Influencer compliance with advertising obligations fails to impress

Earlier this year the Australian Competition Consumer Commission’s (ACCC) conducted a sweep of social media platforms to understand how advertising was conducted in social media posts. An alarming 81% of influencers reviewed had made posts that did not wholly comply with the Australian Consumer Law (ACL).[1]

Every sector ‘swept’ contained non-compliant posts, with the highest proportion of such posts in the fashion, home and parenting, and travel and lifestyle industries. The most common issues seen in the sweep were:[2]

• failing to disclose brand relationships
• using vague or confusing language to describe brand relationships
• making incorrect statements about brands, products or services in posts
• other concerning practices, including subscription traps and multi-level marketing.

Individuals who do not comply with advertising regulations can be penalised up to $2.5 million and companies can be penalised up to $50 million under the ACL. While the ACCC did not penalise any influencer the subject of the sweep, further non-compliance may result in enforcement action.

Influencers’ endorsements and testimonials relating to therapeutic goods must also comply with the Therapeutic Goods Advertising Code (TGA Code). An endorsement is a form of support, approval or sanction. Testimonials go further and involve a person who claims to have used a therapeutic good making a statement about that good.

The TGA Code prohibits individuals from referring to a personal experience with a therapeutic good in exchange for money or other consideration. Influencers and the businesses that engage their services should take care not to cross the line between endorsement and testimonial. More information on the TGA Code and its application to influencers can be found here.

As the use of social media for promotion of products increases, regulators’ scrutiny of online marketing will also increase. Influencers and those who engage them for marketing should evaluate their current practices to ensure compliance with the ACL, TGA Code and other obligations under law.

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Authored by:

Kelly Griffiths, Partner
Clare Smith, Associate

[1] Australian Competition and Consumer Commission, Social Media Influencer Testimonials and Endorsements: findings of the ACCC’s internet sweep of testimonials and endorsements by influencers, December 2003, [1].

[2] Ibid.