What you need to know:

• The Australian Competition and Consumer Commission has launched two internet sweeps – one looking at environmental and sustainability marketing claims and the other looking at online reviews and influencers.
• The announcement follows Kim Kardashian's near A$2m fine for promoting cryptocurrency without clear disclosure.
• Industry reckons the regulator will be looking to make a similar high profile example locally – with industry commentators suggesting not every brand or influencer has been playing by the rules.
• Australian regulators are increasingly turning their attention to the ad industry. ASIC this week launched legal action against Harvey Norman, with the retailer accused of misleading and deceptive conduct within its advertising.

Catching up with the Kardashians

Brands that leverage influencers and don’t make sure commercial or advertising deals are clearly disclosed could face legal action from the competition watchdog – with fines of up to $500,000 for individuals or millions for corporations.

The same day Kim Kardashian was fined almost A$2 million in the US for promoting a cryptocurrency product, the Australian Competition and Consumer Commission (ACCC) specifically called out “misleading posts by influencers” in two impending internet sweeps. The sweeps will target deceptive environmental and sustainability claims and fake online reviews. The ACCC will review 200 unnamed company websites for misleading environmental claims across energy, automotive, household products, appliances, FMCG, cosmetics, clothing and footwear brands. It will also look at 100 additional businesses – in similar categories, but including furniture, kitchenware, health products, travel and electronics – for use of influencers and third-party review platforms.

“Unfortunately, consumers are facing an ever-increasing range of manipulative marketing techniques designed to exploit or pressure them, due in part to the huge number of online information sources available,” ACCC Deputy Chair Delia Rickard said in a statement

“The sweeps will be followed up with compliance, education and potential enforcement activities and we also want to improve awareness to enable consumers to make more informed purchasing decisions.” 

In other words, at some stage over the next few months the ACCC is likely to name and shame either a brand or specific influencer – or both – for misleading or deceptive conduct over their posts. It has named consumer and fair trading issues that relate to “manipulative or deceptive advertising and marketing practices in the digital economy” on its annual list of enforcement priorities for the 2022-23 financial year.

Storm in a teacup?

Local numbers are difficult to pin down, but global influencer marketing spend is estimated to top US$15 billion this year, according to HypeAuditor. Influencer marketing has been under close scrutiny by Ad Standards, which has made dozens of rulings finding brands did not do enough to ensure influencers’ posts were distinguishable as advertising.

Since early last year, when the Australian Association of National Advertisers (AANA) updated its Code of Ethics, Ad Standards has called out high profile brands and celebrities like Anna Heinrich, McDonald’s, Unilever, Unibet, Thermomix and Grill’d. But the body has limited powers and cannot impose penalties. As a result, not every influencer or brand has heeded Ad Standards’ warnings.

“This is the professionalisation of influencer marketing,” Sharyn Smith, founder of influencer agency Social Soup and Chair of the Australian Influencer Marketing Council, or AiMCO.

“Anyone who has a relationship with an influencer, be it paid or gifted, whatever claims or messages that influencer is putting out there should be scrutinised like any other ad. If that’s in place, the brand or business is responsible for the messaging… The regulation is catching up with what’s happening in the market.”

Sam Kelly, Managing Director of digital media agency Hello Social, said those who’ve not been following evolving guidelines are most at risk as the regulatory spotlight focuses on the industry.

“The consultation and specific regulation won’t affect those who have been compliant with advertising standards to date,” he said.

“Influencer marketing has continued to prove its effectiveness and credibility over the past five years. It works, it’s here to stay and is still growing rapidly. With this meteoric rise and success, we were anticipating increased regulation… It all sounds scary but it’s a storm in a teacup.”

Heavy fines

Other government bodies – the Therapeutic Goods Administration (TGA) and financial regulator the Australian Securities and Investments Commission (ASIC), for example – have recently introduced rules around influencer marketing.

ASIC has cracked down on financial influencers – so-called ‘finfluencers’ – saying it would apply strict financial services laws to their online comments. Likewise, the TGA updated its advertising code to clarify that testimonials by influencers cannot be used to advertise therapeutic goods like medicine and medical devices.  

“Some of the regulators have been quite active around education in the past year,” Tegan Boorman, lawyer and Founder of Social Law Co., said.

“I think everyone’s been wondering, where is the ACCC on influencer marketing, and will they be next? We've been talking in legal circles for a while about action from the ACCC likely being an inevitability. It was just a matter of when."

Infringement penalties for breaching consumer law protections are $13,320 for a corporation,  $133,200 for a listed corporation or $2,664 for an individual – for each alleged contravention. When taken to court, the maximum amount under Australian Consumer Law, Boorman said, are $500,000 for an individual and the greater of $10m, three times the benefit obtained by the offence, or 10 per cent of annual turnover for a corporation.

“The risks associated with breaching the Australian Consumer Law… have always existed in the context of influencer marketing campaigns. That’s where real financial penalties come into play,” she said.

“The possibility of losing brand deals, other brands not wanting to work with you because you have in the past failed to disclose, as well as consequences for breaches of the platform terms and policies are other real risks.”

Smith said Kardashian is the “perfect example” of a regulator, in her case the US’s Securities and Exchange Commission, making a high-profile example.

“I have no doubt that is coming in Australia,” she said. “Some of the big influencers think they’re above it. They hide behind the idea that ‘it’s obvious’. No. Everybody should be disclosing [if the post is an ad].”

Watchdogs crack down

The ACCC's move comes as Australia's corporate regulator ASIC also turns its attention to the ad industry. On Wednesday ASIC launched legal action against Harvey Norman, one of Australia's largest advertisers, alleging misleading and deceptive conduct within an ad campaign promising interest-free credit, when the terms actually required consumers to sign-up for a Latitude credit card and as a result, could end up paying hundreds of dollars more for the goods.

ASIC argues that the fine print disclosing those terms was not sufficiently prominent. It is seeking a financial penalty and wants the federal court to force Harvey Norman to take out prominent ads admitting misleading and/or deceptive conduct.

The case serves as a warning to advertisers following new 'design and distribution obligations' on the banking and financial services sector that came into force last October, placing tighter restrictions on how financial products are marketed to consumers.