In the lead up to the Christmas just passed, Australia Post boosted its advertising by paying popular local Instagram users to promote Australia Post products. Unfortunately for the postal service, the Instagram “Influencers” it engaged failed to disclose the fact they were receiving payment for their posts.
As a result, Australia Post now appears to be under fire for breaching the Australian Consumer Law (ACL) rules on online endorsements and reviews.
Under the ACL, failing to disclose paid endorsements is considered misleading and deceptive, and can attract serious penalties. This applies to any organisation that engages in trade and commerce.
The postal service, via its talent management agency, Moda Creative, paid “Influencers” to promote the Australia Post brand to their followers, some amounting to 400,000 followers. Australia Post initially responded to the allegation by stating that “Australia Post requires our suppliers to comply with Australian Competition and Consumer Commission (ACCC) guidelines for online reviews.” The organisation has since contacted Moda Creative to amend the situation.
When questioned, Moda responded that disclaimers were evident elsewhere on their website, and that it believed the Influencers were disclosing the commercial relationship. However, the provisions of the ACL do not require Australia Post to be aware of the illegal conduct in order to be liable. The law applies irrespective of intent or knowledge, imposing an obligation on companies to ensure that their agents conduct themselves within the bounds of the law.
Further, it became apparent that one of the Instagram Influencers was deleting posts that criticised the lack of disclosure. This removal of negative feedback is also a breach of the ACL, since it conveys a distorted and misleading image of the products.
A similar case in which the ACCC took action was reported here previously. In that case, carpet cleaning giant Electrodry was discovered breaching the requirements on disclosing commercial arrangements when franchisees were given financial incentives to post false or misleading endorsements.
Given the increasing use and popularity of online endorsements as affordable and effective promotion, it is important for all online advertisers to recall the Australia Post and Electrodry experiences. The ACCC has produced the following set of guidelines to assist businesses in keeping within the law when advertising online.
Principle 1: Be transparent about commercial relationships
Using paid endorsements creates a competitive advantage over rival businesses, which may impact consumer perceptions of the competing products. Consumers must be made aware of the commercial arrangements that underlie product endorsements.
Principle 2: Do not publish misleading reviews
Reviews or endorsements may mislead consumers where they appear impartial, but are in fact created by:
- The business providing the products;
- A competitor;
- A third party acting on behalf of one of the above;
- Brand ambassadors paid to promote the products who are not ordinary consumers; or
- A person who has been offered an incentive to inflate their experience with the product.
Principle 3: Removing or editing reviews may be misleading
Reviews and endorsements must not mislead the general impression created by overall feedback on the products. Conduct that breaches the ACL includes selectively removing or editing negative feedback.
Businesses that follow the above simple guidelines are likely to satisfy the ACL rules governing online endorsements. Of course, it is always a good idea to become better acquainted with the legislation before promoting products online.