Out-Law / Your Daily Need-To-Know

Out-Law Analysis 5 min. read

How social media influencer marketing regulation differs across the Asia Pacific region

Companies that engage social media influencers to promote their brands or products need to have a thorough understanding of the regulatory frameworks governing influencer marketing and whether any liability arising from the conduct of the influencer can flow on to the company.

In many respects, mainland China is leading the world when it comes to this type of regulation, which is perhaps unsurprising given its rapid move to a digitalised economy. Elsewhere in the Asia Pacific region, we are expecting further regulation in Australia – while Singapore has, to date, taken a more ‘hands off’ approach.

Businesses operating across borders in the APAC region should review all the relevant regulatory frameworks, as it is important to understand what is – and what is not – permissible in this space.

Influencer marketing regulation in Australia

In Australia, the regulatory framework relating to social media influencer marketing is primarily dictated by the Australian Consumer Law (ACL). The ACL does not specifically deal with influencer marketing, but the Australian regulator in this space, the Australian Competition and Consumer Commission (ACCC), is actively monitoring the industry, with its key regulatory tool being the prohibition on misleading and deceptive conduct. The ACL is further supported by supplementary guidance from self-regulated industry bodies, and industry-specific regulations, such as those for therapeutic goods and alcohol.

The ACCC has signalled it will take an active role in education and enforcement and has indicated that further scrutiny will occur, with guidance set to be released this year.

A particular focus for the ACCC, and a key issue for businesses to be aware of when dealing with influencers in Australia, is that businesses cannot mislead or deceive consumers in Australia, and that businesses that use influencers to promote products or services can potentially be liable for the misleading or deceptive conduct of those influencers.

To this end, businesses should have contracts with influencers which require them to comply with all applicable laws and regulations, including to properly identify where influencers are being paid to post content.

Influencer marketing regulation in Singapore

All advertisements, regardless of whether they are use influencers, must comply with the Singapore Code of Advertising Practice (SCAP). This covers advertisements in printed form, those that are shown on television, and the promotion of products via social media. Generally, advertisements should be truthful and should not be exaggerated to mislead the public.

The Advertising Standards Authority of Singapore’s (ASAS) ‘Guidelines for Interactive Marketing Communication & Social Media’ requires that influencers advertising on social media identify sponsorship of the products advertised through their channel. The marketing communication should be clearly distinguishable from personal opinions of the influencer.

ASAS regulates the advertising industry in Singapore and has the power to scrutinise advertisements and impose sanctions where there is a breach of the SCAP, the abovementioned guidelines and any other guidelines issued by the ASAS. When found in breach, ASAS may inform the advertiser to amend or remove the advertisement, and may publicise the breach, which may have an adverse impact on the reputation of business owners.

An advertisement may be governed by several sets of regulations and scrutinised by various regulatory bodies in addition to the ASAS. For example, advertisements relating to health products may be governed by the Health Products Act 2007, which is regulated by the Health Sciences Authority of Singapore. If an advertisement relates to food products, it may be scrutinised by the Singapore Food Agency.

Business owners dealing with social media influencers in Singapore should specify in contracts how they would like influencers to advertise the business’ products. For example, the sponsorship should be specifically disclosed, and the specific representations that will be made to promote the product, and the context in which the product will be advertised, should be set out clearly. Where the influencer gives a personal opinion, it should be specifically mentioned in the contract that the influencer will do so.

As a safeguard, business owners may wish to include appropriate termination clauses in contracts to provide for situations where the reputation of an influencer results in a negative and adverse impact on the branding of the business and sales of its product. After all, the reputation and influential power of an influencer is the whole purpose of businesses engaging social media influencer marketing to promote its business and product. 

Influencer marketing regulation in Hong Kong SAR

In Hong Kong, like Australia, there is no specific overarching influencer marketing legislation. Instead, the Trade Descriptions Ordinance (TDO) will be generally applicable, as its broad reach applies to all goods and services, subject to certain exceptions, offered in Hong Kong.

Businesses that breach the TDO may be liable to a maximum penalty of HK$500,000 (US$63,932) fine and 5-year imprisonment in serious cases. In addition, the Misrepresentation Ordinance will also be applicable, given that, if misrepresentation is made by an influencer, a civil claim can be brought against the influencer or the business.

The Customs and Excise Department (C&ED) is the principal agency responsible for enforcing the TDO, while the Office of the Communications Authority (OFCA) is responsible for enforcing the fair-trading sections in the TDO in relation to the commercial practices of licensees under the Telecommunications Ordinance and the Broadcasting Ordinance.

Recently, certain influencers were arrested for their promotion and affiliation with the approximately HK$1.2 billion fraud case involving crypto exchange platform JPEX.

We do not expect Hong Kong’s legislative framework under the TDO to undergo significant changes post-JPEX. Instead, we consider it more likely that issues arising from influencer marketing may be dealt with as a practical matter by guidelines issued by the regulatory bodies, such as the Hong Kong Monetary Authority and the Securities and Futures Commission of Hong Kong.

In July 2013, the C&ED and the OFCA issued enforcement guidelines for the Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012. Although these guidelines do not have the force of law or make any reference to influencer marketing, they serve as guidance for traders in complying with the fair-trading sections of the TDO, whether using influencers or not.

Considering the severity of potential penalties, businesses that engage influencers in Hong Kong should take all reasonable precautions and exercise all due diligence to mitigate the potential liability arising from false description of goods and services made by their influencers. It may be helpful for businesses to turn to the C&ED’s guidelines, as well as guidelines issued by other regulatory bodies, such as the HKMA’s guidelines, for further guidance.

Influencer marketing regulation in mainland China

Mainland China, in comparison to the jurisdictions already discussed, has stringent and comprehensive laws in respect of commercial advertising, being the Advertising Law of the People’s Republic of China and the E-Commerce Law of the People’s Republic of China.

Influencer marketing falls within the ambit of these laws and brands must be aware of the various obligations they must adhere to.

In addition, under China’s ‘Administrative Measures for Internet Advertising’, influencers and their internet advertising, including livestreaming advertising, are generally subject to the following requirements:

  • the advertising and advertisements must comply with laws and regulations with healthy expression, and conform to fair competition;
  • reviews and other influencer marketing activities which are, in reality, paid advertisements or sponsored content must be clearly marked as advertising;
  • influencers must clearly and conspicuously mark the location of the pop-up close sign; and
  • influencers must establish registration, review and archive management systems.

Recommendations for companies

If you have or intend to engage an influencer to endorse a product, we recommend reviewing your current contracting arrangement to ensure they:

  • confirm the influencer must comply with relevant laws, regulations and codes;
  • oblige the influencer to fully disclose the commercial relationship and require transparency when providing endorsements;
  • oblige the influencer to ensure that content does not, and would not reasonably, mislead or deceive the target audience; and
  • provide reasonable control rights, including the ability to alter or remove, content that influencers disseminate, to ensure companies can control their brand reputation.

Co-written by Tom Walsh, Jade Wong and Johnny Yin of Pinsent Masons.

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