Social influencers and the law – where does it stand on disclosure?
After Australia Post was found to be paying for social media endorsements which were not disclosed and with more brands looking to social media influencers in their campaigns, Stephen von Muenster looks at where the law currently stands on the issue.
It is evident from a casual gaze through social pages or comms industry commentary that brands are 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.
Brands and their agencies are identifying and building commercial relationships with individuals, events or groups such as journalists, bloggers, Instagrammers, consultants, or industry analysts (directly or via influencer networks) to leverage them and build brand credibility within their identified following or ‘tribe’. This has sometimes been referred to as the Oprah Winfrey effect.
The product is sometimes overtly or subtly promoted by the influencer and the influencer does not always disclose that they have been rewarded. This gives rise to an important consumer law question – do social influencers need to disclose rewards and commercial connections with brands and products?
The question is important because consumers trust what is said online and a breach of that trust may result in a breach of the law. According to Nielsen Global Online Consumer Survey more than two thirds of consumers say they trust opinions stated online – second in trustworthiness only to recommendations from people they know in real life.
Australia Post was caught using undisclosed paid Instagram endorsements
For example, in December 2014 Australia Post came under fire after being caught out by consumers over its use of social media influencers, when it emerged it was paying Instagrammers without disclosing that their endorsements were being paid for.
Social influencers take many different forms, including:
Celebrities and personalities with a significant social presence and ‘tribe’ of followers
- Brand ambassadors
- Events / activities / sports (eg V8 Supercars)
- Bloggers and instagrammers
- Journalists (native advertising)
- Individuals that have received social notoriety purely from their social activities (eg You Tube videos)
- Product review sites – (eg App Store etc)
The Australian Competition & Consumer Commission (ACCC) is the Federal Government regulator looking after the interests of consumers and competition in the Australian market place. They administer 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.
The ACL prohibits misleading or deceptive conduct and specific product misrepresentations including testimonials (Section 18 and 29). This is the only generally applicable law at this time that would require social influencers to disclose rewards and commercial connections for posts. A brand or business would only need to do so if, in the circumstances, it would be misleading or deceptive or a misrepresentation NOT to disclose rewards and commercial connections for posts.
What this means legally is difficult to answer and must be assessed on a case by case basis having regard to the nature of the communication, the context, the likely audience of the post and the consumer ‘take out’.
The uncertainty in Australia is compounded due to a lack of judicial decision – we are still waiting for the “big” court decision around the requirements of social influencers and their paid for posts, although we can obtain some guidance from a case involving celebrity testimonials: ACCC v Advanced Medical Institute Pty Ltd (the Turpie Case), in relation to advertising and promotion by Advanced Medical Institute Pty Ltd (AMI) of a nasal spray form of treatment for erectile dysfunction. The Federal Court of Australia declared that AMI engaged in conduct that was misleading or deceptive in breach of section 52 of the Trade Practices Act 1974 (now s18 of the ACL) by causing advertisements to be published in major newspapers featuring the celebrity Ian Turpie and containing false representations including:
- that Mr Turpie had undertaken an interview during which he disclosed, in the presence of his wife, that he was losing his sexual potency, and
- that AMI nasal delivery system had cured or alleviated Mr Turpie of the effects of impotence or erectile dysfunction.
The court also declared that the advertising agent for AMI, by preparing and causing the advertisements to be published, was knowingly concerned in, or party to, the breach of section 52 of the Act. This makes it clear that both the advertising agency and the celebrity concerned can be held liable for misleading conduct.
Another recent case of some relevance to the question of liability is ACCC v Allergy Pathway Pty Ltd, where the Federal Court found the defendant company liable for false customer testimonials posted on the wall of its Facebook and Twitter pages, when it knew the testimonials were false and took no steps to remove them.
SATC paid celebs for Twitter endorsements for Kangaroo Island
An example involving Twitter occurred in April 2012 with the SA Tourism Commission Kangaroo Island ‘Cash for Tweets’ controversy when they came under fire from Media Watch for paying celebrities to tweet positive messages about Kangaroo Island without disclosing that the celebrities were paid to post.
The ACCC is at present carefully watching social influencers and has issued some guidance for online reviews. From our reviews of the ACCC’s commentary, press releases and comments to journalists we can state with confidence that the ACCC is of the view that the use of endorsements on social media can breach the ACL when the influencer has received payments for the post / comment and this is not disclosed. For instance:
There is nothing illegal about paying someone to do an endorsement, but is a third party aware of the commercial relationship? What we ultimately say to businesses and bloggers is that you are on good safe ground if you disclose commercial relationships. When you’re not then you start running into this grey area that could potentially lead you to a messy end.”
Michael Schaper, ACCC Deputy Chair, January 2014.
The use of social influencers by brands and their agencies is growing in popularity but 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 commentary and legal liability. As the legal implications of using a given influencer and releasing a particular post must usually be considered on a case by case basis, we strongly recommend that legal advice and clearance be obtained and if possible an appropriate Social Influencer Agreement be entered into with the influencer that addresses the legal issues (including those discussed in this article) and mitigates brand risk appropriately.
Stephen von Muenster is a solicitor and owner of von Muenster solicitors and attorneys.
An interesting debate. I wonder how this applies to ‘mainstream’ celebrity sponsorships. For example, by the disclosure rationale, would athletes need to say they are being paid by Nike or Adidas every time they see someone in the street while they are wearing the branded clothes or turn up to a corporate/promo event?
User ID not verified.