Staying Compliant: An Overview of the ACCC and ATO's Intentions for Influencer Marketing
The global influencer marketing sector is growing at a rapid rate, with a market valuation in 2022 of $16.4 billion US dollars – more than double its size in 2019. As we step into 2023, the sector is showing no signs of slowing, with predicted shifts to micro-influencing and user-generated content marketing.
Australian regulators, however, have cast shadows over the market in the first weeks of 2023. As discussed in our previous article, it is more imperative than ever that influencers, brand owners, talent agencies and marketing firms keep a close eye on the foreshadowed changes as intentions to crackdown on the sector are revealed. Here is a brief overview of some of the announcements made this year:
ACCC: Investigation into the sector to identify misleading and deceptive conduct
In line with the ACCC’s previous declaration of its intention to examine competition and consumer issues in the provision of social media and advertisement services, the consumer watchdog has announced a ‘sweep’ of influencer media platforms to determine the extent of misconduct in the market.
The sweep will target high profile influencers on platforms including Instagram, TikTok, Snapchat, YouTube, Facebook and Twitch. In particular, the sweep will shine a light on sectors where influencer marketing is widespread such as the fashion, beauty and cosmetics, food and beverage, travel, health fitness and wellbeing, parenting, gaming and technology markets. The ACCC will focus on breaches of the Australian Consumer Law (ACL), with an objective to identify influencers who are:
Including incorrect statements or creating false impressions of products, brands and services;
Omitting crucial information in advertisements; and
Failing to adequately disclose advertisements and sponsorships.
The concerns at the centre of this investigation echo those at the core of the upcoming March 2023 interim report for the Digital Platform Services Inquiry. Importantly, the investigation will also consider the role of agencies and firms operating within the influencer marketing sectors in facilitating misconduct.
ATO: Consideration of the tax consequences of receiving gifts and benefits
In another example of the intention to crackdown on influencer tax obligations, recent media reports have revealed the ATO’s intention to review the taxation of gifts received by influencers in exchange for services such as advertising.
If an influencer is paid in-kind, for example, having their teeth whitened at no cost in exchange for a favourable post on social media, the review may result in the value of the benefit or gift being subject to income tax.
The reports have referred to data-matching technologies adopted by the ATO to compare the tax returns of influencers with the lifestyle and property displayed in their content posted on social media platforms in an effort to ensure all gifts and benefits received by the influencer are accounted for.
If the review progresses further, influencers will be left to consider if it’s in their best interests receive gifts instead of payment for services as they will have to pay tax on what they receive. It may also force influencers to consider re-structuring their relationships with brands in light of potential taxation changes.
Whats next?
The foreshadowed regulatory changes above are the first to come out of 2023, but certainly not the last. At a time where trust with audiences and brand reputation is currency, it is important to see the smoke before the fire and protect yourself and your business from adverse regulatory crackdowns.
As the ACCC and ATO continue to disrupt the market, the social media law team at BlackBay Lawyers will be keeping an eye on the storm.
