Clarification of social media laws #notanad

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[co-authors: Angell Zhang, Zachary Forrai]

Recently, Ad Standards Australia (Ad Standards) found two social media influencers breached the Australian Association of National Advertisers Code of Ethics (the Code) in relation to their obligations to disclose paid promotions on social media platforms. In these cases, Ad Standards found that when promoting goods on social media, tagging a brand name alone was not obvious to show followers that there was a commercial arrangement between the social media influencer and company.

This is a timely reminder for companies to review their internal policies, particularly with respect to social media advertising. To the extent companies partner with social media influencers or key opinion leaders to promote their products, such marketing must comply with the Code, Australian Consumer Law and other relevant laws pertaining to their industry of operation

Background

Recently, Ad Standards Australia (Ad Standards) found two social media influencers breached the Australian Association of National Advertisers Code of Ethics (the Code) in relation to their obligations to disclose paid promotions on social media platforms. In these cases, Ad Standards found that when promoting goods on social media, tagging a brand name alone was not obvious to show followers that there was a commercial arrangement between the social media influencer and company.

Ad Standards is the central authority for receiving complaints about advertising across all forms of media (including online advertising). Ad Standards works in collaboration with AANA, the principal body for the regulation of advertising and marketing communication in Australia. All advertisers who choose to abide by the self-regulatory scheme for advertising and marketing must comply with the Code. The Code is aimed at ensuring advertising is legal, honest and reflects community standards.

What are some of the recent changes?

In February 2021, AANA updated the Code to impose stricter conditions for social media advertising. These changes include (amongst others), additional restrictions on the use of content containing violence where children form part of the audience, prohibiting use of overtly sexual images in outdoor advertising where the image is not relevant to the product or service being advertised and additional prohibitions on the proliferation of gender stereotypes in advertising.

In particular, section 2.5 of the Code now specifies that advertising must only use language which is appropriate in the circumstances (including appropriate for the relevant audience and medium). Further, section 2.7 of the Code requires that advertising must be clearly distinguishable as such. This means that advertisers (such as social media influencers) would not be in breach of the Code if it can be proven that the audience of a particular post was likely paid for the promotion, even if this was not expressly stated.

Advertising Guidance

The practice notes to the Code clarify that advertisers have flexibility in terms of how to ensure their material is distinguishable as advertising or marketing communication. For example, advertisers may use logos or brand names combined with other visual or audio cues where appropriate, such as background shading, outlines, borders, graphics, video or audio messages depending on the medium. When advertisements are targeted to a specific audience, the relevant perspective is that of a typical member of the targeted group.[1]

What are the impact of the changes?

Importantly, the obligation to comply with the Code ultimately falls on the brand owner who has control over the relevant material and whose products or services are being promoted.

Penalties for non-compliance (and the failure to modify or discontinue that non-compliance) with the Code are significant. Case reports may be made publicly available via the Advertising Standards Bureau website or referred to the relevant enforcement governmental agencies such as the Australian Competition and Consumer Commission (ACCC). To that end, the ACCC have indicated their willingness to implement and impose penalties for breaches of the Code. Where such breaches of the Code are deemed to be misleading or deceptive under the Australian Consumer Law, penalties could be up to A$500,000 for individuals and for corporations, the greater of A$10 million, 3 times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of annual turnover in the preceding 12 months.

Next steps

This is a timely reminder for companies to review their internal marketing policies, particularly with respect to social media advertising. To the extent companies partner with social media influencers or key opinion leaders to promote their products, such marketing must comply with the Code, Australian Consumer Law and other relevant laws or codes pertaining to their particular industry.

For example, companies operating in the pharmaceutical or medical device industry must also be mindful of their obligations when using endorsements in their advertisements. Endorsements of therapeutic goods must comply with the Therapeutic Goods Advertising Code (No.2) 2018 (Cth) (TGAC) which requires advertisers to disclose the nature of endorsement and whether the person has received (or will receive) valuable consideration for the endorsement. Given the increased shift towards internet and social media advertising, the Therapeutic Goods Administration is also looking to update the TGAC and is currently seeking public consultation on amendments to the TGAC.

 

[1] See full copy of Code and Practice Note here: https://aana.com.au/self-regulation/codes-guidelines/code-of-ethics/

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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