Do Influencers Have To Say It’s An #Ad?

Social media has seen a rapid increase in influencer marketing, and for a while it has not been a heavily unregulated area. However, it appears this type of advertising is now also facing a stricter regulatory crackdown. 

You may know about the New Zealand Consumer Guarantees Act (CGA), which protects consumers from unfair trading practices. For example, they can take legal action if they made a purchase based on a claim that was deceptive. 

There’s something just like this for influencer marketing ads, and it’s designed to protect consumers from misleading information and promote informed decisions. Put simply, influencers have a legal obligation to disclose their commercial partnerships when endorsing a product. 

If you’re an influencer or a brand that works with social media influencers, it’s essential that you understand your obligations under the relevant rules and that both parties do their part to ensure compliance. 

So, what rules apply to you?

What Is The Advertising Standards Authority (ASA)?

The Advertising Standards Authority (ASA) is a national body that regulates advertising to promote fair marketing practices in New Zealand. It encourages transparency, so advertisers can sell products in an honest manner. 

Essentially, these regulations protect the end consumer from any unfair marketing practices. 

Hilary Souter, the Chief Executive of the ASA, commented that the “ASA Codes of Practice are in line with New Zealand law so rulings by the ASA are designed to uphold that based on any consumer complaints.”

With the rise of influencer marketing ads, the ASA introduced a Code for Social Media Advertising to regulate this area. 

Lots of influencers sell products or services to their audience and it is an extremely successful form of marketing. It is often seamlessly promoted alongside their organic content, which is what really encourages their audience to make purchases. If there is no disclosure of paid partnerships or sponsorships, this could fall under misleading and deceptive conduct. In other words, consumers may think it is organic content when it is not. 

So, a few changes were made in response to these concerns. 

What Is The New Influencer Code Of Practice?

The Code of Practice sets out standards around online advertising in New Zealand. It requires that:

• The relationship between influencers and brands is clear, obvious and upfront
• The relationship is expressed in a way that is clearly understood

What Are The Penalties?

The Code of Practice itself is not enforceable in the same way as the CGA. This means that if you are in breach of the Code, you won’t be issued any financial penalties. 

However, the world of influencers relies almost entirely on social following and public image. Where there is a breach, the decision made in that case will be made public. So, this type of publicity can permanently damage an influencer or a brand’s reputation and potentially their entire career. 

Even though there is no fine, the damage it can cause to an influencer’s career is just as much of a loss. As such, it’s important that influencers and online brands are aware of the standards they are held to. 

How Do I Know If It Applies To Me?

The Code will apply to advertisers or marketers if:

• They have a reasonable degree of control over the material
• The material draws the attention of the audience in a way that promotes the product 

Generally speaking, this would include most sponsored posts. 

What Should Influencers Do?

If you’re an influencer, it’s important that you understand your obligations under the Code and maintain a healthy business relationship with your partners. 

If you’re making a sponsored post, you should:

• Include the relevant hashtags (for example, #ad, #sponsored, #paidpartnership)
• Use Instagram’s ‘paid promotion’ tag in your post 
• Explicitly refer to your partnership in the caption 

The code is actually aimed more towards the brands rather than the influencers, so if you’re an influencer, it’s important that you and your lawyer review the arrangements or agreements you have with your brands to ensure your posts are compliant with the Code. 

For example, if your brand is asking you not to disclose your sponsorship, then this is a breach. You’d need to discuss this with them and ensure your obligations are set out in your Influencer Agreement (you can read more about what your Agreement should cover here).  

What Kind Of Post May Breach The Code?

In some cases, simply tagging the brand or product is not enough to meet your obligations under the Code. For example, you can’t make a post and only include the hashtag #gifted or #collaboration. 

If you fail to disclose your partnership, and you give the impression that the advertisement is organic content, this could amount to a breach. 

It’s a safer option to use Instagram’s paid partnership tag and to explicitly disclose your partnership or paid promotion in the caption. However, this is not just for your feed posts, but it should also be used for your stories. 

While there are no financial penalties for breaching the Code itself, misleading conduct can breach the Fair Trading Act. The Commerce Commission can issue penalties up to NZ$200,000 for individuals and in excess of NZ$600,000 for companies. 

What About The Fair Trading Act?

As we mentioned, the Code ties in closely with the Fair Trading Act 1986. More specifically, section 13 deals with misleading and deceptive conduct, which could affect social media marketing and the representations influencers make to their audience.

As an influencer, you need to:

• Disclose sponsorship arrangements/paid partnerships so it’s not misleading
• Don’t make any false or misleading claims with regard to the product/s you’re advertising 
• Make sure you are genuinely using the products you claim to be using 

Need Help?

The world of advertising is increasingly regulated due to the rise in influencer marketing. To ensure you’re compliant, and to avoid any penalties, you should consult a lawyer on your obligations depending on your unique situation. 

• Which hashtags do I need to include?
• To what extent do I need to disclose my commercial partnerships?
• How do I know if my agreement with the brand is compliant with the Code?
• I’ve already signed a non-compliant agreement, can I change my agreement so it is compliant?
• The brand I’m collaborating with refuses to comply with the Code, or doesn’t want me to disclose our partnership – what do I do?

You can reach out to us at [email protected] or contact us on 0800 002 184 for an obligation-free chat.

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