Crackdown on social media influencers who fail to disclose payment

US authorities recently fined American celebrity Kim Kardashian $2 million for promoting cryptocurrency on her social media accounts without declaring she was paid $385,000 to do so.

Kim K could probably pay that fine with the loose change at the bottom of her Gucci handbag, but the real damage was to her reputation. The case revealed that many of the products she and other celebrities and so-called influencers praise on their social media sites are really just advertisements for products they have secretly taken money to promote.

Celebrities and influencers can make big money flogging products to their followers. An eight-yearold American who had his own YouTube channel reviewing toys collected $32 million in 2018. US model Kylie Jenner, with 139 million followers, charges more than $1 million for a single promotional post.

According to The Daily Mail, top Australian influencers can command up to $63,000 for a single Instagram post. Sport stars and celebrities can get up to $5,000 for a single sponsored advertisement. That is on top of loads of free products.

It is tempting for influencers not to declare that these are paid promotions, because then it appears to followers as though they really do like the product. This can give the marketing some legitimacy and increase sales.

But business lawyer Christopher Morris at Stacks Law Firm warns this sort of misleading marketing breaches consumer law and offenders can be fined up to $500,000.

“The Australian Competition and Consumer Commission has launched a crackdown on influencers who fail to disclose their affiliation with the product or company they are promoting, particularly in beauty, food, travel, health, lifestyle and fashion,” Mr Morris said.

“The ACCC is examining all social media channels to identify deceptive marketing practices and the role of advertisers, marketers, brands and social media platforms in facilitating misconduct.

“Consumer law protects consumers against misleading or deceptive commercial conduct in order to encourage accurately informed purchasing. Advertising must not mislead or deceive consumers.

“Those conducting marketing campaigns on social media should get legal advice to ensure they are complying with consumer law,” Mr Morris said. The ACCC says with more Australians shopping online, consumers often rely on reviews and endorsements to decide whether to buy.

ACCC chair Gina Cass-Gottlieb said the public had already reported more than 100 influencers who had promoted products without declaring they were paid endorsements.

“The number of tip-offs reflects the community concern about the ever-increasing number of manipulative marketing techniques on social media, designed to exploit or pressure consumers into purchasing goods or services,” she said.

Responsibility for comment is taken by Stacks Law Firm