branded content tools.
The Instagram terms further provide that Instagram can remove any content or information users share, or refuse to provide or stop providing their service to certain users (including terminating or disabling their account) if Instagram believe it violates the terms or their policies.
Therefore if a sponsored post is not properly disclosed and / or breaches the Australian Consumer Law, technically Instagram could terminate or disable the users account. This is a significant risk to Influencers who have invested years in growing their followers.
Follower Trust
As the best practice set out in the Influencer Marketing Code of Practice starts to be adopted by most Influencers and Brands, Influencers who fail to adopt the same best practice in their disclosures face not only the legal risks, but also the risk of losing follower trust which may result in decreased followers and engagement as well as less interest from Brands looking to use them in their campaigns.
Protection offered through Contracts
The Code of Practice recommends that a valid and binding contract be entered into between the brand / intermediary and the influencer for each influencer marketing campaign. It further sets out what should be covered in the contract. It is important that these topics are agreed and set out in an enforceable agreement so, amongst other things, the Brand has enforceable rights and some protection such as certain indemnities in relation to any non-disclosure by the Influencer.
We can assist in drafting and reviewing Influencer Agreements to ensure that all of the relevant issues are covered. You can also download our Influencer Agreement Checklist to assist in the early stages of your negotiation.
Final Thoughts
As you can see from the above, there are legal, financial and reputational risks involved with failing to properly disclose a sponsored post on social media. These should act as a deterrent to brands and influencers who do not currently properly label their sponsored content. There are also avenues for dealing with any brands or influencers who fail to follow the best practice guidelines set out in the Australian Influencer Marketing Code of Practice.
For further information about complying with the australian influencer marketing code of practice, 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.
