Advertising & Marketing 2021

Last Updated October 07, 2021

Australia

Law and Practice

Authors



Baker McKenzie has an Australian advertising and marketing law practice that comprises an experienced and multi-jurisdictional team of lawyers providing regulatory and legal expert advice to many of the world's leading brands. The team understands the issues specific to this fast-paced and constantly evolving practice area and offers a holistic approach, bringing the knowledge, integrated experience and geographical scope needed to address the varying needs of clients. With 17 offices across major cities and financial centres in the Asia Pacific, and more than 6,000 lawyers and tax advisers in 77 offices globally, Baker McKenzie supports clients with advertising claim substantiation and defence; online, print and television advertising review; industry advertising clearance and consumer/trade complaints/disputes; complex contests, sweepstakes and promotions; social media marketing initiatives, integration and risk management; food, cosmetic, drug, device, technology and online services regulation; complex Australian and cross-border privacy compliance; advocacy with advertising regulators; and marketing, joint promotion, co-branding, talent, agency appointment, contest administration, prize supply, media buying and other commercial agreements.

Advertising in Australia is primarily regulated under the Australian Consumer Law (ACL) (Schedule 2, Competition and Consumer Act 2010 (Cth) (CCA)), which prohibits misleading or deceptive conduct, or conduct likely to mislead or deceive, in trade or commerce (Section 18).

The ACL also prohibits specific false or misleading representations (Section 29), including representations concerning:

  • the standard, quality, value, grade, composition, style, model, history or previous use of goods;
  • the standard, quality, value or grade of services;
  • the price of goods or services;
  • testimonials about goods or services;
  • the availability of repairs and spare parts for goods;
  • the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including about a requirement to pay for a contractual right that a person has at law);
  • place of origin of goods; and
  • sponsorship, approval, affiliation, performance characteristics, accessories, uses or benefits of goods or services.

The ACL is supplemented by a number of voluntary, self-regulatory industry codes administered by the Australian Association of National Advertisers (AANA). For more information, see 1.4 Self-Regulation.

Radio and television advertising is subject to additional regulation under the Broadcasting Services Act 1992 (Cth) and related industry codes, including the Commercial Radio Code of Practice 2017 and the Commercial Television Industry Code of Practice 2015.

The main bodies responsible for enforcing laws and regulations on advertising are the following.

The Australian Competition and Consumer Commission (ACCC)

The ACCC is the primary body tasked with enforcing the ACL across Australia. In addition, state and territory consumer protection agencies have powers to enforce the ACL in their applicable state or territory.

The ACCC has very broad powers. Where a corporation has made a false or misleading representation in advertising, the ACCC has the power to bring court proceedings seeking pecuniary penalties up to an amount that is the greater of (i) AUD10,000,000, (ii) three times the value of the benefit received, or (iii) 10% of annual turnover in the preceding 12 months, if the court cannot determine the benefit obtained from the offence. In addition, the ACCC may seek other orders, such as injunctions, declarations, orders for corrective notices, orders for compliance programmes and compensatory orders.

As an alternative to court proceedings, the ACCC may impose administrative remedies that can include either or both:

  • infringement notices imposing fines of up to AUD13,320 per contravention of the ACL for a corporation, AUD133,200 for a listed corporation and AUD2,664 for individuals; and/or
  • court-enforceable undertakings (which usually include a commitment not to engage in similar conduct in the future, corrective measures, compliance programme commitments and ongoing monitoring for the duration of the undertaking).

Ad Standards

The self-regulatory system administered by AANA includes two tribunals set up to resolve complaints under the AANA Codes. These are:

  • Ad Standards, which resolves consumer complaints via the Community Panel; and
  • the Ad Standards Industry Jury, which resolves competitor complaints.

The Australian Communications and Media Authority (ACMA)

Radio and television advertising is also regulated by the ACMA. Complaints about compliance with broadcast industry codes are required to be made direct to the broadcast licensee, and the ACMA deals with any unresolved complaints. Complaints about compliance with a standard (eg, the Children's Television Standard or the commercial radio standards) can also be made directly to the ACMA.

Industry-Specific Regulators

Industry-specific laws and regulations are administered and enforced by a range of different regulators. See 1.6 Regulated Industries for further information.

Any person or entity may be liable for engaging in conduct that contravenes the ACL.

If a representation made in an advertisement is misleading, the person or entity who or that made the representation will be liable. Individuals or entities who or that did not make the representation may still have a primary liability if a third party will reasonably understand that the person or entity is adopting the representation as accurate. This is an issue of fact, case by case.

There will also be liability for entities or individuals (including directors) involved in misleading advertising by:

  • aiding, abetting, counselling or procuring;
  • inducing, or attempting to induce;
  • being directly or indirectly, knowingly concerned in, or party to; or
  • conspiring with others to contravene the prohibitions on

such advertising.

For a person or entity involved in misleading advertising in one of these ways to be liable, they or it must have had actual knowledge of the essential elements of the contravention and intended to participate in it.

The ACL is supplemented by a number of voluntary, self-regulatory industry codes. These include a series of codes administered by the AANA, the broadest of which is the AANA Code of Ethics, which mandates standards for advertising in any medium. The AANA Code of Ethics provides that advertisements shall:

  • not be misleading or deceptive, or be likely to mislead or deceive;
  • not contain misrepresentations likely to cause damage to the business or goodwill of a competitor;
  • not exploit community concerns in relation to protecting the environment (eg, by implying that products or services benefit the environment when they do not);
  • not make misleading claims about the Australian origin or content of products advertised;
  • not portray people or depict material in a way that discriminates against or vilifies a person or section of the community;
  • not employ sexual appeal using images of minors (or people who appear to be minors) or in a manner that is exploitative or degrading of any individual or group of people;
  • not present or portray violence unless it is justifiable in the context of the product or service advertised;
  • treat sex, sexuality and nudity with sensitivity to the relevant audience;
  • only use language that is appropriate in the circumstances, avoiding strong or obscene language;
  • not depict material contrary to prevailing community standards on health and safety; and
  • be clearly distinguishable as advertising.

Complaints to the Industry Jury or Community Panel are often brought on the basis that the advertising contravenes one or more provisions of an applicable AANA Code. Complaints made through Ad Standards are not subject to monetary damages or fines. If Ad Standards finds that a complaint is upheld, it can direct the advertiser to discontinue or modify the advertisement. Such directions are not legally binding but are typically followed in practice. Compared to other private rights of action listed below, the Ad Standards complaints process is relatively inexpensive and quick.

The AANA also has a number of more specific codes, including:

  • the AANA Code for Marketing & Advertising Communications to Children;
  • the AANA Food & Beverages Advertising & Marketing Communications Code;
  • the AANA Environmental Claims Code; and
  • the AANA Wagering Advertising & Marketing Communication Code.

There are a number of product-specific industry codes of practice that regulate advertising in Australia. These include the following self-regulatory codes:

  • the Alcohol Beverages Advertising Code (ABAC);
  • the Responsible Children's Marketing Initiative (RCMI) and the Quick Service Restaurant Initiative for Responsible Advertising to Children (QSRI), both managed by the Australian Food & Grocery Council (AFGC); and
  • the Code of Practice for Motor Vehicle Advertising published by the Federal Chamber of Automotive Industries (FCAI).

Any person, including consumers, may challenge advertising practices, either by making a complaint directly to the advertiser or making a complaint via an industry body or regulator.

Complaints to Regulators

Depending on the nature of the complaint, individuals or corporations can submit a complaint to a regulator, including to the Ad Standards Industry Jury or Community Panel or the ACCC.

The remedies available will depend upon whether a regulator chooses to investigate and take action. If a regulator pursues enforcement action, the full range of remedies is available.

Direct/Civil Complaint

Individuals or corporations have standing for contravention of the ACL and may make a direct complaint and pursue litigation if necessary.

In a civil action, the Federal Court of Australia has a broad discretion on remedies, including the grant of injunctions, delivery up, corrective advertising, damages or an account of profits (but not pecuniary penalties, which are only available if an action is commenced by the ACCC). Civil actions are public, enforceable determinations and the courts are empowered to grant strong remedies that may act as a deterrent. However, court proceedings can be costly and resource intensive and may attract unwanted media attention.

There are specific restrictions and requirements, under statutes and self-regulatory industry codes, for the advertisement of particular products and services, including:

  • tobacco;
  • gambling;
  • therapeutic goods;
  • telecommunications services;
  • financial products and services;
  • consumer credit;
  • alcohol;
  • food and beverages;
  • motor vehicles;
  • marketing to children;
  • environmental claims; and
  • weight management.

For example:

  • the Therapeutic Goods Advertising Code is administered by the Therapeutic Goods Administration (TGA);
  • the Telecommunications Consumer Protections (TCP) Code, which regulates advertising of telecommunications goods and services, is administered by the ACMA;
  • tobacco products are regulated under the Tobacco Advertising Prohibition Act 1992 (Cth), which limits the exposure of the public to advertisements for smoking and tobacco products; and
  • financial products and services are subject to additional provisions in the Australian Securities and Investments Commission Act 2001 (Cth) and are regulated by the Australian Securities and Investments Commission (ASIC).

ACCC Priorities

Each year, the ACCC publishes its enforcement and compliance priorities. In 2021, the ACCC nominated the following industries as its key priority:

  • essential services, particularly energy and telecommunications;
  • funeral services;
  • domestic air travel;
  • digital platforms;
  • financial services;
  • franchising; and
  • commercial construction.

Recent Cases

In the past 12 months, the ACCC has taken significant steps to pursue COVID-19-related enforcement issues (as further outlined in 1.8 Impact of the COVID-19 Pandemic).

Lorna Jane

In ACCC v Lorna Jane Pty Ltd [2021] FCA 852, a popular female activewear brand made claims in advertising material and online that its “LJ Shield Activewear” protected consumers from COVID-19. These claims were found to be false and misleading, and the Federal Court ordered Lorna Jane Pty Ltd (Lorna Jane) to:

  • pay a AUD5 million penalty;
  • be restrained for three years from making any “anti-virus” claims regarding its activewear clothing unless it has a reasonable basis for doing so;
  • publish corrective notices;
  • establish a consumer law compliance programme; and
  • pay the ACCC’s costs.

Since these advertisements involved statements in relation to goods claiming to be therapeutic, the TGA separately pursued Lorna Jane and issued a fine of AUD39,960.

Mosaic Brands

In May 2021, the ACCC issued five infringement notices in respect of alleged false or misleading representations to Mosaic Brands Limited (Mosaic), the largest speciality fashion retail group in Australia. Mosaic admitted that it breached the ACL in its promotion of pandemic-related "Health Essential Products", including face masks and hand sanitiser. Mosaic paid penalties totalling AUD630,000. The infringement notices stated that:

  • Air Clean hand sanitiser sold on the NoniB website contained 70% alcohol, when a sample tested by the ACCC was found to contain 17% alcohol;
  • Miaoyue hand sanitiser sold by Millers contained 75% alcohol, when a sample tested by the ACCC was found to contain 58% alcohol;
  • Velcare-branded hand sanitiser products sold on its websites were "WHO approved", when they were not;
  • KN95 Kids Safety Face Masks sold on its websites were "CE/FDA certified", when they were not; and
  • KN95 Adult Face Masks were “non-refundable”, when in fact consumers have a statutory right to a refund under the consumer guarantee remedies.

The products were marketed with phrases such as "Be prepared", "Stock up now before it’s gone", "Remain Healthy" and "Stay Safe and Clean", as well as references to the pandemic such as "These are uncertain times and as the COVID-19 situation changes, we will be too" and "It’s important we are all doing our part to protect the most vulnerable".

digiDirect

On 15 June, Digital Imaging Express Pty Ltd, trading as digiDirect, paid AUD39,240 in penalties after the ACCC issued the company three infringement notices for misleading consumers by falsely representing that all products were on sale, when this was not, in fact, the case.

In June, July and October 2020, digiDirect conducted sales promotions that used the headline statement “X% off storewide”. The promotions were advertised on digiDirect’s website, posted on social media and sent via email to digiDirect subscribers.

While the promotions stated the discount would apply to all products available for sale, hundreds of products, between 5 and 7% of all products, were excluded from the promotions. This included a number of popular digital cameras, camera lenses and accessories.

Each of these promotions contained a disclaimer including “terms and conditions apply” or “terms and exclusions apply” in a small font. The ACCC considered that the “storewide discount” representation was not capable of being qualified so that it was no longer misleading, even if the disclaimers had been more prominent.

Employsure

On 13 August 2021, the Full Federal Court unanimously upheld an appeal by the ACCC in relation to Google Ads published by workplace relations advisory Employsure Pty Ltd (Employsure). Employsure was found in breach of the ACL by making misleading representations that it was, or was affiliated with, a government agency.

The Google Ads, published between August 2016 and August 2018, featured headlines such as "Fair Work Ombudsman Help – Free 24/7 Employer Advice" and "Fair Work Commission Advice – Free Employer Advice" and appeared in response to search terms such as "fair work ombudsman".

The Full Court found that Employsure’s Google Ads were misleading in large part because of the use of the government agency names in the largest and most prominent typeface, and because the ads omitted any reference whatsoever to Employsure.

A hearing on relief, including penalties, is yet to be heard at the time of writing.

The COVID-19 pandemic resulted in a significant increase in the number of complaints received by regulators. For example, the ACCC reported a 500% increase in complaints and reports about the travel sector alone. In response, the ACCC established a COVID-19 Taskforce in 2020 to specifically resolve COVID-related issues.

As a result of COVID-19, the ACCC was required to adjust its 2020 enforcement priorities and compliance approach to accommodate the sudden change in demands. In 2021, the ACCC set COVID-related issues as a priority, including those relating to the promotion and sale of products, with a particular focus on travel and event cancellations.

The ACCC also prepared a variety of COVID-19 fact sheets to encourage the resolution of disputes between consumers and businesses. The ACCC also directly engaged with over 100 businesses to resolve consumer complaints promptly. This direct engagement resulted in many businesses changing their behaviour and refunding consumers where required.

In addition to the ACCC, there has been a significant increase in the enforcement of advertising regulations relating to therapeutic goods claiming to prevent and treat COVID-19 by the TGA (as referred to in 1.7 Regulatory Trends).

There have been no recent changes or any impact upon regulation or the enforcement of advertising regulation as a result of the political climate or political administration in Australia.

An advertising claim will be misleading or deceptive if, when considering the claim and advertisement in context and as a whole, it creates a misleading impression in the minds of ordinary consumers.

There are no specific standards for determining whether advertising claims are misleading or deceptive.

Courts undertake a two-step analysis in determining whether advertising claims are misleading or deceptive:

  • firstly, courts determine whether the relevant claims/representations are made by the advertisement by considering all relevant context; and
  • secondly, whether those claims are false or misleading.

It is not necessary that the advertiser intended to mislead or deceive consumers, although courts are more likely to find advertising claims are misleading or deceptive where there is evidence of an intention to mislead or deceive.

Most advertising claims, including express and implied claims, are actionable. An exception is advertising claims that are wildly exaggerated or vague such that they are considered "puffery". These claims are so fanciful that no consumer would treat them seriously, or find them misleading.

Express and implied claims are determined according to the same principles set out in 2.1 General Standards. Empirical evidence (such as a consumer survey) is not required to prove that an implied claim/representation has been made.

There are no standards in Australia regulating the type of information required to support an advertising claim. Courts will look at whether the evidence as a whole supports the truth of the claim on the balance of probabilities.

Additionally, where advertisements make a claim as to future matters (for example, that a product will perform in a certain way), the advertiser must be able to show it had reasonable grounds for making the claim.

Advertisers should keep a record of claim substantiation. The ACCC may ask an advertiser to provide information and/or documents that substantiate the claims. Failing to comply may lead to a penalty of up to AUD27,500.

There are no standards in Australia regulating testing conducted to support advertising claims. If testing evidence is used to support advertising claims, it is best practice for testing to be conducted independently using objective, sound and reliable practices.

There is no requirement that clinical studies be used to support advertising claims. However, properly conducted clinical studies often provide the best evidence for claims that are scientific or medical in nature.

In relation to therapeutic goods marketed to consumers, any scientific or clinical representation must be consistent with the body of scientific or clinical evidence applicable to those goods. Where a clinical study is referenced (either expressly or impliedly), the study must be sufficiently identified for consumers to access it and the researcher and financial sponsor should be identified.

Certain advertising claims are regulated by law and specific requirements apply in addition to the general requirement that advertisements should not be misleading or deceptive, such as the following.

  • Food – the Australia New Zealand Food Standards Code contains standards for certain claims that can be made about food and beverages (including alcoholic beverages). Standard 1.2.7 regulates nutrition content claims such as "low in fat" or "good source of calcium". These claims need to meet certain criteria to be made. The Code also regulates health claims, which are claims about the relationship between food and health effects. These claims must meet certain criteria and be supported by scientific evidence.
  • Therapeutic goods – the Therapeutic Goods Act 1989 (Cth) and Therapeutic Goods Advertising Code regulate advertising of therapeutic goods. The Code contains specific requirements for claims made about medical devices and over-the-counter products marketed to consumers. The Code requirements are directed at promoting the quality, use and safety of the product, as well as specific requirements for certain goods (for example, vitamins, complementary medicines, analgesics and weight loss medicines). The Code also prohibits certain claims being made in relation to some diseases in the public interest.

Other claims are self-regulated by industry and additional industry standards apply. For example, environmental claims are regulated by the AANA Environmental Claims Code, which is an industry code administered by Ad Standards.

1.4 Self-Regulation and 1.6 Regulated Industries deal with self-regulated and regulated industries.

Certain claims are not separately regulated by laws or industry codes, but have been scrutinised by the courts and/or the ACCC, such as the following.

  • Natural or organic claims – the ACCC has issued infringement notices to an advertiser claiming its products were "Pure", "Natural" and "Organic" when the products contained two synthetic chemical preservatives. However, there is no clear position on the use of "natural" or "organic" claims in Australia and each advertisement will be assessed on its face. As such, advertisers should exercise caution when marketing products as “natural” and/or “organic”.
  • Country of origin – misleading conduct will occur if products are labelled as having been made in one country or place when in fact they were made elsewhere. In relation to food, the Country of Origin Food Labelling Information Standard 2016 (a standard made under the ACL) requires that certain food products display country of origin information.
  • Small print – an advertisement containing small print to identify a limitation or condition will be misleading if the small print is not sufficiently prominent to ensure that, taken as a whole, the advertisement is not misleading.
  • "Free" claims – "free" claims may be misleading if the relevant product or service is not absolutely free without condition, unless the claim is clearly and appropriately qualified.

Comparative advertising is permissible under Australian law. There are no specific rules or restrictions that apply to comparative advertising claims.

Comparative advertisements may be misleading if they:

  • omit material necessary to make the comparison fair (however, the advertisement does not need to compare all features of the relevant products or services);
  • do not clearly identify the products or services being compared; disclaimers or fine print are unlikely to correct a misleading or potentially misleading comparison; and
  • do not clearly identify the criterion that is being compared between products or services and ensure accuracy (for example, quality, volume, sugar levels).

It is permissible to identify a competitor by name in a comparative advertisement. It is also a defence to trade mark infringement that a competitor's registered trade mark is used for the purpose of comparative advertising; however, it is easy to fall outside the protection of this defence. In particular, simply referring to a competitor product is not enough to fall within its scope.

The risks associated with comparative claims can be higher than standalone claims, as they are usually closely scrutinised by competitors, which may result in civil action or complaints to the ACCC.

Advertisers should ensure their comparative advertisement remains accurate for the life of the advertising campaign. If a competitor's product or service is changed during the life of a campaign, the comparison may become inaccurate or unsubstantiated. The fact that a claim was true at a particular point in time is not a defence if the claim becomes false due to competitor action while the advertisement is still in circulation.

Comparative advertising claims are not generally subject to any additional or different standards than general advertising claims. However, comparative claims are more closely scrutinised by courts because consumers are less likely to view a comparative ad as an exaggeration.

Some industries have additional requirements for comparative advertising claims. For example, comparative advertising of food and beverages (including alcoholic beverages) is subject to additional requirements under the Australia New Zealand Food Standards Code. In particular, comparative claims involving nutrition content (including the use of certain words such as "light", "reduced" and "diet") have specific requirements around percentage energy and sugar content (see 2.6 Regulated Claims).

Advertisers can challenge claims made by a competitor by:

  • making a complaint or reporting the misleading advertising to a regulatory authority – the usual avenues are the ACCC (which administers consumer law throughout Australia), Ad Standards (which manages the complaint resolution process of a self-regulation system) or the relevant industry body; or
  • seeking relief from the court – most commonly, such a claim would be based on misleading conduct under the ACL.

The relief available depends on the avenue of challenge. If a comparative claim is challenged by a competitor in court, the relief available includes injunctions, the award of damages, corrective advertising and declarations of misleading advertising. If the ACCC takes formal action, the relief available includes penalties, injunctions, corrective advertising and declarations. No damages can be awarded to the wronged advertiser. Where Ad Standards upholds a complaint, the advertiser is requested to remove or amend the offending advertisement as soon as possible. Ad Standards cannot mandate a penalty or other relief.

Comparative advertising claims in relation to efficacy of over-the-counter pain relief medicines have been particularly prevalent in recent years. For example, in March 2020, Reckitt Benckiser succeeded in a claim against a competitor in relation to comparative advertising of analgesic products.

Advertising on social media is subject to the same laws and regulations that apply to advertising in other mediums, including the ACL and Ad Standards industry regulation (see 1.4 Self-Regulation). In social media advertising, advertisers must ensure that they do not make any false, misleading or deceptive claims. There are no specific or different consumer laws or rules in place for social media, but the ACCC has issued guidance on its website relating to social media and avoiding contravention of the ACL.

Some of the key legal challenges in advertising via social media include:

  • commercial relationships with brand ambassadors and influencers, including in relation to gifting, disclosures and transparency, control over advertising content and compliance risks;
  • user-generated content (UGC) – material that has not been created by the brand owner or advertiser, but by a person interacting on the brand owner's digital marketing platform or social media; and
  • challenges identifying third parties who may engage in illegal conduct via social media, including infringing intellectual property rights or posting misleading or deceptive content.

Advertisers can be liable under the ACL for UGC posted by others on the advertiser’s site or social media channels. This is discussed further in 4.3 Liability.

Specific issues relating to influencer campaigns are discussed further in 5. Influencer Campaigns.

Advertisers may be held liable for content posted by others on an advertiser's site or social media channels.

In ACCC v Allergy Pathway (No 2) [2011] FCA 74, a company was held responsible for fan posts and testimonials on its social media pages in circumstances where it knew about the content and decided not to remove the content. The company had therefore become a "publisher" of the posts.

The key issue is an advertiser's ability to monitor and exercise control over third-party content posted on its site or social media channels. The ACCC has indicated that companies should monitor their social media pages and remove any posts that may be false, misleading or deceptive as soon as they become aware of them. The amount of time that should be spent monitoring social media depends on the size of the business and the number of users on that business' social media pages. The ACCC also states that businesses should establish clear "in house" rules on social media pages that feature prominently, and block users who breach those rules.

As a general principle, the same disclosure requirements apply to social media advertising as those that apply to traditional media. Advertisements must be identifiable to members of the public as advertising, and advertisers must ensure that content is not false or likely to mislead or deceive customers, even though space may be limited. It is common to deploy the use of hashtags (eg, "#ad") and links to additional content to assist in meeting disclosure requirements.

The Online Safety Act 2021 (Cth) establishes a take-down system for abusive content on social media services. While this legislation is not advertising specific, content removal obligations may be relevant to advertisers publishing content on social media. The legislation is expected to commence on 23 January 2022.

Advertisers should also ensure they comply with each social media platform's terms of use.

There are no special rules applying to "native advertising" in Australia.

However, native advertising is subject to the general requirements under the ACL that advertising must not be false or likely to mislead or deceive. In order to avoid contravention of the ACL, it is important to ensure that native advertising is identifiable as advertising rather than appearing to be, for example, an unpaid editorial.

The AANA Code of Ethics states at Section 2.7 that advertising must be clearly distinguishable as such.

The AANA and the Interactive Advertising Bureau of Australia jointly launched best practice principles for Native Advertising in 2015 to help consumers to be able to distinguish between what is paid advertising and what is editorial content. The guidelines assist compliance with Section 2.7 of the AANA Code stating that native advertisements must:

  • prominently display visual cues to enable consumers to immediately understand they are engaging with paid-for marketing content; examples provided include prominent brand logos around or within the content or different design formatting by publishers to mark the native advertising as being different to editorial content;
  • use a prominently visible label that demonstrates in clear language that a commercial arrangement is in place; and
  • adhere to the AANA Codes; the AANA Code of Ethics also applies to native advertising, which squarely falls into the definition of "advertising and marketing communications" in the Code.

Under the AANA Code of Ethics, sponsored Instagram posts must be identified with appropriate tags. Section 2.7 of the AANA Code requires that advertising be clearly distinguishable as such, which creates a positive obligation on influencers to disclose commercial relationships in a clear, obvious and easily understood manner.

According to the AANA Code of Ethics Practice Note, advertisers should ensure that social media influencer posts are clearly distinguishable as advertising, which could include the use of "#ad", "Advert", "Advertising", "Branded Content", "Paid Partnership", or "Paid Promotion". Less clear labels such as "#sp", "Spon", "gifted", "Affiliate", "Collab", "thanks to...", or merely mentioning the brand name, will likely not be sufficiently clear to distinguish an influencer post as advertising.

The Ad Standards Community Panel is increasingly taking a strict approach to determinations. In 2021, an Australian influencer, Anna Heinrich, uploaded an Instagram post wearing a dress from the brand Runaway The Label. The Panel found that the post was not clearly distinguishable as advertising material because there was nothing in the wording of the post and no hashtags that clearly demonstrated that the post was advertising material.

The Panel has also ruled that a post featuring an influencer, Rozalia Russian, holding a bottle of Tom Ford perfume constituted advertising. The Panel found that the post was not clearly distinguishable as an advertisement and breached Section 2.7 of the Code, even though Tom Ford Beauty had gifted the product to the influencer without any payment, requirement or obligation to post.

Other than the AANA Code of Ethics, there are no special rules or regulations applying to the use of influencer marketing campaigns. Advertisers must ensure they do not engage in any misleading or deceptive conduct via influencer campaigns, and influencer campaigns must be clearly identifiable as advertising and not incorporate any false, misleading or deceptive content.

Advertisers can be held accountable for content posted by influencers through the AANA Code, but also as a result of general ACL provisions that prohibit false or misleading claims or representations. Advertisers and influencers must be transparent in disclosing commercial relationships with influencers, similar to how businesses must not include misleading customer testimonials on their websites that purport to be from genuine customers.

The ACCC has not taken action against a business for false, misleading or deceptive conduct resulting from an influencer marketing campaign; however, in 2013, the ACCC commenced proceedings against a business that included false testimonials on its websites to promote the quality of its solar panel products.

Advertisers should exercise care when entering into commercial arrangements with social media influencers and monitor those arrangements to ensure they do not contravene the ACL or AANA Code of Ethics.

Advertisers (which can include persons acting on behalf of the actual provider of the relevant good or service) that send emails as part of their marketing programmes must comply with the Spam Act 2003 (Cth) (the "Spam Act"), which regulates the sending of commercial electronic messages, including email, SMS, MMS, instant messages (IMs) or other similar accounts, for the purpose of offering, advertising or promoting goods and services. The commercial electronic message must have an Australian link (eg, the message originates in Australia, the sender authorising the message is in Australia, or the recipient is in Australia).

Under the Spam Act, advertisers must:

  • obtain consent (which may be express or inferred) from the recipient of the commercial electronic message;
  • accurately identify the sender of the commercial electronic message, including its name and contact details; and
  • provide a functional unsubscribe facility.

The threshold for what comprises a "commercial" electronic message is low. Importantly, consent for receiving commercial electronic messages should not be sought via email, SMS, MMS or IMs, as that initial approach would be regarded as a commercial electronic message. Moreover, the use of pre-checked boxes opting in to receiving marketing communications is not regarded as best practice.

Non-compliance with the Spam Act may result in a formal warning, an infringement notice, an enforceable undertaking, injunctive relief, an order for compensation, or an order to pay a pecuniary penalty. For example, in 2020, an infringement notice of AUD1,003,800 was issued to Woolworths Group Limited for 5 million breaches of the Spam Act when Woolworths sent marketing emails to consumers after they had unsubscribed from previous messages.

The Do Not Call Register Act 2006 (Cth) established the Do Not Call Register, which is a secure database where individuals can register their telephone number to opt out of receiving most unsolicited telemarketing calls. Advertisers (which can include persons acting on behalf of the actual provider of the relevant good or service) should check their calling lists against the numbers listed on the Register before undertaking telephone or fax marketing to Australian consumers. Businesses are required to check their databases against the Register every 30 days to ensure no registered numbers are called.

Advertisers may be penalised for a breach of the Do Not Call Register Act. In 2018, the ACMA fined telemarketing company Lead My Way Pty Ltd AUD285,600 for making telemarketing calls in breach of the Do Not Call Register Act. The company made consumer calls to gauge interest in particular products and services and then on-sells personal details as marketing "leads".

Advertisers should also be conscious of provisions in the ACL about unsolicited sales practices, which are easily breached through telemarketing. For example, consumers must be provided with a copy of any agreement and have a ten-day cooling-off period to cancel an agreement. The penalties discussed in 1.2 Regulatory Authorities may apply for breach of these provisions.

In ACCC v Superfone Pty Ltd [2020] FCA 278 (26 March 2021), Superfone Pty Ltd (Superfone) was penalised AUD300,000 after engaging an Indian-based telemarketer that made unsolicited phone calls to consumers in Australia advertising mobile, landline and internet services. Superfone engaged in misleading or deceptive conduct, made false and misleading representations, and also breached ACL provisions in relation to unsolicited consumer agreements.

The Spam Act also applies to text messages (see 6.1 Email Messaging).

There are no specific rules in Australia specifically focused on targeted/interest-based advertising. However, (other than marketing via email, SMS, MMS or IMs) to the extent any such advertising involves the use of "personal information", the Privacy Act 1998 (Cth) (the "Privacy Act") will apply. Personal information is defined as "information or an opinion about an identified individual, or an individual who is reasonably identifiable:

a. whether the information or opinion is true or not; and

b. whether the information or opinion is recorded in a material form or not."

As to whether personal information is involved will be a question of fact. Often there may be differing views on whether an individual is reasonably identifiable from the information an organisation holds. In practice, many online platforms in Australia give users the option of opting out of receiving targeted advertisements.

If targeted/interest-based advertising uses personal information, then the direct marketing rules in Australian Privacy Principle (APP) 7 in the Privacy Act need to be considered. APP 7 sets rules for when personal information may be used for direct marketing. Key rules to know are that consent is usually needed (some exceptions apply) and each marketing message must contain a means for the individual to request not to receive further direct marketing communications.

Advertising aimed at children is subject to self-regulation by the advertising industry and other industry groups (see 1.4 Self-Regulation). The AANA Code of Advertising & Marketing to Children regulates advertising content to children. For example, it states that:

  • advertising for food or beverages must neither encourage nor promote an inactive lifestyle or unhealthy eating or drinking habits;
  • advertising must not use popular personalities or celebrities (live or animated) to endorse, recommend, promote, or advertise or market products in a manner that obscures the distinction between commercial promotions and programme or editorial content; and
  • any disclaimers, qualifiers or asterisked or footnoted information used in advertising must be conspicuously displayed and clearly explained to children.

The following codes contain prohibitions on advertising alcohol and therapeutic goods to children.

  • The AANA Code of Advertising & Marketing to Children contains rules about advertising alcohol. Advertising aimed at children must not be for, or relate to, alcohol products or companies that supply alcohol products.
  • The ABAC Responsible Alcohol Marketing Code provides at Section 2(b)(i) that advertising of alcohol must not have a "strong or evident appeal" to minors.
  • The Commercial Television Industry Code of Practice and the Outdoor Media Association Alcohol Guidelines state that advertisers must use age restrictions (if any) on media platforms to exclude minors, or limit advertising to places where the audience is reasonably expected to comprise at least 75% adults and not place advertising within programmes primarily aimed at minors.
  • The Therapeutic Goods Advertising Code (No 2) 2018 provides at Section 19 that therapeutic goods must not be "primarily directed" to children under 12 years under any circumstances.

Definition of "Children"

There is no single legislative definition of "children" applied consistently in the context of advertising. However, a number of industry-developed codes apply and contain varying definitions of "minor" or "child". For example, the Code for Advertising & Marketing Communications to Children defines a child as "a person 14 years old or younger" but the ABAC Responsible Alcohol Marketing Code defines a minor as "a person who is under 18 years of age and therefore not legally permitted to purchase an Alcohol Beverage in Australia."

Rules Applying to the Collection or Use of Personal Information from Children

Personal information about children may be collected in marketing through registration pages and online contests.

The collection of personal information for adults and minors is regulated under the Privacy Act, which contains 13 privacy principles that deal with the collection and use of personal information. Advertisers must only collect personal information that is "reasonably necessary for their work" and they must tell children that their personal information is being collected. However, consent is only needed when an advertiser is collecting "sensitive information", which includes information about racial or ethnic origin, political opinions or associations, religious beliefs, sexual orientation, criminal record, health or genetic information, and some aspects of biometric information.

The AANA Code of Advertising & Marketing to Children also states that if personal information will, or is likely to, be collected from a child as a result of advertising, then the advertisement must include a statement that the child must obtain a parent or guardian’s express consent prior to engaging in the activity.

As a general rule, and according to the Office of the Australian Information Commissioner (OAIC), an individual under the age of 18 has the capacity to consent if they have the maturity to understand what is being proposed. However, if it is not practical for an advertiser to assess the capacity of individuals on a case-by-case basis, as a general rule, an organisation or agency may assume an individual over the age of 15 has capacity to consent to personal information being collected.

Definition of "Personal Information"

The definition of “personal information” in the Privacy Act is set out in 6.4 Targeted/Interest-Based Advertising.

Personal information is defined in the AANA Code of Advertising & Marketing to Children as “information that identifies the child or could identify the child”.

Liability for Violating Rules about Marketing to Children

As this is a system of self-regulation, there are no criminal or civil consequences for non-compliance with the industry codes.

Advertisers must also adhere to requirements under the ACL prohibiting false, misleading or deceptive conduct that apply to all advertisements, including advertisements directed at children.

Each state and territory in Australia has separate laws regarding the conduct of sweepstakes and contests. It is important to ensure that a competition is compliant in each jurisdiction in which it is offered, particularly for businesses that wish to operate a national campaign.

Key considerations and requirements include the following.

  • Permits – may be required, depending on the game and circumstances (see 7.3 Regulatory Bodies).
  • Entry – there is no restriction on requiring an entrant to purchase a product or service to enter a skill- or chance-based competition in Australia. Some jurisdictions require an entry to be free, whilst others have imposed limits to certain amounts, including the cost of a telephone call or AUD0.55 SMS fee.
  • Online – generally, rules, procedures and the need for permits apply equally to online businesses and competitions.
  • Competition and consumer laws – sweepstakes and contests must comply with the ACL and the general prohibition on engaging in misleading or deceptive conduct. In particular, companies must honour the prizes as promised, match the value and description of the prize as advertised and terms and conditions of the contest must be clearly explained to the consumer.
  • Public interest – most jurisdictions will not allow a competition that promotes behaviour that may be considered contrary to public interest, including encouraging dangerous behaviours or drinking excessive amounts of alcohol.
  • Privacy – there is a range of privacy, spam and consumer protection laws that must be considered when running a competition. In particular, entrants must understand how, why and for what purpose their personal information is collected and can be used.

States and territories in Australia regulate games of chance and games of skill differently. Although the distinction between games of chance and skill is not identically expressed in each state and territory, the following distinction generally exists.

A game of chance is one in which the winner is randomly selected from a pool of entrants. Games of chance are a quantitative competition and do not require entrants to show any skill in exchange for an entry. Common examples include:

  • liking, following or sharing a post or page on social media;
  • entry of an email address on a form; and
  • submitting a vote.

A game of skill is one in which the winner is determined based upon their performance and/or judged against set criteria by a judge or panel of judges. Common examples include:

  • answer a question in X words or less;
  • caption a photo;
  • submit a photo/video;
  • complete a survey and answer a qualifying question; and
  • submit an original piece of written or artistic work.

Contests, including requirements for registration with regulatory bodies, are regulated differently in each state and territory in Australia. Generally, games of chance require the organiser to hold a permit, but games of skill do not. Businesses must be registered and have an Australian Business Number (ABN) to apply for permits.

The requirement for a permit, and the conditions associated with such permit, depend on specific rules in each state and territory. Permit requirements are typically tied to the value of the prize pool (the "Prize Threshold") or total ticket sales/gross proceeds (the "Sale Threshold"). Some jurisdictions also provide exemptions to obtaining a permit if there is no cost to the participant.

Below are set out the relevant threshold amounts for a permit in each state and territory in Australia and the agency from which to seek a permit.

  • New South Wales (NSW): AUD10,000 Prize Threshold – NSW Fair Trading.
  • Queensland (QLD): permit not required for trade promotions (Category 4 games); however, a AUD50,000 Sale Threshold applies for Category 3 games (raffles or art unions) – Office of Liquor and Gaming Regulation.
  • Victoria (VIC): permit not required – Victorian Commission for Gambling and Liquor Regulation.
  • Tasmania (TAS): permit not required – Tasmanian Liquor and Gaming Commission.
  • Northern Territory (NT): AUD5,000 Prize Threshold – Licensing NT.
  • South Australia (SA): AUD5,000 Prize Threshold – Consumer and Business Services Liquor and Gaming.
  • Western Australia (WA): permit not required – Department of Local Government, Sport and Cultural Industries.

There are no special laws or regulations that apply to loyalty programmes in Australia. In Australia, loyalty programmes are regulated under existing competition, consumer and privacy regimes, including the:

  • CCA and ACL; and
  • Privacy Act.

There are no special laws or regulations that apply to free or reduced-price offers. The general prohibition on misleading and deceptive advertising claims applies to free or reduced-price offers, cashback offers, gift card offers and general sales or percentage discounts.

Businesses must clearly state all the conditions and restrictions attached to such offers.

Businesses should be particularly careful when using the word "free" as this has been scrutinised by the court. Consumers will usually consider that an item is "free" if it is absolutely free. Businesses must ensure that any conditions or requirements that entitle consumers to something "free" are very clearly set out. For example, a "buy one, get one free" offer may be misleading or deceptive if the price of the first item is raised to largely cover the cost of the second (free) item.

In all instances, the relevant consideration is whether the advertising, viewed as a whole and in context, is misleading as to the true nature of the offer.

Automatic renewal and continuous service offers are permitted, provided they comply with the ACL. In particular, businesses must not mislead consumers about the true cost and nature of goods and services.

"Subscription trap" is a term used to describe online retailers treating a consumer’s decision to make a single purchase as consent to signing them up to a paid, ongoing subscription service without adequately disclosing that the subscription service involves ongoing fees.

The ACCC has warned that businesses should:

  • be upfront about additional costs such as subscription fees;
  • clearly disclose the nature of subscription services;
  • make the terms and conditions readily available and not hide them on separate pages, in hard-to-read grey text or fine print;
  • not place restrictions on the cancellation of the unwanted services; and
  • refrain from using pre-checked boxes that require consumers to actively opt out.

The ACCC has previously pursued offending corporations, including Fabletics and Scootprice, which charged monthly subscription fees to consumers for "premium memberships" without proper notification or warning. In both instances, the offending companies co-operated with the ACCC by committing that they will make any ongoing membership fees clearer and more prominent in their website communications and throughout the checkout process.

Sports betting and other forms of gambling are permissible in Australia. Online gambling is regulated at a federal level as well as at the state and territory level, whilst other forms of gambling are regulated only at a state and territory level.

Therefore, the regulatory regime that applies to sports betting and other forms of gambling is dependent on:

  • whether the gambling service is online or otherwise;
  • the type of gambling service taking place; and
  • the location (state/territory) where the gambling service is taking place, and the jurisdiction in which the operator is licensed (if required).

Typically, a game will constitute a “gambling service” under Australian law if all three of the following elements are present:

  • prize – the game is played for money or an item of value;
  • chance – the game is one of chance, or a mixture of chance and skill; and
  • consideration – customers of the service must agree to give consideration (usually monetary) to play or enter the game.

Online Gambling

Online gambling is regulated at both the federal and state and territory levels in Australia. The Interactive Gambling Act 2001 (Cth) (IGA) is supplemented by state and territory legislation that typically accords with the key principles established in the IGA.

The following forms of gambling are captured under "online gambling":

  • betting – can be provided by licensed operators as a “regulated interactive gambling service” under the IGA;
  • bingo – the legal position under the IGA is unclear; however, authorities consider online bingo to be prohibited and therefore it is not able to be provided legally to persons present in Australia;
  • casinos – prohibited under the IGA and cannot be legally offered to persons present in Australia;
  • fantasy sports – see "betting";
  • lotteries – can be provided by licensed operators as a “regulated interactive gambling service” under the IGA; however, this does not include online scratch lotteries or other online instant lotteries;
  • poker – prohibited under the IGA and cannot be legally offered to persons present in Australia; and
  • social gaming – is unlikely to meet all three elements required to evidence a gambling service and therefore does not require a licence to be offered.

In December 2018, the Australian federal government and all Australian states and territories reached an agreement to introduce the National Consumer Protection Framework (NCPF). The NCPF will gradually introduce regulatory standards across Australia, with particular focus on responsible gambling and harm minimisation when conducting online betting.

The IGA has recently been amended to prohibit betting on the outcome of a lottery (including a keno draw). Such lottery betting services (also referred to as "synthetic lotteries") allow customers to bet on the outcome of a lottery draw without the need to purchase a ticket in the official lottery draw.

Land-Based Gambling

Unlike online gambling, land-based gambling is regulated at the state and territory level only.

The following forms of gambling are captured under "land-based gambling":

  • betting (off-course) – can be provided by the exclusive licensed operators, being a subsidiary of Tabcorp Holdings Ltd for all states and territories other than Western Australia, and the relevant government entity in Western Australia;
  • betting (on-course) – can be provided by licensed operators in all states and territories, with some service providers also offering online or telephone services;
  • bingo – receives varied treatment under the law of each state and territory; however, the operator generally will not be required to hold a licence if the prize is below a specified threshold prescribed in the respective legislation;
  • casinos – can offer table games (including poker) and gaming machines provided the operator holds a casino licence;
  • gaming machines – can be provided by licensed operators, including casinos, clubs and hotels in all states and territories (except Western Australia);
  • lotteries – can be provided by exclusively licensed operators in each state and territory and tickets are typically sold via newsagents, convenience stores and online; and
  • poker – can be provided by licensed operators, including casinos, hotels and clubs, subject to conditions.

The advertising of gambling services is heavily regulated in Australia.

The advertisement of online gambling is mainly regulated at the federal level by the IGA, which prohibits a person from publishing an "interactive gambling service advertisement" in Australia or authorising or causing the publication of such an advertisement. The prohibitions are not restricted to the entity that creates, or is the subject of, the advertisement. Certain services are excluded from the advertising prohibition, including betting on horse, harness or greyhound racing, sporting events and certain types of lotteries.

Both land-based and online gambling advertising is regulated at the state and territory level. There is a myriad of requirements for the advertising of different gambling services depending on the state or territory in question. By way of example, most states and territories have prohibitions against gambling advertisements that:

  • depict or target persons under the age of 18;
  • misrepresent the likelihood of winning;
  • depict the consumption of alcohol;
  • relate to a gambling service that is unlawful;
  • do not include a mandated responsible gambling message;
  • represent gambling as a means of financial betterment;
  • offer an inducement to participate in wagering activities or open a betting account;
  • display live odds during a sporting event; and/or
  • promote gambling services during peak times on radio or television.

In addition, all gambling advertisements must accord with the general prohibition against misleading advertising in the ACL, as well as industry codes of practice and other federal laws, including the ACL, Spam Act and Broadcasting Services Act 1992 (Cth). Commercial television also has a code of practice that regulates gambling advertisement on commercial television.

No specific legislation has been enacted to regulate cryptocurrencies and tokens in Australia. Australian government departments regulate the sale and advertising of tokens within existing regimes under Australian law, including:

  • anti-money laundering legislation in Australia;
  • the Corporations Act 2001 (Cth);
  • tax legislation; and
  • the Australian Securities and Investments Commission Act 2001 (Cth), which, among other things, regulates the sale of financial products to consumers.

There are a large number of regulations applying to cryptocurrencies under these regimes. Some important aspects are set out below.

Cryptocurrency exchanges must register with the Australian Transaction Reports and Analysis Centre (AUSTRAC), the Australian government agency responsible for detecting, deterring and disrupting criminal abuse of the financial system. AUSTRAC requirements include that exchanges identify and verify users, maintain proper records and comply with various reporting obligations.

Cryptocurrency exchanges are also required to hold an Australian Financial Services licence, which attracts additional obligations under the Corporations Act 2001 (Cth).

The sale of cryptocurrencies may be required to be via an initial coin offering (ICO) and accompanied by a regulated disclosure document, commonly known as a product disclosure statement, prospectus or financial services guide. Disclosure documents must not be misleading or deceptive and must comply with stringent content requirements established under the Corporations Act 2001 (Cth) and regulatory guidance published by ASIC. In particular, misleading and deceptive conduct relating to the sale of cryptocurrencies may arise for:

  • failing to disclose accurate and/or sufficient information about the sale of the token;
  • suggesting that a token, or its sale, is a regulated product or endorsed by a regulator when it is not;
  • using digital platforms to create the appearance of greater levels of public interest; and
  • exaggerated statements or claims in relation to the levels of buying and selling activity of a specific token by encouraging others to engage in certain trading strategies.
Baker McKenzie

Tower One
International Towers Sydney
Level 46
100 Barangaroo Avenue
Sydney NSW 2000
Australia

+02 9225 0200

Reception.Sydney@bakermckenzie.com www.bakermckenzie.com/australia
Author Business Card

Trends and Developments


Authors



Baker McKenzie has an Australian advertising and marketing law practice that comprises an experienced and multi-jurisdictional team of lawyers providing regulatory and legal expert advice to many of the world's leading brands. The team understands the issues specific to this fast-paced and constantly evolving practice area and offers a holistic approach, bringing the knowledge, integrated experience and geographical scope needed to address the varying needs of clients. With 17 offices across major cities and financial centres in the Asia Pacific, and more than 6,000 lawyers and tax advisers in 77 offices globally, Baker McKenzie supports clients with advertising claim substantiation and defence; online, print and television advertising review; industry advertising clearance and consumer/trade complaints/disputes; complex contests, sweepstakes and promotions; social media marketing initiatives, integration and risk management; food, cosmetic, drug, device, technology and online services regulation; complex Australian and cross-border privacy compliance; advocacy with advertising regulators; and marketing, joint promotion, co-branding, talent, agency appointment, contest administration, prize supply, media buying and other commercial agreements.

Introduction

Despite a turbulent and challenging period, Australian regulators, courts and competitors have continued to carefully scrutinise advertising claims.

Australia is well known as a jurisdiction in which regulators and courts are rigorous in assessing truth in advertising and in holding advertisers accountable. Regulators have continued to show a keen interest in advertising claims in the past year; in particular, where advertisers have attempted to take advantage of the COVID-19 pandemic. Businesses of all sizes and industries should continue to carefully consider their advertising and marketing strategies to ensure they are compliant with the robust Australian legal system.

The areas in which Australia has recently seen the most activity and interest in advertising and marketing are:

  • energy;
  • telecommunications;
  • education;
  • digital platforms;
  • social media; and
  • COVID-19-related advertising.

In this Trends & Developments section, a general overview of the key advertising and marketing prohibitions under Australian law is provided. Important developments and enforcement actions recently brought in the above areas are also addressed.

Overview of Key Prohibitions

The Australian Consumer Law (Schedule 2, Competition and Consumer Act 2010 (Cth)) (ACL) prohibits advertising that is misleading or deceptive, or likely to mislead or deceive, or the making of false representations. There are no prescribed rules for what constitutes false or misleading advertising. Rather, each advertisement or marketing campaign is assessed on its face, taking into account all relevant context, to determine whether it is likely to mislead or deceive an ordinary consumer.

The Australian Consumer and Competition Commission (ACCC) is the regulatory body responsible for enforcing the prohibition against misleading advertising. The ACL is also frequently leveraged by companies against its competitors (so-called competitor challenges) to hold competitors accountable and protect market share.

Certain advertising claims are subject to additional legal and industry standards; however, these standards and the majority of enforcement actions and competitor challenges are rooted in the general principle that advertising should not be misleading or deceptive.

Key Trends and Developments

Energy

The ACCC has recently pursued energy providers for making false or misleading marketing claims about potential discounts and savings available to consumers.

In June 2021, Sumo Power was ordered to pay a AUD1.2 million penalty and consumer redress to affected customers after it advertised cheap rates and high "pay on time" discounts to entice consumers to sign up to certain electricity plans, when in fact Sumo Power planned to, and did, materially increase the rates paid by customers who had received one to three monthly bills. These rate increases were found to have substantially eroded, or even eliminated, the benefit of the large “pay on time” discount that Sumo had used to entice consumers to switch to Sumo in the first place.

This case follows an earlier March 2019 matter where Click Energy paid a AUD900,000 penalty for making misrepresentations about the savings consumers could expect to receive. Between October 2017 and March 2018, Click Energy told consumers in Victoria and South East Queensland they could get discounts of between 7% and 29% under its market energy offers if they paid their bills on time. These claims were misleading because the discounts were calculated on Click Energy’s market offer rates, which were higher than Click Energy’s standing offer rates available to all consumers. This meant that the effective discounts were smaller than claimed and, in some cases, consumers effectively received no discount at all.

It is anticipated that the ACCC will continue to look into the transparency in the pricing and selling practices of essential services, with a focus on energy and telecommunications in 2021. Following new prohibitions in the electricity market that require retailers to pass on significant reductions in wholesale electricity costs to consumers, the ACCC will be closely monitoring costs and, where necessary, asking retailers to justify their prices.

Telecommunications

Over the past decade, the ACCC has brought numerous enforcement actions against a variety of telecommunications providers that have made false or misleading representations regarding the "unlimited" nature of their mobile or fixed line plan offerings. This trend has continued. Most recently, in October 2020, two telecommunications providers, Amaysim Australia Ltd and Lycamobile Pty Ltd, were issued penalties totalling AUD126,000 and AUD12,600 respectively for misrepresenting that their mobile phone plans were "unlimited" in advertisements on social media designed to entice new customers, when in fact the plans had a maximum data allowance.

In August 2021, the ACCC also announced that it has instituted separate proceedings in the Federal Court against each of Telstra Corporation Ltd (Telstra), Optus Internet Pty Limited (Optus) and TPG Internet Pty Ltd (TPG) for making alleged false or misleading representations in their promotions of some 50Mbps and 100Mbps National Broadband Network (NBN) plans. The ACCC alleges that the companies made misrepresentations to consumers on fibre to the node (FTTN) connections in relation to testing the maximum speed of their connections, notifications and remedies if maximum speeds were below a stated speed. It is also alleged Telstra, Optus and TPG wrongly accepted payments from certain customers for NBN plans when they were not provided with the promised speeds. The ACCC is seeking a range of orders, including declarations, injunctions, pecuniary penalties, publication orders and the implementation of compliance programmes.

Education

The ACCC has recently brought action against numerous education providers that made false or misleading representations when enrolling students on government-supported (VET FEE-HELP) courses. These claims have generally involved misleading advertising claims and/or broader marketing campaigns that were found to be unconscionable.

In August 2021, the Federal Court found that former training college Phoenix Institute of Australia Pty Ltd (Phoenix) and its marketing arm, Community Training Initiatives (CTI), made false or misleading representations and implemented systems of unconscionable conduct. Phoenix was also found to have breached the ACL in its dealings by engaging in the following conduct:

  • making misrepresentations that courses were “free”;
  • offering inducements of “free” laptops for enrolling;
  • coaching consumers on how to complete enrolment documents or verification calls, or filling out enrolment documents on their behalf;
  • proceeding with the enrolment despite the consumer not having the skills or experience necessary to complete their courses;
  • failing to properly assess the students’ suitability for the courses, including their language, literacy, numeracy and computer skills; and
  • enrolling consumers, including vulnerable and disadvantaged students, on to courses that they had no reasonable prospect of completing.

Phoenix had enrolled almost 12,000 students in more than 21,000 courses in subjects such as business, management and early childhood education and care, and was paid AUD106 million by the federal government for those enrolments.

Many of the false representations were made by brokers and agents employed on a commission basis to enrol consumers on to courses. The Court found Phoenix and CTI failed to properly train and monitor sales agents. Representations were made in person (door-to-door sales), over the phone and online.

Phoenix and CTI’s conduct left students with very large debts under the VET FEE-HELP loan scheme for courses they were unlikely to be able to ever complete. For example, disadvantaged individuals enrolled on to courses costing at least AUD18,000, and most of the consumers were enrolled on at least two full-time courses at once, leading to individuals incurring debts of over AUD36,000. Penalties in this case are yet to be determined by the Federal Court at the time of writing.

This matter is the ACCC’s fifth action against a VET FEE-HELP provider that has engaged in misleading or unconscionable conduct in its advertising and marketing campaigns.

Digital platforms

The ACCC has been increasingly focused upon regulation of the digital platform space in recent years. On 10 February 2020, the Australian government directed the ACCC to conduct an inquiry into markets for the supply of digital platform services. The ACCC established a specialist Digital Platforms branch to conduct specific work in this area, including to monitor and report on the state of competition and consumer protection in digital platform markets specially via:

  • a Digital Platforms Inquiry (which is set to be held over a five-year period);
  • an Ad Tech Inquiry; and
  • a News Media Bargaining Code.

To assist the Digital Platforms branch in achieving these goals, the federal government announced a AUD27 million budget allowance over four years specifically for the Digital Platforms branch.

The Digital Platforms Inquiry will report to the federal government Treasurer every six months and examine different forms of digital platform services, their advertising services as well as data brokers. The ACCC released its March 2021 interim report on consumer issues associated with the distribution of mobile apps to users via the Apple App Store and Google Play Store. In July 2021, the ACCC announced that it will examine competition and consumer concerns with general online retail marketplaces such as eBay Australia, Amazon Australia, Kogan and Catch.com.au.

Given this inquiry, obvious ACCC interest and federal government support, it is expected that ACCC enforcement action in the digital platform space will increase in future years.

Social media and influencers

Advertisers continue to actively and increasingly engage with consumers on social media and advertising via social media influencers. It follows that Australian regulators are closely monitoring these social media activities, particularly the Australian Association of National Advertisers (AANA) (an industry body of advertisers with a self-regulatory arm).

The AANA's Code of Ethics has been updated with associated rules to require advertising transparency: "advertising shall be clearly distinguishable as such". Advertisers are encouraged to:

  • ensure that social media influencer posts are clearly distinguishable as advertising, which could include the use of "#ad", "Advert", "Advertising", "Branded Content", "Paid Partnership", or "Paid Promotion"; and
  • ensure that social media influencers do not use unclear labels such as "#sp", "Spon", "gifted", "Affiliate", "Collab", "thanks to...", or merely mention a brand name, because these measures do not sufficiently distinguish an influencer post as advertising.

Recent decisions regarding Code compliance demonstrate strict application of the transparency rules with respect to social media. By way of example:

Runaway The Label

Australian fashion label Runaway The Label was found to have breached the Code where Anna Heinrich, an Australian influencer, uploaded an image of herself wearing a green dress from the brand with the caption "Turning my apartment into a Runway [green heart emoji] Then back to my PJs I go! Wearing: @runawaythelabel" to her Instagram page. The Panel determined that the advertising material was not clearly distinguishable.

Tagging the advertiser's brand "@runawaythelabel" was not sufficient to clearly and obviously show that there was an arrangement between the brand and the influencer.

Tom Ford Beauty

The Panel also made a determination against Tom Ford Beauty after an influencer, Rozalia Russian, uploaded a photo to Instagram holding a bottle of Tom Ford perfume with the caption "summer in a bottle @tomfordbeauty". The Panel found that the post was not clearly distinguishable as an advertisement in breach of the Code, despite the fact there was no commercial relationship or payment between Tom Ford Beauty and the influencer.

McDonald's Australia

Most recently, in August 2021, McDonald's Australia was found to be in breach of the Code where an influencer, Andrew "Cosi" Costello, uploaded a picture to Instagram featuring a family in matching McDonald's pyjamas holding bags marked with "McDelivery". The caption was “Verified @maccas_sa have been serving South Australians for 50 years. How cool is that? Tonight we are celebrating their birthday with delivery and my girls are wearing the @peteralexanderofficial limited edition maccas PJ’s”.

McDonald's indicated the products were gifted to a radio station (with which McDonald's is in a sponsorship arrangement), and that Mr Costello was an employee of the radio station. McDonald's argued that the post was not "advertising" because it had no control over who at the radio station received the product and no influence over the creation of the Instagram post, and therefore could not be seen to have a reasonable degree of control over the post.

The Panel considered that while McDonald's did not have direct editorial control over the post, the influencer was motivated to publish positive content about his employer’s sponsor. The Panel reasoned that the influencer would not have posted similarly about a competitor to the employer’s sponsor.

These decisions demonstrate the risks associated with influencer content, product gifting and transparency in social media advertising.

COVID-19-related advertising

Some businesses and advertisers have sought to take advantage of the current COVID-19 pandemic by advertising products that claim to prevent or cure COVID-19.

Australian regulators and the courts immediately clamped down on these claims and readily issued infringement notices and penalties against such conduct.

The advertising of products to consumers for the prevention or treatment of COVID-19 is prohibited in Australia. In March 2020, the Therapeutic Goods Administration (TGA), the regulatory body responsible for therapeutic goods, issued a warning about illegal advertising relating to COVID-19 and was quick to issue infringement notices for non-compliance.

In 2020, the TGA issued Lorna Jane, an activewear clothing business, three infringement notices with penalties totalling AUD39,960 for:

  • claiming its anti-virus activewear had been sprayed with a substance called "LJ Shield", which protected people against pathogens; and
  • advertising on its website, in-store signage and Instagram that stated "Cure for the Spread of COVID-19? Lorna Jane Thinks So".

In 2021, after the TGA's infringement notices were issued, the ACCC commenced separate proceedings against Lorna Jane in the Federal Court. Lorna Jane was found to have made false and misleading representations to consumers, and engaged in conduct liable to mislead the public. The Court imposed a AUD5 million penalty, intended to reflect Lorna Jane's serious and "exploitative" conduct.

In 2020, the TGA issued two infringement notices totalling AUD25,000 to celebrity chef Peter Evans' company in relation to advertising of a "BioCharger" device on his website and during a Facebook live stream. Mr Evans claimed the device could be used in relation to "Wuhan Coronavirus" during the live stream.

Conclusion

Australia remains a key market for robust advertising practices and regulation, with active regulators and competitor clashes. Industry guidance and areas of enforcement focus for the ACCC and other regulators in relation to advertising and marketing are continually changing. Therefore, businesses need to remain vigilant and up to date in relation to key advertising trends and enforcement action.

In particular, as businesses further expand their presence on digital platforms and become increasingly reliant on social media, developments in relation to advertiser liability for user-generated content and influencer conduct should be monitored closely. Advertisers should also be conscious of increased scrutiny around health-related claims cast into the spotlight by the COVID-19 pandemic. Irrespective of the industry or subject matter, advertisers should ensure that all advertising claims can be adequately substantiated.

Baker McKenzie

Tower One
International Towers Sydney
Level 46
100 Barangaroo Avenue
Sydney NSW 2000
Australia

+02 9225 0200

Reception.Sydney@bakermckenzie.com www.bakermckenzie.com/australia
Author Business Card

Law and Practice

Authors



Baker McKenzie has an Australian advertising and marketing law practice that comprises an experienced and multi-jurisdictional team of lawyers providing regulatory and legal expert advice to many of the world's leading brands. The team understands the issues specific to this fast-paced and constantly evolving practice area and offers a holistic approach, bringing the knowledge, integrated experience and geographical scope needed to address the varying needs of clients. With 17 offices across major cities and financial centres in the Asia Pacific, and more than 6,000 lawyers and tax advisers in 77 offices globally, Baker McKenzie supports clients with advertising claim substantiation and defence; online, print and television advertising review; industry advertising clearance and consumer/trade complaints/disputes; complex contests, sweepstakes and promotions; social media marketing initiatives, integration and risk management; food, cosmetic, drug, device, technology and online services regulation; complex Australian and cross-border privacy compliance; advocacy with advertising regulators; and marketing, joint promotion, co-branding, talent, agency appointment, contest administration, prize supply, media buying and other commercial agreements.

Trends and Development

Authors



Baker McKenzie has an Australian advertising and marketing law practice that comprises an experienced and multi-jurisdictional team of lawyers providing regulatory and legal expert advice to many of the world's leading brands. The team understands the issues specific to this fast-paced and constantly evolving practice area and offers a holistic approach, bringing the knowledge, integrated experience and geographical scope needed to address the varying needs of clients. With 17 offices across major cities and financial centres in the Asia Pacific, and more than 6,000 lawyers and tax advisers in 77 offices globally, Baker McKenzie supports clients with advertising claim substantiation and defence; online, print and television advertising review; industry advertising clearance and consumer/trade complaints/disputes; complex contests, sweepstakes and promotions; social media marketing initiatives, integration and risk management; food, cosmetic, drug, device, technology and online services regulation; complex Australian and cross-border privacy compliance; advocacy with advertising regulators; and marketing, joint promotion, co-branding, talent, agency appointment, contest administration, prize supply, media buying and other commercial agreements.

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