Australian regulators are cleaning up influencer misconduct on social media

The sweep commenced in late January 2023 following 150 tip-offs from consumers relating to more than 100 influencers. The public responded to the ACCC’s request for tips by sending in reports of influencers failing to disclose their affiliation with a company whose goods or services they were promoting online. The reports predominantly concerned promotional activity in the beauty, lifestyle, parenting and fashion sectors.

In response, the ACCC have announced that their social media sweep will cover a wide variety of platforms, including YouTube, Facebook, Instagram, TikTok and Twitch. The focus will be on sectors where influencer marketing is common: fashion, beauty and cosmetics, food and beverage, travel, parenting, health, fitness and wellbeing. Along with investigating the conduct of influencers, the ACCC will also consider the role of advertisers, marketers, brands and social media platforms in facilitating misconduct.

This response follows the increasing consumer preference for purchasing goods and services online and the importance that online testimonials and endorsements play in influencing the purchasing decisions of consumers. The ACCC’s priority is to ensure that manipulative marketing techniques designed to pressure or exploit customers into purchasing goods or services are eliminated.

To ensure that they are not swept up in this regulatory action, businesses should require, as a mandatory term of engagement, that influencers disclose the commercial relationship between the influencer and the business in any promotional online posts. Such disclosures must be transparent and unambiguous. The use of hashtags or words such as ‘sp’, ‘spon’, ‘gifted’, ‘collab’ and ‘affiliate’ are unlikely to meet the requirement of transparency. As best practice, businesses should require influencers to use statements such as ‘paid promotion’, ‘ad’ or ‘advertisement’.

Businesses should keep in mind that the penalties for a breach of the Competition and Consumer Act 2010 (Cth) (Act) recently increased with corporations found in breach of the Act liable to pay up to the greater of:

• $50,000,000;
• if the Court can determine the reasonably attributable benefit obtained, 3 times the value of that benefit; or
• if the Court cannot determine the benefit, 30% of adjusted turnover of the corporation during the breach turnover period for the offence.

The penalty for individuals who contravene the Act is up to $2,500,000 per breach.

The ACCC is not the only regulator with influencer marketing on its radar. The Australian Securities & Investments Commission (ASIC) last year issued guidance to social media influencers outlining how financial products and services may be discussed online. Additionally, the amendments made to the Therapeutic Goods Advertising Code in 2021 also highlight that testimonials must not be given by any person who has received valuable consideration for making the testimonial, including influencers.

More recently, the Therapeutic Goods Administration published a warning to social influencers regarding the off-label promotion of Ozempic, a prescription medicine for the treatment of type 2 diabetes, for weight loss. The social media testimonials relating to the efficacy of Ozempic for weight loss resulted in a shortage in the supply of the drug since November 2022.

There is no doubt that influencer marketing is a powerful tool for businesses. With the regulatory and compliance action ramping up in this space, advertisers, brands and influencers should revisit their social media marketing practices to ensure that they are complying with legal and regulatory requirements. If you need advice in this space, the team at Bird & Bird are well placed to assist you.

Written by Lynne Lewis, Katrina Dang and Aaron Mathew