If there was any doubt that the metaverse is ‘real life’, it is quickly being eroded. On 27 January 2023, the Australian Competition and Consumer Commission (ACCC) published a media release announcing that it will be targeting misleading testimonials and endorsements made by social media influencers. This especially includes posts that do not disclose commercial relationships with businesses.
The ACCC used its Facebook post to ask for tip-offs from consumers for information on Influencers who don’t disclose ads in their posts, using the hashtag #InfluencersAreOnNotice. The ACCC is reviewing posts made on Instagram, TikTok, Snapchat, YouTube and Facebook, and livestreaming service, Twitch and targeting sectors including fashion, beauty and cosmetics, food and beverage, travel, fitness, parenting and technology. The ACCC has suggested that its sweep could result in fines and enforcement activities.
The sweep is in line with ACCC’s 2022/23 Compliance and Enforcement Priorities, which includes prioritising addressing ‘manipulative or deceptive advertising and marketing practices in the digital economy’, as well as its ongoing Digital platform services inquiry.
What are misleading testimonials and endorsements?
Any comments that are inaccurate or untruthful are misleading.
Specifically, in relation to influencers’ testimonials and endorsements, comments and posts may be misleading if, for example:
- the influencer is being paid or otherwise incentivised for making the post, but the commercial relationship with the business is not disclosed;
- the influencer has not actually used the product or service but suggests that they have;
- incorrect product descriptions are provided;
- inaccurate claims about the performance or quality of the goods or services are made;
- relevant information is omitted; or
- the influencer provides a review of the goods or services and the review is not their own view and not independent.
Even if the Influencer is the person making the testimonial and endorsement, the business being advertised may be implicated in the misleading testimonials and endorsements and be held responsible, especially if the comment or post is made or reflected on the business’ social media pages.
What laws are potentially being broken?
The Australian Consumer Law provides broad obligations on businesses selling direct to consumers.
Section 18 of the Australian Consumer Law requires that persons do not engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Section 29 of the Australian Consumer Law prohibits persons making certain false or misleading representations about goods and services, including in relation to testimonials about the goods and services.
Key takeaways to consider
- If influencers are promoting goods/services both the business and the influencer should ensure that their comments are accurate, truthful and their own.
- Disclose the relationship between the business and the influencer in the post.
- Businesses may wish to develop guidelines for influencers to ensure that they follow the law.
- If in doubt, seek expert advice.
Please contact Leanne Oitmaa and Sara Pearson to discuss.
The TGA released its own advertising code in January 2022, which Griffith Hack discussed in this article – Changes to how influencers can promote therapeutic goods in Australia – Griffith Hack.