Everyone wants to look their best online, including businesses!
While putting your best foot forward in online advertising, it is important that both influencers and businesses are aware of the legal requirements in this area. This article will provide you with an overview of the important rules to keep in mind, practical tips for legal compliance, and some factors to consider when brokering an influencer agreement.
Misleading and Deceptive Conduct
The main provisions to take note of are sections 18 and 29(1) of the Australian Consumer Law (“ACL”), which can be found in the Competition and Consumer Act 2010 (Cth). While section 18 creates a broad prohibition on misleading and deceptive conduct in trade and commerce, section 29(1) of the ACL specifically prohibits businesses from promoting their goods and services by making false or misleading representations relating to:
- The standard, quality, value or grade of goods;
- Statements that purport to be testimonials by any person relating to goods or services; and/or
- Sponsorship, approval, performance characteristics, accessories, uses or benefits.
Tips for Compliance with the ACL
1. There’s nothing wrong with hiring people to promote your products, as long as you don’t falsely claim that they are customers.
Large companies hire actors and models all the time to promote their goods and services. While this can be out of reach for many small businesses, influencers provide a great marketing opportunity for affordable and effective advertising. However, the case Australian Competition and Consumer Commission v P & N Pty Ltd  FCA 6 demonstrated that the ACCC is willing to come down hard on businesses providing false testimonials.
In this case, a solar panel company published YouTube videos to their website that claimed to be customer testimonials, but were actually recorded by paid actors. As a result, the defendants were restrained for a period of 3 years from making a representation that purported to be by any person, forced to publish a corrective notice, and required to pay a financial penalty.
2. You may need to verify that your products have had the benefit claimed.
Influencer marketing is a great way to get people who are genuinely passionate about your products to share their enthusiasm with the world. However, if you would like an influencer to represent that they have experienced a particular benefit from the products, you may need to verify these claims.
In Australian Competition and Consumer Commission (ACCC) v Advanced Medical Institute Pty Ltd (No 3) (2006) 69 IPR 462 a company paid Australian television actor Ian Turpie to appear in an advertising campaign claiming that their nasal spray had cured his sexual impotency. Although Mr Turpie had used the spray, the claim was found to be incorrect.
Ultimately, this case demonstrates the importance of ensuring that testimonial statements from clients and influencers are accurate.
3. If you become aware that an influencer or customer has made a social media post about your business that is misleading, you should try to remove it.
Businesses are often quick to act when a customer posts a false review that paints them in a negative light. However, business owners should be aware that they may be held responsible not only for any false or misleading material that they publish, but also for material posted by customers and influencers of which they are aware.
In Australian Competition and Consumer Commission (ACCC) v Allergy Pathway Pty Ltd (No 2)  FCA 74 an allergy medication company was held responsible for posts made by customers to their Facebook page on the basis that they accepted responsibility for them once they became aware of the publications and decided not to remove them.
If the ACCC adopts this enforcement approach into the future, it is possible that businesses that share influencer posts to their social media channels or become aware of content through being tagged in it could become liable if it is misleading and they do not take steps to remove it.
4. Be transparent regarding your incentives policy.
The ACCC recommends that review platforms include a prominent disclosure of any commission or fees earned as a result of reviews posted.
For influencers, this might look like marking content as ‘sponsored’ on social media posts or acknowledging when products have been provided free of cost to influencers.
For businesses offering incentives to customers or influencers who provide reviews, the ACCC recommends placing a disclaimer wherever reviews are posted that acknowledges that some or all reviewers receive a benefit for providing their review.
5. Prepare to accept that customers or influencers may not always provide glowing reviews.
Unfortunately, it is possible that reviewers, including influencers, may be part of the minority of customers that do not love your business. The ACCC advises that incentives should be offered equally to both positive and negative reviews and that businesses should respond to, rather than delete, negative reviews.
To reduce the risk of influencers using their platform to comment negatively on your products, you may wish to consider asking customers to approach you if they love your product and have a significant social media following. Alternatively, you might consider offering product samples to influencers free of charge without the expectation of them providing a review, and only commencing negotiations regarding payment for posts once they have tried the product out and feel comfortable becoming an ambassador for the product.
What if one party doesn’t deliver?
Many influencer agreements are negotiated informally over social media, which can create difficulty if a disagreement arises regarding what exactly was agreed. To reduce the risk of misunderstanding, we recommend that you formalise an agreement in writing regarding what is expected of both parties, particularly if there is going to be an ongoing relationship.
- The rules in the ACL regarding misleading and deceptive conduct mean that businesses can be liable for not only the material they directly publish, but also what they republish or allow influencers to publish.
- Transparency around incentive schemes is important for ensuring that consumers are not misled.
- Clear communication from the outset about what is expected from both parties is important, which a written influencer agreement may assist with.
If you need a review of your current advertising practices or are considering entering into an influencer agreement, the Commercial team at Rouse Lawyers is here to help. Additionally, the Rouse Lawyers Disputes team also have experience acting both for influencers and businesses in relation to disputes over influencer agreements and can advise in the instance of a dispute. Contact us today.
The information contained on this website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved.
Accordingly, the information on this site is provided with the understanding that the authors and publishers are not providing legal advice. As such, it should not be used as a substitute for consultation with professional legal advisers. Before making any decision or taking any action, you should consult with a professional lawyer from Rouse Lawyers.