From TikTok ads to influencer social media posts, one of the many legacies of the COVID-19 era will be the manner and means by which we receive advertising.
Our need to stay digitally connected during the pandemic has exponentially increased our smartphone dependency, resulting in soaring rates of digital and electronic marketing. With government bodies and regulatory authorities doubling down on their enforcement efforts in this space, how can organisations ensure they remain compliant with the ever-changing legal landscape?
All forms of marketing must comply with the Australian Consumer Law (ACL), and digital marketing is no exception. Given its primary object is to protect consumers, the ACL contains a number of prohibitions relating to trade or commerce. Of particular importance for advertisers to note are the prohibitions against false or misleading representations and misleading or deceptive conduct (or conduct that is likely to mislead or deceive).
While the ACL is fairly prescriptive in relation to the former (for example, representations with respect to specific product features or characteristics), the latter can encompass a much wider range of conduct, including omitting or failing to disclose important facts or circumstances. One area where digital marketers often come undone is in failing to disclose commercial arrangements or sponsored content, particularly where the lines between advertising and genuine endorsement are blurred.
Digital marketing must appeal to short attention spans and rapid-fire fingers. For this reason, it is arguably even more crucial to ensure that the overall impression created by the ad is not misleading or deceptive. Important information should be called out in the body of the ad, not buried in a disclaimer and, if the use of a disclaimer is necessary, it should be prominent and appear on screen for long enough to be read in full. Navigating the intricacies of the ACL and understanding the key issues on the radar of the Australian Competition and Consumer Commission (ACCC) is no small feat. However, non-compliance with the ACL can have significant financial and non-financial consequences.
In addition to complying with statutory requirements, advertisers are typically expected to self-regulate through compliance with various general and industry-specific codes, including a number of codes adopted by the Australian Association of National Advertisers (AANA). The AANA codes are technology and platform-neutral, meaning they apply across all forms of digital marketing, including on existing and emerging digital and social media platforms.
At the core of the AANA’s self-regulatory system is the Code of Ethics, which sets out the overarching compliance principles for advertising and marketing communications. The Code of Ethics is supplemented by several specific codes dealing with, among other things, food and beverages, environmental claims, wagering, and advertising and marketing to children (the latter being of particular significance recently).
There is no doubt that digital marketing is an effective way to reach a young demographic. However, businesses should be aware that advertising to children is generally subject to greater regulatory scrutiny, so compliance with AANA’s Children’s Advertising Code is crucial. The code broadly applies to advertising which is directed primarily, and has principal appeal, to audiences aged 14 and younger, and seeks to prevent advertising which goes against prevailing community standards in relation to, among other things, alcohol, safety and social values. The code also places limitations on the use of popular personalities or celebrities in advertising to children.
A number of digital and social media platforms have the capability to profile users by age. Age profiles should be used responsibly by businesses advertising on such platforms, particularly businesses that sell market restricted products. Restricting who is able to view advertisements based on age (often called ‘age-gating’) is a good practical measure to employ in this regard.
Many businesses may be surprised to learn that user-generated content (UGC) can also be subject to the self-regulatory codes. For example, UGC is subject to the AANA codes where it appears on a website or social media site that the business owns, or is endorsed or promoted by the business on an external site or platform (for example, ‘liking’ or ‘sharing’ the UGC). Businesses should closely monitor and remove any UGC that is not compliant with relevant legislation or voluntary codes as soon as practicable after becoming aware of such content.
Although compliance with the AANA (and other) codes is on a voluntary basis, businesses are expected to comply with determinations made by the Ad Standards Community Panel, and where a complaint made to Ad Standards is upheld, the offending ad must be removed or modified as soon as possible.
The power and pitfalls of big data
In today’s digital world, businesses of various sizes and industries are recognising the value of big data and its ability to generate insights from customer data and create more targeted advertising campaigns. However, once this information can be used to reasonably identify individuals (such as if it is combined with names of individuals), it becomes personal information and its collection and handling must comply with the Privacy Act 1988 (Cth) (Privacy Act).
Under the Privacy Act, organisations are only permitted to use or disclose the personal information of an individual for direct marketing purposes in certain circumstances, such as where the individual has consented or would reasonably expect the organisation to use or disclose their personal information for those purposes. Generally, the safest approach is to obtain express consent via opt-in mechanisms. However, many businesses try to obtain implied consent via opt-out mechanisms or assume that all of their current and previous customers would reasonably expect their personal information to be used or disclosed for direct marketing purposes. While this may maximise the reach of a marketing campaign, it may not necessarily be complaint with the Privacy Act.
Similarly, under the Spam Act 2003 (Cth), electronic marketing messages (such as emails and text messages) generally can only be sent with the recipient’s express or implied consent. These messages must also contain a ‘functional unsubscribe facility’. The Australian Government recently tightened this requirement by prohibiting certain types of unsubscribe facilities that did not allow recipients to easily unsubscribe (e.g. if they required recipients to provide additional personal information, or create or log in to an account, in order to unsubscribe). Earlier this year, one online shopping destination was served an infringement notice of $310,800 for using these types of prohibited unsubscribe facilities.
If a business sends a non-compliant email to a large mailing list, multiple contraventions of the Spam Act will simultaneously occur, attracting significant penalties as seen last year in the retail food sector.
With digital and electronic marketing continuing to be invaluable marketing tool in this digital era, and government authorities and regulators placing a sharper focus on this space, there is no better time for businesses to ensure that they are, to the extent possible, compliant with the ever-changing legal landscape while still achieving their marketing ambitions.
This article is part of our publication Continuity Beyond Crises: Staying ahead of risk in an evolving legal landscape. Read more here.
This publication is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this publication. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.