The use of social media influencers to promote food and beverage products is on the rise. As digital advertising practices continue to evolve, the legal risks become more pertinent and must be proactively managed.
While online content can be changed relatively quickly, easily and cheaply compared to a product label or packaging, damage can still be done in the short amount of time that a social media post is online due to its instant reach to thousands of viewers.
An ‘influencer’ is someone who uses their reputation to influence the purchasing decisions of their audience. They may provide a testimonial about a product or simply advertise it on a platform like Instagram. However, even when the business being promoted is not involved in the messaging, it raises potential liability issues, particularly if there is an element of gifting or paid promotion involved.
While New Zealand law does not require the use of hashtags such as #ad or #sponsored, it is an offence to mislead consumers under the Fair Trading Act 1986, and breaches can carry penalties of up to $600,000. The Advertising Standards Authority (“ASA”) is another body monitoring misleading content and while unlike the Commerce Commission it does not have the power to make orders or issue fines, influencers and brands face reputational risk in respect of adverse findings.
The ASA Complaints Board recently upheld two complaints against influencer Simone Anderson, making it very clear that non-disclosure of a sponsored post could be considered misleading. Ms Anderson had not sufficiently identified that certain Instagram posts were in fact commercial endorsements. One of the posts was for an activewear brand and the second was for a hotel. Neither were controlled or guided by the businesses being promoted. Although Ms Anderson was not paid for the posts, it was concluded that compensation occurred in the form of free goods and commissions through an affiliate code, and the provision of free accommodation. The ASA found that both posts met the definition of “advertisement” and disclosure of the commercial arrangement was required, for instance by use of the hashtag #gifted.
While in these cases the complaints were made against the influencer rather than the businesses they were endorsing, in other countries regulators have taken a stricter approach and held both parties to be liable if the advertisement is found to be misleading. In order to avoid misleading consumers and causing damage to your brand, businesses should proactively manage how they engage with influencers. If you are compensating an influencer to promote your products, ensure you provide them with guidelines on the claims they can and cannot make. The person making the statement must have used or consumed the product and their testimonial needs to be accurate and factual.
Following publication of this article in FMCG Business September 2020, the Advertising Standards Authority released the document Influencers AdHelp Information – making it clear that ads are ads. The identification of ad content requirements will apply to all Influencer ad content posted from 14th September 2020.
