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Insure your Instagram: the importance of media liability for social media influencers

The unique needs of media professionals require distinctive insurance cover to protect against the significant costs associated with defending claims for financial loss that may arise from erroneous or negligent publication of material. Media liability insurance provides cover from exposures such as misleading advertising, defamation, invasion of privacy, copyright or trademark infringements, and breach of contract.

According to Suzie Shaw, Managing Director of Sydney based advertising agency, We Are Social, “social influencers are effectively our future media owners”, and as such, they require the same level of insurance cover as other media professionals, particularly in safeguarding against misleading advertising.

It’s certainly true that social media influencers have well and truly evolved into decisive players in the marketing world, with around 75 percent of brands aiming to utilise influencers this year. Yet, with the significant swaying power of these online moguls comes a responsibility to be smart and authentic in disclosing when online posts are in fact paid advertisements. Ensuring that no one is misled is vital, according to Red Agency CEO James Wright, after all, “consumers will work it out anyway, they are smart”.

Here we highlight three common exposures for social media influencers, and where media liability insurance becomes paramount.

Misleading Advertising

While it is vital not to erode consumer trust, new guidelines set by the Australian Association of National Advertisers (AANA) place further onus on the importance of disclosure on social media posts. The guidelines, coming into effect on the 1 March, dictate that brands must disclose where they have paid personalities to promote products on social media. Furthermore, the provision also states that advertising must be “clearly distinguishable” from surrounding content and enforces the point that brands don’t “camouflage the fact that it is advertising”. The effect these new guidelines have on the social media influencer juggernaut is yet to be seen, however, it is vital for influencers to know their responsibilities in terms of disclosure and where they can be held liable for misleading consumers.

Under the regulation of the Australian Competition and Consumer Commission (ACCC), individuals and corporations are prohibited from engaging in conduct that may mislead or deceive others. This rule applies to all advertising, including testimonials on websites and other social media pages. In the case of social media influencers, the ACCC stipulates that it is illegal for businesses to make false claims about the sponsorship of a product or service. Influencer marketing can be considered misleading under these provisions if the influencer does not disclose that they are receiving remuneration. It is deceptive for followers if they believe the influencer is providing their honest unbiased opinion about a product when in fact that view has been paid for by the business. What’s more, it makes no difference whether the business intended to mislead consumers or not; if the overall impression left by a business advertisement or promotion creates a misleading impression in the mind of the consumer, then it is likely to breach the law.

For example, In March 2015, the Federal Trade Commission in the United States cracked down on department store Lord & Taylor for failing to reveal its relationships with paid promoters and influencer campaigns on Instagram. Lord & Taylor paid fifty fashion influencers between $1000 and $4000 each to post on Instagram a photo of themselves wearing its Design Lab dress without requiring them to disclose that they had been compensated.  According to the FTC, Lord & Taylor failed to disclose the commercial connection, meaning that the social media influencers essentially communicated false messages to consumers that the Instagram images were all independent content produced by unbiased consumers, when in fact they were part of Lord & Taylor’s advertising campaign.  The FTC imposed significant compliance obligations on Lord & Taylor, which included establishing a monitoring system, reviewing advertisements and communications made by endorsers, and immediately terminating any endorser for misrepresenting impartiality or failing to disclose a material connection.

Ultimately, the best way to avoid misleading advertising is to disclose the commercial relationship in some way. Best practice is to disclose in the post that it is a paid endorsement. For example, endorsements on social media should come with hashtags #paid, #ad, or #spon to show followers that these posts are advertisements and the influencers have been paid to provide that opinion.

Equally important, however, is ensuring that influencers don’t disclose too much about the relationship they have with the brands they endorse. While it is common practice for brands and agencies to give social media influencers a suggested caption, there have been cases, of very high-profile influencers, who have revealed a little bit too much about their relationship with sponsors. Naomi Campbell, for example, accidentally copied and pasted everything that the Adidas marketing team gave her to post. Her Instagram post embarrassingly read, Naomi, so nice to see you in good spirits! Could you put something like: Thanks to my friend @gary.aspen and all at Adidas – loving these Adidas 350 SPZL from the Adidas Spezial range @adidasoriginals, before she noticed the error and amended her post.

Copyright Infringement

A further example of where social media influencers can be held liable for breaching Australian Consumer law is through copyright infringement. For example, in 2014, leading YouTube entrepreneur Michelle Phan, was sued by Ultra Records for alleged copyright infringements in her videos. According to Ultra, Phan never properly acquired the licenses she needed to use the tracks that featured in her videos, claiming a blatant disregard of the plaintiff’s rights of ownership. The label’s complaint included upwards of 50 examples of blatant copyright infringement, asking for $150,000 for each proven infringement. Phan’s legal advisors launched a counterclaim in which they argued that Ultra had agreed to allow Michelle to use the music. This case was eventually settled with both parties agreeing to dismiss the claims against each other, however, both parties would have incurred substantial legal expenses.

Breach of Contract

Influencers also need to be mindful of contractual obligations. Failure to adhere to your contractual requirements may result in a breach of contract, as was the case for lifestyle blogger Ang Chiew Ting who was sued by influencer network Churp Churp. According to Churp Churp, Ang entered an agreement with the agency in March 2013 where she agreed to have Churp Churp exclusively manage and negotiate all commercial deals involving her social media accounts. Since that time, Ang allegedly entered into more than 30 commercial, advertising and promotional agreements with numerous brands without Churp Churp’s knowledge or approval. As such, the company claims it suffered loss and damage from losing out on fees it would have received had it negotiated the deals on her behalf. The popular blogger launched a countersuit, denying that she had entered into agreements with said brands, and pointing out that she was no longer under contract with Churp Churp. In order to fund her counterclaim, Ang launched a crowdfunding campaign, stating that she “really needed help with the legal fees”.

As evidenced, disclosure on social media can become a point of contention for those in the flourishing influencer industry. While the new guidelines may prove to have little impact on influencers, as many have already adopted upfront measures when it comes to disclosing endorsements to their audience, it certainly serves as a strong reminder of the importance of full transparency when it comes to making consumers aware of any commercial relationships between influencers and brands.

What’s more, the act of gifting a product is still a grey area as the new guidelines state that without a formal agreement, no disclosure is required. However, this does not mean that you are free from being held liable for misleading advertising in the instance of gifting. Along with best practice when it comes to disclosure, it is important to insure yourself against these exposures. The best way to ensure that you are adequately covered is to speak with an experienced broker who can help in determining the right media liability policy for you. If you would like more information, please drop us a comment, email, or call Intuitive on (02) 9493 6111. We’d love to hear from you!

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