Misleading influencer advertising and online reviews #trending on ACCC’s #foryoupage

The ACCC’s sweep of social media advertising by influencers found that a whopping 81% of influencers reviewed made posts that were potentially misleading under the Australian Consumer Law. In a separate sweep, the ACCC found that 37% of businesses reviewed had concerning online reviews or testimonials of their products.

The ACCC has released the findings of its social media sweep of influencer testimonials and endorsements and its sweep of online reviews and testimonials posted on businesses’ websites, Facebook pages and third-party review platforms. The sweeps come off the back of the ACCC’s 2023/24 compliance and enforcement priority to address “[c]onsumer and fair trading issues relating to manipulative or deceptive advertising and marketing practices in the digital economy.”

The ACCC reviewed 118 social media influencers across Instagram, TikTok, Snapchat, YouTube, Facebook and Twitch and 137 businesses to assess the nature and extent of online advertising practices, and the results may surprise you.

There was a high rate of non-compliance across the different sectors the ACCC reviewed in its influencer sweep. At the highest end of the range, the ACCC found that 96% of fashion influencers reviewed made concerning posts. At the lowest end of the range was gaming and technology, with the ACCC reporting that 73% of influencers reviewed made concerning posts. The major issues identified by the ACCC in its influencer sweep were:

  • failure to disclose brand relationships in posts, including the receipt of payment, gifts or other incentives to promote brands, products or services
  • vague or confusing attempts at disclosing brand relationships, for example, the use of terms like “sp, “spon”, “sponcon”, “collab” and “ambassador” or disclosures at the end of lengthy captions or videos
  • false or inaccurate statements about a brand, product or service, including claims that the influencer had a history with the product when they may not or that the influencer had purchased items that may have actually been gifted
  • engaging in other concerning practices, such as subscription traps where an influencer promotes a free trial for a subscription that is difficult to cancel and multi-level marketing schemes disguised as ordinary membership programs

The sectors of greatest concern to the ACCC following its online review sweep are household appliances and electronics, beauty products and home improvement and household. The ACCC identified the following key issues from its online review sweep:

  • use of third-party review management services which encourage businesses to filter which reviews are publicly displayed
  • failure to clearly disclose incentivised reviews and encouragement of inflated reviews such as gifts, reward points or discounts offered to consumers in exchange for providing a review
  • creation of fake positive reviews by a business, or allowing fake positive reviews to remain on their website, including positive reviews written by friends, family, employees or people incentivised by the business to leave reviews, without stating the personal or commercial relationship with that business
  • prevention, editing or removal negative reviews or testimonials to create a more favourable impression of the business
  • misrepresentation of review ratings and the number of reviews received to represent a higher positive rating than is the case

How can businesses ensure their influencer advertising campaigns comply with the Australian Consumer Law?

The Australian Consumer Law’s prohibition of false, misleading or deceptive conduct extends to influencer advertising on social media and online reviews. As explained in our article “50 million shades of pain – the new competition and consumer law penalties and the ACCC’s updated priority areas”, breaches of the Australian Consumer Law carry serious penalties.

If you are a brand owner or advertiser, keep the following in mind when using influencer advertising to stay on the right side of the Australian Consumer Law.

Do:

  • Ensure that you are aware of your obligations, and the influencers you work with are aware of their obligations, under the Australian Consumer Law when promoting your products
  • Carefully review social media content created by or with influencers to ensure they do not make any misleading or deceptive claims about your products
  • Make sure the influencers promoting your products have actually used them and are expressing their own views about your products in promotional social media posts
  • Ensure that the influencers you work with use clear, obvious and up-front hashtags (e.g. #ad, #sponsored or #paidpartnership) or platform advertising disclosure tools on all social media content to disclose sponsorship arrangements or paid endorsements
  • Require influencers to format their posts in a way that makes it easy for consumers to notice the disclosure of the underlying commercial relationship

Don’t:

  • Require influencers to follow a script that may not reflect their own experiences with your products or make false, misleading or deceptive claims about your products (including that there is “limited stock” when there is not)
  • Rely on influencers using vague or unclear language (e.g. “sp”, “spon”, “gifted” or “collab”) or “tagging” your brand to disclose sponsorship arrangements or paid endorsements
  • Re-post an influencer’s content and state or imply you have a commercial relationship with that influencer when you do not

For tips on ensuring your online reviews comply with the Australian Consumer Law, read our article “Cheat Sheet for Businesses: How to Manage Online Reviews in Compliance with the ACL”.

New advertising guidelines and ACCC enforcement loading…

The ACCC’s sweep is by no means the end of the ACCC’s scrutiny of influencer advertising and online reviews. The ACCC is set to release influencer advertising guidelines for businesses and influencers and online review guidelines for businesses in early 2024. And it doesn’t stop there. The ACCC Acting Chair Catriona Lowe has warned that “a renewed focus on enforcement” will follow the new guidelines.

The ACCC’s findings and upcoming guidelines represent an opportunity for businesses to review their current marketing practices and ensure consumers can trust the testimonials and endorsements made in online reviews and by their favourite social media influencers.

If you have a question about your next influencer marketing campaign or the management of online reviews, contact the Addisons Competition, Consumer & Antitrust team.

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