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ACCC’s ongoing scrutiny of advertising by influencers and the online economy


The ACCC is sharing an update on its continuous efforts to examine deceptive online reviews and endorsements by influencers.


‘The next steps in our continuing scrutiny of these important parts of the online economy include developing strong guidelines for online operators so they clearly know what we expect, before a renewed focus on enforcement.’ ACCC Acting Chair Catriona Lowe said.


‘Influencers and businesses need to review their practices and improve compliance with the Australian Consumer Law to ensure consumers can trust the information they find online.’


Out of the 118 social media influencers examined in the ACCC's influencer sweep, 81 percent were identified as sharing posts that triggered concerns under the Australian Consumer Law, suggesting potential issues with misleading advertising. The sweep covered influencers across seven sectors, revealing that a significant number in each sector posted content that raised concerns. This ranged from 96 percent of fashion influencers generating concerning posts to 73 percent of gaming and technology influencers causing apprehension.


‘Influencers often cultivate an image of themselves as being relatable and genuine, which can create an element of trust with their followers when it comes to recommendations,’ Ms Lowe said.


‘Based on the findings of our sweep, we are concerned that influencers, brands and advertisers are taking advantage of consumers’ trust through hidden advertising in social media posts by influencers.’


The examination covered influencers on various platforms such as Instagram, TikTok, Snapchat, YouTube, Facebook, and the livestreaming service Twitch. Consumers tipped off the ACCC about these influencers. While most influencers scrutinised had sizable followings, the sweep also encompassed some with smaller audiences. The prevalent concern identified in the investigation was influencers failing to disclose their affiliations with brands in their posts. ‘Many of the influencers we reviewed did not make adequate disclosures in their posts where it appeared they were receiving payment, gifts or other incentives to promote brands, products or services,’ Ms Lowe said.


Another common issue was influencers using vague or confusing language to disclose advertising, such as ‘sp’ and ‘spon’ instead of ‘sponsored’.


‘We found that many influencers were formatting their posts to hide their advertising disclosure or make it difficult for consumers to notice it.’


‘Under the Australian Consumer Law, businesses must not mislead or deceive consumers. This applies to influencers engaging in trade or commerce, as well as brands and marketers using influencers to advertise online.’


‘Influencers and brands may break the law if they do not take reasonable steps to ensure consumers are not misled to believe that sponsored posts are genuine.’


‘The influencer industry is complex and constantly evolving, with many parties involved that may not be fully aware of good practice. We will engage with the industry on our upcoming guidance to ensure they are informed of their obligations and have no excuses for failing to make adequate disclosures.’


Influencers are advised to:

  • Clearly disclose promotional posts in a manner immediately evident to consumers, whether they receive free products, tickets, or other gifts or incentives.

  • Avoid making misleading claims about a product, refraining from misrepresenting their experience with it.

  • Refrain from employing manipulative or deceptive advertising practices.

Similarly, businesses are urged to:

  • Ensure influencers are cognizant of their obligations under the Australian Consumer Law when endorsing products or services.

  • Exercise caution when providing influencers with scripts for posts, ensuring that scripts do not compel influencers to misrepresent their experiences or opinions about a product.

‘The ACCC will continue to monitor influencers and businesses and where we see continued non-compliance we may take enforcement action,’ Ms Lowe said.


The ACCC will release guidance in early 2024 for influencers and businesses to remind them of their obligations under the Australian Consumer Law to disclose advertising in social media posts.


BUSINESSES FOUND TO BE MANIPULATING ONLINE REVIEWS

In a separate online investigation aimed at detecting deceptive online reviews, the ACCC discovered that 37 percent of the 137 businesses under scrutiny had participated in questionable behavior.


‘Our sweep indicates that some businesses are manipulating online reviews to present a more favourable impression of their business to consumers,’ Ms Lowe said.


‘Misleading reviews cause considerable harm to consumers who increasingly seek out and rely on online reviews to help them make a purchase.’


The categories exhibiting the greatest percentages of potentially spurious or deceptive online reviews were household appliances and electronics, beauty products, as well as home improvement and household products and services. Conversely, the sectors with the lowest proportion of potentially false or misleading online reviews were health products, along with food and restaurants.


The investigation revealed a widespread practice among businesses employing third-party professional reviewers and review removal services as a strategy to handle their online image. The ACCC scrutinised 24 such businesses providing services to fabricate reviews, eliminate negative feedback, and hinder or modify unfavourable reviews. The sweep exposed that certain third-party review management services facilitate manipulation by prompting businesses to selectively showcase reviews. This involves directing customers with positive experiences to publish public reviews, while steering those with negative experiences to communicate directly with the business.


‘Businesses that seek to create fake reviews or edit or remove genuine negative reviews, with the intention of inflating their own ratings, lowering their competitors’ ratings, or hiding genuine negative reviews from the public, are in breach of the Australian Consumer Law,’ Ms Lowe said.


‘Whilst it may be important to businesses to manage their online reputation, they need to ensure that in doing so they are not misleading consumers.’


‘The ACCC will continue to monitor businesses that offer services to facilitate the manipulation of consumer reviews, including the removal, blocking or prevention of legitimate consumer reviews about a product, service or business.’


Additionally, the investigation revealed that a majority of businesses and third-party review platforms did not provide disclosure about whether reviews were incentivised. Furthermore, these platforms did not mandate reviewers to reveal whether they had received any form of benefit or incentive for their submitted reviews.


‘Businesses that do not disclose incentivised reviews are likely to mislead consumers as it presents incentivised reviews as impartial when they are not,’ Ms Lowe said.


‘Many businesses reviewed also appear to have fake positive reviews on their website or third-party review platforms, which is in contravention of the law.’

Indicators for consumers that positive reviews might be fraudulent include:

  • A sudden surge in extremely positive reviews about the business within a brief timeframe.

  • Numerous reviews authored by the same reviewer.

  • Generic reviews lacking personalised or specific details about the business or product.

  • Reviews written in comparable language to other reviews for the same business or product.

  • Discrepancies between overwhelmingly positive reviews on the business's website and a varied mix of reviews on third-party platforms.

‘The findings of our online reviews sweep will inform our education, compliance and enforcement activities with businesses, including producing updated guidance material for businesses and review platforms.’


‘We will also develop educational material for consumers to help them identify potentially fake or misleading online reviews,’ Ms Lowe said.

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