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BlackBay Insights

  • Writer's pictureIsabella Orlic

#Disclose or be exposed: The Legal Risks of Influencer Marketing

Updated: May 1, 2023

It’s no secret that influencer marketing has transformed the ways we use social media to buy products, engage with brands and build community. As sponsored content becomes more seamlessly distributed to wide audiences, the line between organic and paid content grows blurrier by the day.


However, the law is beginning to catch up to the proliferation of influencer marketing by cracking down on instances where sponsored content has not been disclosed. Just this October, influencer Kim Kardashian was fined $1 million USD for failing to disclose that she was paid by a crypto compony to endorse an asset on Instagram. Closer to home, the Australian Competition & Consumer Commission (ACCC) announced it will examine the role of sponsored posts and influencer advertising offered by social media platforms in its sixth interim report for the Digital Platform Services Inquiry, set to be released in March 2023.


As both global and Australian watchdogs such as the ACCC turn their attention to the domination of influencer marketing, it is clear that influencers, brands, talent agencies and consumers should be aware of the legal obligations to disclose commercial partnerships when promoting products and services online.


So, what obligations do influencers have?


The AANA Code


The Australian Association of National Advertisers (AANA) regulates Australian advertising to promote transparency and honesty. In 2021, the AANA introduced a new Code of Ethics (the Code) that imposed a positive obligation on influencers to disclose commercial relationships in a clear, upfront manner that can be easily understood.


Specifically, section 2.7 of the Code requires advertisers to be cognisant that they do not camouflage the fact their content is advertising so as to make the content more engaging to audiences. The section provides some guidance on descriptions that can be used to ensure branded content is sufficiently obvious, stating hashtags such as #ad, #advert, #branded content and #paid partnership will satisfy the Code. However, the use of more vague hashtags such as #sp, #Spon, #gifted, or #collab may place you at risk of breaching the Code.


While the Code is not enforceable by law, a breach can still cause significant damage to an influencer or brand’s reputation as AANA publicises its decision. With the current market’s increasing demands for authenticity and transparency from creators, breaching the Code may corrode any trust and goodwill that has been built with audiences.


The Australian Consumer Law (ACL)


Section 18 of the ACL provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. An influencer, brand or talent agency may be exposed and liable under the ACL as failing to disclose sponsored content or paid partnerships may amount to misleading or deceptive conduct, or deemed like to mislead or deceive.


In addition, care needs to be taken to ensure an influencer avoids making false claims regarding a product they are promoting. For example, if a creator claims they love using a (#sponsoered) product or service that they have never genuinely used, they may risk liability under section 18 of the ACL.


Unlike the reputational damage that may be caused by a breach of the AANA Code, if an influencer or brand engages in misleading or deceptive conduct, they could be exposed to the risk of adverse injunctions, compensatory orders and payment of damages.


As the world of social media marketing continues to grow more profitable for influencers, brands and agencies, it is no wonder that streams of creators are stepping into the space. However, as the global regulators are turning their attention to influencer marketing and brand obligations, sufficiently clear disclosure is needed to ensure content does not breach relevant codes or consumer law.


As the ACCC announced its intention to dig deeper into sponsored posts and influencer marketing on social media, it is more imperative than ever to understand the risks of engaging in commercial partnerships. Reach out to the media law team at BlackBay Lawyers to ensure your #sponcon does not place you or your brand at risk of drowning in the AANA or ACL obligations

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