Influencer marketing is an increasingly popular and effective promotional tool for beauty brands. However, by its very nature, influencer marketing is designed to look and feel different from traditional marketing. This can lead to potential pitfalls with content not being clearly identifiable as advertising or sponsored, the possibility of misleading or unsubstantiated claims being made by influencers, and adverse publicity for all involved. In this context, it’s no surprise that influencer marketing, particularly in the beauty industry, has been the subject of recent regulatory attention from both the Australian Competition and Consumer Commission (ACCC) and Ad Standards.

The ACCC and the Australian Consumer Law

The ACCC has had social media in its sights for several years, particularly for misleading and deceptive conduct. This focus was reflected in the 2024/25 Compliance and Enforcement Policy and Priorities. While the previous year’s priorities only specified “manipulative or deceptive advertising and marketing practices”, this year, the ACCC has specified its focus to be on “influencer marketing, online reviews, in-app purchases and price comparison websites.”

In her CEDA 2024 speech, ACCC Chair Gina Cass-Gottlieb stated,

“influencer marketing, online review and comparison tools have become a key to reaching consumers and persuading them to choose particular products and brands. They have also become a tool for some businesses to manipulate and influence consumers' decisions.”

Ms Cass-Gottlieb commented on the ACCC’s 2023 internet sweep into influencer marketing and online reviews (the ACCC Internet Sweep), which highlighted that over 80% of influencer posts raised concerns under the Australian Consumer Law (ACL) for potentially misleading advertising, and more than a third of the businesses assessed had engaged in "concerning" conduct in relation to their online product reviews.

The ACCC Internet Sweep analysed several accounts across various social media platforms, including Instagram, TikTok, Snapchat, YouTube, Facebook and Twitch. The content type for these accounts varied, including fashion, travel, home and parenting, and beauty and cosmetics. For the beauty industry in particular, the report found that:

• 75% of beauty and cosmetics influencers swept made concerning posts;
• some makeup brands were more commonly promoted than others – suggesting these brands, which rely heavily on influencer marketing, may need to improve their disclosure practices; and
• influencers often did not disclose if the products featured were gifted or sponsored by a brand.

Although there have not yet been any significant investigations, proceedings or other action publicly brought by the ACCC with respect to social media advertising, it remains a regulatory priority. Brands and influencers should expect that the ACCC is maintaining a watching brief on influencer marketing and is ready to take enforcement action should the need arise.

Australian Association of National Advertisers (AANA)

In addition to the requirements of the ACL, there are also the Australian Association of National Advertisers’ (AANA) self-regulatory codes, which apply to influencer and social media advertising. In particular, the AANA Code of Ethics (Code) applies to all advertising content, including digital advertising and social media, and is administered by Ad Standards. Relevantly, section 2.7 of the Code requires that advertising be clearly distinguishable as advertising. Where influencers promote a business’ brand or product and fail to disclose the existence of a commercial relationship sufficiently, Ad Standards may determine that the relevant business has breached the Code. Complaints claiming potential breaches of the Code can be made to Ad Standards. A panel then adjudicates the complaints and decides, which can include a direction to withdraw or modify the advertising if the complaint is upheld.

One aspect of the Code that appears to be unclear to many influencers and advertisers is the definition of “advertising”. For example, in 2022, a complaint was made to Ad Standards regarding the advertiser La Mer, and an Instagram story by a social media influencer. In the story, the influencer showed a photo of a La Mer product, along with the text “THANK YOU @lamer FAMILY [heart emoji]". In their response to the complaint, La Mer stated that there was no paid partnership with the influencer, and the influencer had simply been gifted the product without an obligation to post content. The Panel found that while there was no direct request to post content, La Mer “chose to send the product to the influencer, knowing that she has a large social media presence and is likely to post about the gift.” For this reason, the Instagram story met the definition of advertising in the Code. Regarding the text of the advertisement, the Panel found that “stating ‘thank you’ was not the same as declaring that the product had been gifted… ”, and as a result, the advertisement was not clearly distinguishable to the audience and breached section 2.7 of the Code.

Even posts involving products that have not been gifted and posts not made as part of a contractual agreement have been found to meet the Code definition of advertising and, therefore, fell under the operation of section 2.7 of the Code. For example:

• In 2022, a social media influencer posted an Instagram story about Natio Pty Ltd (Natio) products. The story depicted a photo of a Natio product on a shop shelf, along with the text “PSA while I'm waiting in the pharmacy [Face with tears of joy emoji] This is the Bomb! @natiobeauty”. In response to the complaint, Natio highlighted that the post was made without any direction or financial support from the brand. There had been a prior commercial agreement with the influencer, but this had ended shortly before the story in question had been posted. The Panel found that the recent affiliate relationship constituted a sufficient degree of control over the post to satisfy the definition of advertising under the Code. However, as the post clearly showed the product name, type of product, price and featured an endorsement from the influencer, the Panel considered that the post was clearly distinguishable as advertising and not in breach of section 2.7 of the Code.

• Similarly, in February 2024, the Panel found that an Instagram post made by an influencer promoting sunscreen from the brand Avene, was advertising due to the existence of an agreement between Avene and the influencer. However, as the post featured a brand tag, sun-safe information, and the image focused on the product, the Panel found that it was clear to viewers that the Instagram post was an advertisement.

• Finally, in March 2024, the Panel upheld a complaint regarding an Instagram post made by an influencer, promoting the brand Carroten. The post featured an image of the influencer using a product, along with the text "[b]each day tanning made easy with @carrotenau [sun emoji]”. The Panel found that the image itself did not clearly depict a paid advertisement, as it could be viewed as an organic post. As the influencer had simply ‘tagged’ the brand, this did not make the post clearly distinguishable as advertising, and thus, was in breach of section 2.7 of the Code.

Key takeaways for brands and influencers

As regulators are sharpening their focus on influencer marketing practices in the beauty industry, businesses and influencers should be vigilant about the type of content they approve and post. Clear and transparent statements about endorsements and sponsorships should always be included, regardless of whether the advertiser has directly requested the post or not.

In addition, businesses engaging influencers for marketing campaigns should ensure that they provide the influencers with clear guidelines and that the terms of any commercial engagement are clear and express, including addressing liability for any misleading content or claims posted by the influencer.

Following these general principles will help enable brands and influencers to enjoy beautiful partnerships and seek to avoid the ugly downside of unclear or unsubstantiated claims, regulatory action, and adverse publicity.