Working with social influencers: compliance tips for brands

It is evident from a casual gaze through social pages or comms industry commentary that brands are turning to ‘social influencers’ to promote their products through online social channels, with the intent of influencing consumer purchasing decisions in favour of their products.

Source: Mumbrella

Brands and their agencies are identifying and building commercial relationships with individuals, events or groups such as journalists, bloggers, instagrammers, consultants, or industry analysts (directly or via influencer networks) to leverage them and build brand credibility within their identified following or ‘tribe’. This has sometimes been referred to as the Oprah Winfrey effect.

The product is sometimes overtly or subtly promoted by the influencer and the influencer does not always disclose that they have been rewarded. This gives rise to an important consumer law question – do social influencers need to disclose rewards and commercial connections with brands and products?

The question is important because consumers trust what is said online and a breach of that trust may result in a breach of the law. According to Nielsen Global Online Consumer Survey more than two thirds of consumers say they trust opinions stated online – second in trustworthiness only to recommendations from people they know in real life.

For example, in January 2015 Australia Post came under fire after being caught out by consumers over its use of social media influencers, when it emerged it was paying instagrammers without disclosing that their endorsements were being paid for.

Social influencers take many different forms, including:

• Celebrities and personalities with a significant social presence and ‘tribe’ of followers
• Brand ambassadors
• Events / activities / sports (eg V8 Supercars)
• Bloggers and instagrammers
• Journalists (native advertising)
• Individuals that have received social notoriety purely from their social activities (eg You Tube videos)
• Product review sites – (eg App Store etc)

The Australian Competition & Consumer Commission (ACCC) is the Federal Government regulator looking after the interests of consumers and competition in the Australian market place. They administer the Competition & Consumer Act 2010 and this act contains the Australian Consumer Law (ACL) which applies to the commercial practices of any person, company or business in Australia.

The ACL prohibits misleading or deceptive conduct and specific product misrepresentations, including testimonials (Section 18 and 29). This is the only generally applicable law at this time that would require social influencers to disclose rewards and commercial connections for posts. A brand or business would only need to do so if, in the circumstances, it would be misleading or deceptive or a misrepresentation NOT to disclose rewards and commercial connections for posts.

What this means legally is difficult to answer and must be assessed on a case by case basis having regard to the nature of the communication, the context, the likely audience of the post and the consumer ‘take out’.

The uncertainty in Australia is compounded due to a lack of judicial decision – we are still waiting for the “big” court decision around the requirements of social influencers and their paid for posts, although we can obtain some guidance from a case involving celebrity testimonials: ACCC v Advanced Medical Institute Pty Ltd (the Turpie Case), in relation to advertising and promotion by Advanced Medical Institute Pty Ltd (AMI) of a nasal spray form of treatment for erectile dysfunction. The Federal Court of Australia declared that AMI engaged in conduct that was misleading or deceptive in breach of section 52 of the Trade Practices Act 1974 (now section 18 of the ACL) by causing advertisements to be published in major newspapers featuring the celebrity Ian Turpie and containing false representations including:

• That Mr Turpie had undertaken an interview during which he disclosed, in the presence of his wife, that he was losing his sexual potency, and
• That AMI nasal delivery system had cured or alleviated Mr Turpie of the effects of impotence or erectile dysfunction.

The court also declared that the advertising agent for AMI, by preparing and causing the advertisements to be published, was knowingly concerned in, or party to, the breach of section 52 of the Act. This makes it clear that both the advertising agency and the celebrity concerned can be held liable for misleading conduct.

Another recent case of some relevance to the question of liability is ACCC v Allergy Pathway Pty Ltd, where the Federal Court found the defendant company liable for false customer testimonials posted on the wall of its Facebook and Twitter pages, when it knew the testimonials were false and took no steps to remove them.

An example involving Twitter occurred in April 2012, with the SA Tourism Commission Kangaroo Island ‘Cash for Tweets’ controversy when they came under fire from Media Watch for paying celebrities to tweet positive messages about Kangaroo Island without disclosing that the celebrities were paid to post.

The ACCC is presently watching social influencers and has issued some guidance for online reviews. From our reviews of the ACCC’s commentary, press releases and comments to journalists we can state with confidence that the ACCC is of the view that the use of endorsements on social media can breach the ACL when the influencer has received payments for the post or comment that is not disclosed. For instance:

“There is nothing illegal about paying someone to do an endorsement, but is a third party aware of the commercial relationship? What we ultimately say to businesses and bloggers is that you are on good safe ground if you disclose commercial relationships. When you’re not then you start running into this grey area that could potentially lead you to a messy end.”  Michael Schaper, ACCC Deputy Chair, January 2014.

Here are some compliance tips we recommend for brands and agencies entering into commercial relationships with social influencers and offering rewards for posts:

• Enter into an appropriate Social Influencer Agreement with the influencer that addresses the legal issues (including those discussed in this article) and mitigates brand risk appropriately
• The risk of ACL breach in our view increases if the comment or post is actually ‘scripted’ and clear disclosures about the rewards and commercial associations are not made
• Posts and testimonials must reflect genuine views, opinions, experiences and should organically fit
• For celebrity or other influencer to disclose rewards, incentives and commercial connections with a brand – case by case basis as to whether they need to disclose. Consider audience take out and if a well known brand ambassador already
• If consumers think blogger is blogging without commercial influence, likely to be misleading or deceptive
• Blogger should disclose commercial connection in a prominent way
• Blogger should be told incentive is available regardless of what is stated – positive or negative
• Paid for and fake positive consumer reviews on review sites likely to be misleading or deceptive
• Brands writing of ‘own’ reviews to look like genuine consumers – eg fake testimonials on You Tube, own websites, Facebook page etc likely to be misleading or deceptive
• Brands writing negative reviews to damage reputation of competitors likely to be misleading or deceptive

The use of social influencers by brands and their agencies is growing in popularity but it is important that their influence is used in such a way so as to enhance the brand and its products and not result in negative commentary and legal liability. As the legal implications of using a given influencer and releasing a particular post must usually be considered on a case by case basis, we strongly recommend that legal advice and clearance be obtained.