By Clint Fillipou, Principal/Managing Director Melbourne
27 January 2023
The Australian Competition and Consumer Commission (“ACCC”) this week has flagged that the influencer industry is on its 2023 enforcement watch list, along with a handful of other problem areas in the digital economy. As brands and agencies know well, the influencer space is now a very valuable segment of the advertising and marketing ecosystem. For many years influencers largely slipped the regulatory cracks, in part because Australia’s advertising industry is self-regulated. As concern grew, the AANA updated the industry’s Code of Ethics to more clearly apply to influencers. Still, many stakeholders were either bad eggs or plainly ignorant of the rules, so recently we have seen further interest by the Australian Securities and Investment Commission (“ASIC”), the Therapeutic Goods Administration (“TGA”), and now the ACCC. Indeed, we have even seen interest from the Australian Tax Office in the influencer space, as the regulatory world started to catch on to some of the concerning practices seen in the market. The ACCC has decided to make a play at cleaning things up after receiving a large number of tip-offs from the public, so what is the play, how will they do it, and why?
What are the ACCC’s powers again?
The ACCC is the enforcer of Australia’s competition law, primarily comprised within the Competition and Consumer Act 2010 (Cth) (the “Act”) and the Australian Consumer Law (“ACL”) contained in Schedule 2 of the Act. The ACCC has broad enforcement powers, including the seeking of substantial fines, issuing infringement notices, obtaining court enforceable undertakings, making corrective advertising orders, issuing substantiation notices, imposing compliance programs, and more.
The ACCC has the discretion to respond to tip-offs (such as from consumers, or other stakeholders), and may choose to conduct its own investigations or seek to enforce the ACL where it considers a breach to have occurred. For instance, if a brand has engaged in misleading or deceptive conduct, or published a false testimonial (or allowed one to be published), or made some other form of false representation, if the ACCC considers the breach to be particularly serious, the ACCC can deploy its enforcement arsenal on the relevant party.
But… doesn’t the advertising industry regulate itself?
Yes, indeed, the Australian advertising industry operates under a self-regulatory system, and a very efficient one at that. However, the self-regulatory system that sees advertising complaints submitted to AdStandards, then reviewed against advertising codes like the AANA Code of Ethics and determinations made, only has so much power. Ultimately, where conduct goes beyond merely breaching an advertising code and starts to put consumers or competition at risk, the ACCC will intervene. The ACCC is now flagging that it is sufficiently concerned about dodgy influencer practices that it is more forcefully injecting itself into the fray.
What is the ACCC particularly concerned about?
The ACCC has made clear that it is concerned about clearing up deceptive practices in the influencer space, and that all stakeholders in the influencer industry are on notice. So, agencies, brands, social media platforms and influencers themselves all need to be aware, especially given the ACCC has flagged its concern about false testimonials or misleading representations, which are banned under the ACL.
The ACCC has also expressly stated that their “sweep” is targeting “sectors where influencer marketing is particularly widespread including fashion, beauty and cosmetics, food and beverage, travel, health fitness and wellbeing, parenting, gaming and technology”.
What can we expect now?
The influencer space is one area of the market where, by its very nature, the problematic conduct is somewhat easy to track because influencers put their material out in the market for public consumption. The ACCC will almost certainly focus on the influencers with the largest follower base first, and the bigger brands and more obvious influencer-led campaigns. This is on-trend for the ACCC, but it is also the most sensible way of conducting a sweep of the industry. The larger the brand and influencer target, the more attractive it will be for the ACCC to use as a test-case and to make an example of. However, the ACCC has also expressly stated that micro-influencers with smaller followings are on their radar, as these micro-influencers can have a profound impact on the buying decisions of everyday consumers.
It is particularly important that agencies and brands understand that the 2023 landscape for influencer campaigns is very different to the one that existed a few years ago as the industry grew. Further, agencies and brands need to be aware that we are dealing with far more than the risk of an upheld AdStandards complaint – real regulatory enforcement is on the horizon, and the ACCC’s new enforcement powers to issue infringement notices (as flagged above) alone are enough to be nervous about, at $13,320 per infringement for corporations. If the ACCC is particularly motivated though, the new maximum financial penalty that the ACCC can seek for more serious breaches of the Act are the greater of $50,000,000; or if the Court can determine the “reasonably attributable” benefit obtained, 3 times that value; or if the Court cannot determine the benefit, 30% of the corporation’s adjusted turnover during the breach turnover period for the offence.
What we recommend
Now is the time to ensure your practices and procedures in the influencer space are compliant. But, what does “compliant” mean in practical terms? Firstly, we strongly recommend that all influencer engagements are properly contracted – given that many engagements are through agencies or managers, brands and agencies alike need to ensure that these relationships are clearly and properly documented, with appropriate liability and indemnity clauses, and that all expectations of the influencers are properly set out. It is also highly recommended that all influencer briefs are legally reviewed, and that all material going to market is reviewed before publication. After all, if an influencer is publishing for good and valuable consideration, their posts are going to be deemed the publication of the brand – so, brands are on notice.
If you would like further information on navigating the influencer space, or any of the material discussed above, please contact us.