100 Social Media Influencers Face Australian Probe Over Hidden Endorsements

The logos of Facebook, YouTube, TikTok, and Snapchat on mobile devices in a combination of 2017–2022 photos. AP Photo

YouTubers, Instagrammers, Facebookers, or TikTokers have been put on notice by Australia’s competition regulator over misleading or undeclared product endorsements.

The move comes after the U.S. Securities and Exchange Commission fined celebrity Kim Kardashian $1 million (AU$1.45 million) in October 2022 for promoting a cryptocurrency brand without declaring she was being paid $250,000 for the endorsement.

On Jan. 27, the Australian Competition and Consumer Commission (ACCC) announced it would look into 100 social media influencers after it received 150 complaints from the general public.

Consumers were responding to an ACCC post on Facebook requesting information from the public.

Kim Kardashian attends the 2022 White House Correspondents' Association Dinner at Washington Hilton in Washington on April 30, 2022. Paul Morigi/Getty Images

Many of the tip-offs involved social media influencers in the beauty, lifestyle, parenting, and fashion industries who allegedly failed to disclose their relationship with companies they were promoting, according to ACCC chair Gina Cass-Gottlieb.

“We want to thank the community for letting us know which influencers they believe might not be doing the right thing,” Cass-Gottlieb said.

“Already, we are hearing some law firms and industry bodies have informed their clients about the ACCC’s sweep and reminded them of their advertising disclosure requirements.”

The watchdog said it would review a range of social media platforms, including Instagram, TikTok, Snapchat, YouTube, Facebook, and livestreaming service Twitch.

The areas to be examined include fashion, beauty and cosmetics, food and beverage, travel, health fitness and well-being, parenting, gaming and technology.

The ACCC is also considering the role of advertisers, marketers, and social media platforms, among others, in facilitating the alleged misconduct.

“With more Australians choosing to shop online, consumers often rely on reviews and testimonials when making purchases, but misleading endorsements can be very harmful,” Cass-Gottlieb said.

“It is important social media influencers are clear if there are any commercial motivations behind their posts. This includes those posts that are incentivised and presented as impartial but are not.”

Labor Government Backs Review

The local online advertising market grew 22 percent year-on-year to A$13.9 billion in the year ending June 30, 2022, according to a report on online advertising spending by IAB Australia, the top industry association for online advertising.

The digital advertising market for social media influencers is estimated to be worth A$560 million.

The Albanese Labor government welcomed the ACCC’s compliance action against social media influencers.

Australian Financial Services Minister Stephen Jones speaks to the media during a press conference at Parliament House in Canberra, Australia, on Nov. 7, 2022. AAP Image/Lukas Coch

Assistant Treasurer and Minister for Financial Services Stephen Jones said on Jan. 27 that social media influencers should disclose business agreements so consumers can make fair and informed decisions.

“If you’re making claims about products on social media or on radio or TV, they’ve got to be true,” he said. “If you’re getting cash for comment, that should be declared—it’s pretty straight forward.”

Maintaining Trust is Crucial, Says Industry Chair

The industry itself has worked on addressing the issue, forming the Australian Influencer Marketing Council (AiMCO) and creating a Code of Practice.

The Council recommends the routine and consistent use of hashtags like “#Ad, #Advert, #Advertising, #PaidPartnership, #PaidPromotion or #Sponsored” in videos and posts.

“An influencer who promotes any product without disclosing it, whether it be an alcoholic beverage or hair straightener, is misleading their followers,” AIMCO chair Sharyn Smith told the Australian Financial Review.

“Those followers are believing those are organic posts. It lacks the transparency of what we really need to work.”

“Everything is based on trust. If that trust is broken, if people are being misled, the industry stops working.”