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Legal Implications of Influencer Disclosure
Do influencers fully understand their obligations to disclose?
I get it, ‘Legal protection’ doesn’t fill you with excitement when thinking about starting your own business or protecting yourself as a social media star. In fact it’s probably the last thing on your mind……the thing is, it’s kinda important. I know it’s not glamourous but it could jeapordise everything you’ve worked so hard to create if you ignore it.
This is the first of a ‘mini-series’ of posts aimed at educating individual influencers and businesses on legal considerations you need to keep up to date with. The first in this series deals with ‘disclosure’ as an influencer.
When social media was in the early stages, influencers would post photos, advertise brands, get paid for promotions with no regard to the implications. To be fair social media grew so quickly I don’t think the law could keep up. However, things have changed and there are some things you need to know about as an influencer and disclosure.
What changed?
Last year (around March 2017) you may have noticed your favourite influencers disclosing ‘paid promotion with….’ at the top of their posts or #ad in the hashtags. In fact, there was a lot of hype over the new laws requiring influencers to disclose this to their audience.
The effect came about because of the need for transparency for the target audiences of influencers who are being subjected to an advertisement. The new provision was implemented by the Australian Association of National Advertisers (AANA) in March 2017.
Specifically, the AANA stated: “Advertising or marketing communication must be clearly distinguishable as such to the relevant audience” and the advertiser has ‘a reasonable degree of control’ over the material.
What kind of marketing does this apply to?
The most common type of influencer marketing is when a company arranges with an influencer to post content on their social media regarding their brand. In this case, it must be clearly distinguishable as determined by the AANA. This is done correctly when we see posts including a tag @ the company, hashtags regarding the company name, #ad or similar wording which has the same effect.
If, on the other hand an advertiser sends the influencer product with no conditions attached and the influencer goes ahead and posts about the product, then the new provision of the code would not apply due to the lack of content control by the advertiser.
Are the new regulations working?
According to an industry report titled ‘The state of social media and influencer marketing in 2018’ published by the Exposure Co, they found that the majority of the participants did not understand the regulations and how to use them. According to the research ‘six out of 10 participants said they did not know the meaning of #sp (sponsored post) or #ad’.
There is no absolute requirement that advertising, or marketing communication must be labelled. If the relevant audience can make a clear conclusion that the content is commercial in nature, then no further disclosure or distinguishing element is needed.
What if you are in breach of the code?
A complaint or a breach of the Code can be made to the independent Advertising Standards Bureau. If a dispute is lodged, the bureau’s complaints board must decide whether or not any of the advertising claims disputed are not substantiated. They then provide a case decision to the advertiser with an invitation to produce an Advertiser Statement stating whether the claims will be modified or discontinued.
The Board then issues a final case report to the parties after a response has been received, identifying the advertiser, the product, the subject matter involved and the decision.
Where an advertiser does not agree to modify or discontinue an advertisement found in contravention of the Code, the Board can also refer the case report to an appropriate government agency and/or forward it to media proprietors. For example, in some instances there could be potential liability under the Competition and Consumer Act 2010 (Cth) for misleading or deceptive conduct, in which case the case report might be referred to the ACCC[1].
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.[2]
As mentioned above and important for the influencer industry, the ACL prohibits misleading or deceptive conduct and specific misrepresentations, including testimonials (Sections 18 and 29).
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 company brands up to $1.1 million[3].
What are the 'Grey Areas'?
As with any rules and regulations and with social media platforms developing so quickly there are bound to be some grey areas that haven’t been considered.
When a company sends an influencer a free product in the mail, without any obligation that they post about this product on their social media channels. The AANA’s Code of Ethics says that since the company has no control over whether any promotion occurs following this, if it happens to be posted by the influencer, it is NOT considered advertising or marketing communication.
Another implication is if the post was made during the course of trade or commerce. Because if it is, and the post is likely to mislead the consumer public, it could well still fall under the realms of the ACL.
Are the laws in Australia the same overseas?
This article discusses the law here in Australia and the legislation does vary a bit from country to country. In the US it is worth looking at the Federal Trade Commission (FTC) to stay updated with their disclosure laws. In the US, the rules go so far as to say that influencers must even disclose all free products they talk about.
Is there a checklist for Influencers?
Disclose and label your posts to be transparent and authentic! It is just not worth hiding when you are getting paid to promote a product or market a brand.
I also think transparency as an influencer builds trust and engagement with your audience. If you are unsure, I would disclose the nature of the agreement with the brand concerned – e.g. ‘Because I believe and use X Brand so much, they just sent me this awesome activewear set to help them promote it and share with you all! #ad’ and tag the brand to make it completely transparent to your audience.
References
[1] http://pointonpartners.com.au/advertisers-beware-social-media-influencers-paid-promote-products-must-disclose-commercial-nature-posts/
[2] https://mumbrella.com.au/brands-agencies-influencers-can-avoid-legal-trouble-comply-new-ad-transparency-rules-424597
[3] https://mumbrella.com.au/brands-agencies-influencers-can-avoid-legal-trouble-comply-new-ad-transparency-rules-424597
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Sophie Benbow is part of the team at Lazarus Legal in Sydney and has a special interest in Social Media law and Intellectual Property. She also has a blog herself and has been exposed to the social media industry. She wants to provide creatives, small businesses, influencers and start ups with current and concise information surrounding their own brand and business.
If you would like to get in touch with Sophie, feel free to contact Sophie and the Lazarus Legal team on info@lazaruslegal.com.au.
