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Could Influencers Be Breaching Advertising Laws?

Could Influencers Be Breaching Advertising Laws?

The rise of influencer culture has brought a range of new advertisement laws and codes that influencers should abide by. Read more here.

31st August 2021
Reading Time: 3 minutes

Social media influencers have become increasingly prevalent in the way businesses promote their products and services. However, there are rules and regulations relating to new disclosure requirements influencers must abide by regarding paid advertisements/sponsorships. This article outlines what these laws and codes are and what they mean for influencer advertising.

Who are Influencers?

In general, an influencer is a person who holds the power to affect the purchasing behaviours of their audience. This is usually a result of their fame, position and relationship with their audience.

The most common types of social media influencers are:

  • High profile personalities or celebrities with significant social media presences,
  • Other individuals with high social media followings including bloggers, instagrammers, Youtube content creators,
  • Brand ambassadors.

Influencers are generally engaged by a business or brand. The purpose of engaging an influencer is purely promotional, as an influencers persuasion over their audience can be a powerful tool.

Are there Influencer Laws?

Well, there are actually a few pieces of legislation and code that Australian influencers must abide by. These include:

  • Australian Consumer Laws and,
  • The Australian Association of National Advertisers Code of Ethics.

Firstly, all forms of advertising must meet the rules prescribed by the Australian Consumer Law (ACL). For influencers, the most important rules are around misleading and deceptive conduct, contained in sections 18 and 29 of the ACL. Read on below to find out how an influencer may be in breach of these ACL provisions.

Secondly, the Australian Association of National Advertisers (AANA) is the advertising industry’s self-regulating body surrounding advertising guidelines. The AANA has a set of rules, called the Code of Ethics. The body responsible for compliance with the Code of Ethics, is “Ad Standards”. In February 2021, the AANA tightened its grip on social media advertising. AANA revamped their Code of Ethics, now requiring all influencers to disclose their commercial relationships in connection to their content/postings.

How Influencer Laws may be breached

If you’re aware of influencers, you may also be aware of their tendency to create content based off paid sponsorships. Under the ACL and AANA’s Code of Ethics, an influencer is prohibited from engaging in any commercial conduct that may mislead/deceive their audience. Specifically, under section 2.7 of the Code of Ethics, an influencer may be in breach of these laws and Codes in the following ways:

  • Failing to write #ad, Advert, Advertising, Branded Content, Paid Partnership, Paid Promotion on social media posts,
  • Using the labels of #spon, gifted, “thanks to….”, “wearing….”, are not sufficient to disclose the influencers commercial relationship,
  • Simply tagging the brand/label is not sufficient disclosure.

All in all, it really comes down to the wording of an influencers post. Ad Standards have made it quite clear under section 2.7 of the Code, the wording must disclose the partnership/sponsorship.

If you are a business wishing to engage an influencer, it is great legal practice to have an Influencer Agreement in place. This agreement should specifiy all advertisement disclosure requirements. This will ensure that both parties are complying with Australian laws and codes.

Consequences for breaching Influencers Laws

If an influencer breaches the Australian Consumer Law, substantial fines can apply. However, taking action under the Australian Consumer Law is the less common route for influencer advertisement investigation. Therefore, the common avenue regarding influencer compliance is through Ad Standards. When it comes to complaints made to Ad Standards about an influencers breaching behaviour, Ad Standards are in charge of investigating the complaint. Now, even though there are no fines that apply for an influencers breach of the Code, Ad Standards can severely damage the reputation of the influencer. This is because Ad Standards’ investigations and findings are publicised. This is seen as a major deterrent in itself, as bad publicity can result in sufficient financial detriment.

Key Takeaways

Engaging an influencer is a great way to promote your brand or business and reach a wide array of individuals. However, if you choose to engage an influencer, you must be clear regarding their requirement to disclose any paid advertisements, sponsorships or gifts. Failing to do so, may result in a breach of Australian Consumer Law and Ad Standards Code of Ethics, both having devastating consequences. However, having an Influence Agreement in place can help both the business and influencer understand their obligations and duties to one another. Thus, minimising the risk of breaching influencer specific laws.

Don’t know where to start?
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Mai Sarkissian

Mai is a Digital Marketing Coordinator at Lawpath, working as part of the Content Team. She is in her final year of a Bachelor of Laws degree at the University of Wollongong. She is interested in Business Law and Employment Law.