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'Don't risk a $1m fine', warns legal expert

Staff Reporter
13 October 2016 1 minute readShare
A businessman shaking hands with a demonic-looking hand

One media specialist recommends SMEs think twice about making deals with consumers in exchange for favourable reviews, lest they be hit with a $1 million fine.

Paul Gordon, medial specialist from NDA Law, says if businesses offer reviewers products or services in exchange for favourable reviews, the offer can be classified as ‘misleading or deceptive conduct’.

“If you’re posting a review of a restaurant on Instagram or writing a blog about how you used a make-up product and you fail to admit you have been paid to do this – either in kind or in cash – then both the business and the influencer are breaching advertising regulations,” explains Mr Gordon.

“Sometimes it’s hard to tell if an online reviewer is genuinely sharing news about a product because they like it, or if it’s because they have entered a relationship that benefits them to do so – and that’s the problem.

“From the Australian Competition and Consumer Commission’s (ACCC) point of view, you need transparency.”

A businessman shaking hands with a demonic-looking handMr Gordon says reviewers should take on the model used in the US, where reviewers who are compensated for their work are highly recommended to mention the endorsement in some form of disclosure; for example, including a hashtag in a review mentioning sponsored content, such as #ad.

“In the US, all online posts must reveal if there is any commercial affiliation, but in Australia we don’t see many acknowledgements online,” he says.

“[That] will have to change in the future as consumers demand a right to know what is truthful and ‘authentic’ and what isn’t.”

Under current Australian law, if an SME decides to pay a reviewer for a review of their product or service, and that payment is discovered, the SME can be penalised up to $1 million for “engaging in deceptive and misleading conduct and breaching advertising standards”.

“It could be an expensive surprise for businesses looking for a quick, cost-effective lift to sales,” Mr Gordon says.

“There’s also been problems where bloggers or Instagrammers have tried to extort rewards from businesses like cafes or restaurants with the threat of a bad review if free services aren’t provided.”

'Don't risk a $1m fine', warns legal expert
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