Watchdog Says 81 Percent of Online Influencers Posting Misleading Content

Silhouettes of mobile users are seen next to a screen projection of Instagram logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration

The consumer watchdog says 81 percent of online influencers post misleading content as it ramps up efforts to regulate the industry.

The Australian Competition and Consumer Commission (ACCC) sweep revealed 96 percent of fashion influencers and 73 percent of gaming and technology influencers are among top sectors making potentially misleading posts. Other key industries include beauty, cosmetics, food and beverage, and health and fitness.

The main issue was influencers failing to disclose their sponsored posts, raising concerns under the Australian Consumer Law.

ACCC Acting Chair Catriona Lowe warned influencers and brands might break the law if they mislead consumers into thinking posts aren’t sponsored.

“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,” she said.

She noted influencers used vague or confusing language to disclose advertising, such as ’sp‘ and ’spon’ instead of ’sponsored.’

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“Influencers were formatting their posts to hide their advertising disclosure or make it difficult for consumers to notice it,” she explained.

She mentioned influencers often problematically present themselves as relatable and genuine, fostering trust with their followers when making recommendations.

In turn, influencers, brands, and advertisers exploit consumers’ trust through concealed advertising.

“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,” Ms. Lowe noted.

However, she pointed out that the influencer industry is complex and constantly changing, involving many parties that may not fully understand best practices.

Therefore, the ACCC will oversee the online economy in 2024. It will create clear guidelines for online operators to understand their expectations under the Australian Consumer Law to disclose advertising in social media posts.

“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,” Ms. Lowe said.

“And where we see continued non-compliance, we may take enforcement action,” she warned.

Around 118 influencers with large followings in seven sectors were reviewed in the sweep, and a majority in each sector were found to be making concerning posts.

The review assessed influencers on Instagram, TikTok, Snapchat, YouTube, Facebook, and the live streaming service Twitch after consumers lodged their concerns to the ACCC about these influencers.

ACCC Chair Gina Cass-Gottlieb noted that the many tip-offs underscored community worry about the increasing use of manipulative marketing techniques for goods and services on social media.

Young People Most Vulnerable

Young people often seek advice on social media and are seen as the most vulnerable to misleading financial guidance online.

Australian Security and Investments Commission (ASIC) research revealed 33 percent of 18- to 21-year-olds follow at least one financial influencer on social media, and an additional 64 percent of young people reported altering at least one financial behaviour due to following a financial influencer.

Financial products and services law prohibits conduct that is misleading and deceptive.

ASIC Commissioner Cathie Armour said influencers who discuss financial products and services online must comply with the law.

“If they don’t, they risk substantial penalties and put investors at risk. ASIC monitors select online financial discussion by influencers who feature or promote financial products for misleading or deceptive representations or unlicensed advice or dealing. If we see harm occurring, we will take action to enforce the law,” she warned.

Influencer Marketing Hit $266 Million in 2022

The Australian influencer marketing industry grew 20.4 percent in 2022 to $266 million (US$175 million), according to PQ Media’s Global Influencer Marketing Forecast 2023-2027.

The leading influencer marketing channel in Australia is content providers, making up almost half of the market. It saw the fastest growth, increasing by nearly 24 percent in 2022.

Globally, spending on influencer marketing rose by 21.5 percent in 2022, reaching $29.14 billion. This growth is due to more brand marketers investing in macro- and micro-influencers across different social media platforms to promote their products and brands.

In this photo illustration, a mobile phone can be seen displaying the logos for Chinese apps WeChat and TikTok in front of a monitor showing the flags of the United States and China on an internet page. (Kevin Frayer/Getty Images)

PQ Media CEO and founder Patrick Quinn said “word-of-mouth marketing” was rarely used anymore after being replaced by influencer marketing.

“Influencer marketing has become a very effective promotional method for brands to partner with influencers to engage target consumers to achieve their strategic marketing objectives,” he said.

He noted if executed well, influencer marketing was a valuable component of multi-channel campaigns because it helped brands improve their social media reputations with high-quality content.

Hello Social Managing Director Sam Kelly weighed in.

He said influencer marketing has proven effective and credible over the past five years.

“It works; it’s here to stay and is still growing rapidly. With this meteoric rise and success, we were anticipating increased regulation ... It all sounds scary, but it’s a storm in a teacup,” he said.