More than 100 influencers will be examined by a federal government watchdog as part of a wider crackdown on misleading product promotion on social media.
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The Australian Competition and Consumer Commission (ACCC) has started to identify misleading testimonials and endorsements by social media influencers.
Tip-offs came from consumers after a Facebook post by ACCC sought information on dodgy endorsements.
Lifestyle, beauty, fashion and parenting influencers will be the focus of the investigation into whether they are failing to disclose their affiliation with the product or company they are promoting.
Brand Partnerships director at Wear Cape Influencer Agency Dr Brent Coker told ACM both brands and influencers often didn't know the rules around paid promotion disclosures.
"I've been surprised about how many brands just break the rules. And they're not doing it on purpose, they just don't know, they have no idea, and the influencers know even less," he said.
"It's a tough one, who's to blame, the brand or the influencer? I feel like it should be the brands controlling this. Many influencers don't even have a contract."
According to ACCC, influencers posting misleading reviews that fail to disclose a relationship could be in breach of Australian consumer law, which can carry penalties of up to $2.5m for individuals.
The Australian Association of National Advertisers code of ethics stipulates that social media influencers are mandated to make known to their audience that they are being paid to promote a respective good or service.
ACCC chair Gina Cass-Gottlieb said consumers have a right to full transparency from people advertising products online.
"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," Ms Cass-Gottlieb said.
"Already, we are hearing some law firms and industry bodies have informed their clients about the ACCC's sweep, and reminded them of their advertising disclosure requirements."
The concern is that influencers, advertisers and brands are trying to hide paid promotions from consumers, which prevents them from making informed choices.
"This can particularly apply to micro influencers with smaller followings, as they can build and maintain a more seemingly authentic relationship with followers to add legitimacy to hidden advertising posts."
Because of this, the social media sweep will be monitoring a mix of small and larger influencers, she said.
Dr Coker, who also lectures in marketing at the University of Melbourne, said 'micro influencers', who have fewer than 20,000 followers, don't have the resources to ensure they are following the legal requirements.
"Micro influencers require a lot more guidance, they're less skilled at creating content, so that's one of our biggest struggles, to communicate exactly how to advertise a product," he said
IN OTHER NEWS:
The new scrutiny comes as reality television star Kim Kardashian was fined US$1.26 million in 2022 for touting a crypto asset sold by EthereumMax on her social media without allegedly disclosing the payment she received for the promotion.
Kardashian failed to disclose that she was paid $250,000 to publish a post on her Instagram account about EthereumMax tokens.
The Australian Influencer Marketing Code of Practice outlines best practice for companies engaging in influencer marketing.
It states that advertising disclosure is recommended when there is an engagement or relationship with an influencer, or where a brand has in some way solicited or enticed an influencer or creator to promote the brand or its products or services.
"When influencers try to be sneaky, it doesn't work. Their followers aren't stupid, people on Instagram are savvy and can tell when someone is pulling the wool over their eyes," Dr Coker said.
