How to stay out of trouble with the new influencer transparency rules

Next month the Australian Association of National Advertisers will amend its Advertiser Code of Ethics and require social influencers to be more transparent about sponsored posts and commercial connections. Here, adland lawyer Stephen von Muenster explains how agencies can ensure their brands and influencers aren’t penalised.

It is evident from a casual gaze through social pages or comms industry commentary that brands are increasingly turning to ‘social influencers’ to promote their products through online social channels, with the intent of influencing consumer purchasing decisions in favour of their products.

Indeed, some commentators have even described social influencers as our ‘future media owners’.


The new AANA provisions are effective from March 1

The recent announcement by the AANA that the Advertiser Code of Ethics will be amended to incorporate a new obligation for advertising to be ‘clearly distinguishable’ as such has generated much excitement in communications agencies and the brands they represent on the one hand and the influencer community on the other.

The amendment, effective March 1 2017, will impact agencies and the brands they represent in circumstances where social “influencers” (which include individuals with social audiences, journalists and bloggers) are engaged by or on behalf of brands for advertising and marketing communications purposes.

In advance of the change to the Code, the AANA has released best practice guidance to marketers, agencies and the community to provide the AANA perspective on how advertising can be clearly distinguishable to the relevant audience.

Numerous scenarios are offered and it is likely that these scenarios will be taken into consideration by the Advertising Standards Board (ASB) should a consumer complaint be received in relation to influencer-based advertising.

Whilst there is currently much excitement about this amendment to the Code and what it all means, it is important to understand that the amendment simply reflects the current legal position in Australia that has, arguably, always applied to influence and restrict the ways in which brands can use social influencers as a marketing communications channel.

The laws are mandatory whilst the AANA Advertiser Code of Ethics relies on voluntary adherence by the industry to self-regulation and tends to reflect prevailing community standards.

The Australian Competition & Consumer Commission (ACCC) is the Federal Government regulator looking after the interests of consumers and competition in the Australian market place. It administers the Competition & Consumer Act 2010 and this act contains the Australian Consumer Law (ACL) which applies to the commercial practices of any person, company or business in Australia.

Importantly for the influencer discussion, the ACL prohibits misleading or deceptive conduct and specific misrepresentations, including testimonials (Section 18 and 29).

Regardless of whether the product is overtly or subtly promoted by an influencer, the Australian experience has shown that influencers do not always disclose that they have been rewarded or honestly believe what they are posting to their audiences.

In the influencer marketing context, the relevant question to ask then is twofold: Do social influencers need to be accurate and truthful about expressions of personal support for a product on the one hand and also disclose rewards and commercial connections with brands and products on the other?

Rewards in this context include monetary payment, gifts and value in kind.

The law is well settled in terms of testimonials and expressions of support as the ACL and recent court decisions confirm that a celebrity, personality or any person expressing personal support must ensure that their testimonial is accurate and true.

So if an influencer tweets “I have been to Kangaroo Island and it is a great place, you should go #kangarooisland” and the influencer has never been, then you have a breach of the ACL, and the brand, agency and influencer may be penalised.

The question of whether influencers need to disclose rewards and commercial connections with brands and products is legally difficult to answer due to a current lack of judicial decisions – while we have court decisions on user-generated content, fake testimonials and false social product reviews, we are still waiting for the “big” court decision around the requirements of social influencers and their reward-based posts.

However, given the approach of the courts in ACL cases it would be reasonable to predict that a brand and rewarded influencer would only need to disclose rewards and commercial connections if, in the circumstances, it would be misleading or deceptive or a misrepresentation not to disclose rewards and commercial connections.

The legal threshold here is quite high – a member of the audience would need to be led into error and it is not sufficient if the post merely causes confusion or uncertainty as to whether some form of commercial association exists.

To make a judgment around what side of the line a post falls, the assessment must be on a post-by-post basis having regard for the nature of the communication as a whole, the context, the likely audience of the post and the dominant impression created by the post to a reasonable member of the audience.

A suggested rule of thumb then may be as follows: if the impression created by a post (or series of posts) on the applicable audience member would result in the realisation that it was a reward-based post – for example the influencer being a well-known brand junkie, or a known brand ambassador or the message itself is plain to a savvy audience as being reward-based – then the post would not be misleading and there would be no need for specific labelling of the post whether by #spon, #ad, #ambassador, or similar.

However, if the impression of the audience is that the post is genuine, organic, unscripted and without any underlying reward base, when it in fact was a reward-based marketing communication, then you are falling dangerously close to or over the misleading or deceptive conduct line and a breach of the ACL.

To cure this, disclosure would be needed by a specific call out in the post or perhaps #spon, #ad, #ambassador, or similar which in effect work as an elucidator to the post and dispel any misleading or deceptive effect (assuming the elucidation is unambiguous and not hidden away).

If brands and their agencies comply with the new, clearly distinguishable advertising provisions to be inserted into the AANA Code of Ethics, there is no doubt they will go a long way to reducing the likelihood of ACL breaches.

Indeed, the approach of the AANA in its guideline, and the approach the courts may take in a case involving alleged breaches of the ACL, are likely to be very similar. The AANA’s scenarios and guidance are particularly helpful and therefore not just for AANA Code compliance, but also for compliance with the ACL.

It is also worth mentioning that the AANA Codes and the ASB decisions do not apply to individual influencers or celebrities and accordingly it will be up to brands and their agencies to ensure compliance by their influencers with the new provisions.

The ASB generally can uphold or dismiss a complaint by a member of the public and if upheld order removal of posts or modifications. There are no financial penalties.

However, breaches of the ACL are far more serious and court action can be brought against all parties involved in the publishing of a post, including the brand, agency and influencer. For individuals, the penalties for each infringing post can be as much as $220,000 and for brands up to $1.1 million.

The use of social influencers by brands and their agencies is now very popular and has entered the mainstream as a marketing communications channel. Accordingly, it is important that their influence is used in such a way so as to enhance the brand and its products and not result in negative community backlash, an adverse ASB finding or even worse, legal liability under the ACL.

The simple approach is this: disclose and label your posts – this transparency and authenticity represents best practice.


Stephen Von Muenster is the principal of von Muenster Solicitors & Attorneys

The new guidelines are set to be discussed at next month’s CommsCon. For earlybird tickets click here


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