Difference Between Influencer Marketing and Unlawful Paid Reviews

In Short

• Disclose paid reviews and sponsored content to comply with the Fair Trading Act.
• Influencers must be transparent about receiving payment or free products in exchange for reviews.
• Ensure all advertising and promotional content is not misleading or deceptive to maintain transparency.

Tips for Businesses

Ensure all collaborations with influencers include clear guidelines for disclosing paid promotions. Train staff and partners involved in marketing to understand compliance with the Fair Trading Act. By prioritising honesty and transparency in all promotional activities, businesses can foster consumer trust and avoid legal issues

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Table of Contents

• Advertising Standards Authority (ASA)
• Fair Trading Duties 
• Influencer Marketing 
• Unlawful Paid Reviews 
• Key Takeaways 
• Frequently Asked Questions

Many NZ businesses advertise their offerings to gain market reach and new customers. There are many different methods to market your products, from paid advertising to influencer marketing on social media. However, it is important to operate within legal boundaries when engaging influencers for marketing purposes to avoid unlawfully paying for reviews. This article will outline the differences between influencer marketing and unlawfully paid reviews so your business can remain legally compliant. 

Advertising Standards Authority (ASA)

The Advertising Standards Authority (ASA) regulates advertising in NZ. They ensure all advertising is decent, honest, truthful and respectful. It also includes two key principles:

• social responsibility; and
• truthful presentation.

The first principle of social responsibility ensures that your advertising does not harm others. Additionally, you cannot use personal information without consent or post anything indecent or degrading. Further, you cannot cause fear nor undermine the health of individuals.  

Under truthful presentation, your advertising, including paid reviews, cannot be misleading, deceptive or confuse customers. Additionally, they cannot make an unrealistic claim or have false representations. 

If you breach the principles, your advertising will be referred to the Complaints Board, which will make a decision. The ASA may conduct any of the following:

• ask your business to remove the advertising;
• conduct a negative press release about your advertising on their website; and
• refer your advertising to a third party if serious.

Fair Trading Duties 

Under the Fair Trading Act, your business cannot engage in misleading or deceptive conduct. You also cannot make unsubstantiated claims. Hence, all product and service information must be honest, accurate and up-to-date. This includes any information about pricing, availability and shipping. Further, you cannot engage in unfair sales practices such as bait advertising or false representations. 

The Act will apply to all commercial activities and e-commerce activities. Failure to comply with the Act can result in legal and financial penalties. 

Influencer Marketing 

To advertise your products and services, you can request an influencer to post comments about your offerings on their social media accounts. This is lawful if done within the ASA rules. You must ensure your influencer and business are being honest during its advertising. Any social media posts made with an influencer should include hashtags of “advertisement” or “ad”. This prevents it from being mistaken as an organic post. 

Avoid dishonest or fake online reviews when engaging an influencer. For example, an influencer cannot claim your product is 100% organic if there is no evidence to back this up. 

You can draft an influencer agreement to ensure your influencer will only post comments and images you approve of. This can outline:

• intellectual property rights;
• deliverables;
• post schedules;
• permitted use of content;
• brand obligations;
• agreed fees and payment;
• your influencer’s legal obligations; and
• dispute resolution.

Additionally, you should inform your influencer that they cannot engage in anti-competitive conduct by unfairly promoting one product over another without valid reasoning. This can breach the ASA standards and result in a penalty. 

Unlawful Paid Reviews 

Unlawful paid reviews are much different from lawful influencer advertising. Such practices can lead to misinformed customers, negative brand reputation and legal disputes. Unlawful paid reviews include advertising that is:

• not declared as being an advertisement;
• paid in cash and, therefore, off the record;
• performed in exchange for a free offering; and
• includes dishonest statements.

For example, a social media star may post about your product, claiming they love it despite never using it. 

The ASA may deem advertising unlawful if it is inaccurate and dishonest. This is to protect consumers from fake reviews and regulate fair competition. Additionally, consumers can be prevented from purchasing based on false information. 

NZ Website Terms of Use

These NZ Website Terms of Use set out the rules for people using your website.

Download Now

Key Takeaways 

Advertising your products and services is a great way to inform and reach consumers. However, you should prevent negative media attention due to unfair or misleading advertising. Ensure your advertising practices align with the ASA standards and the Fair Trading Act. Further, you can draft an influencer agreement to regulate your relationship with your influencer. 

If you need help conducting lawful advertising for your business, our experienced e-commerce lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at 0800 005 570 or visit our membership page.

Frequently Asked Questions

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