Social media influencers can help to promote your business. Instagram is a popular choice for retailers, with many retailers opting to provide influencers with products to give away to their loyal followers. It is often the case that these businesses do not setup a formal agreement with the influencer or determine the competition terms beforehand – but there are often risks to this casual approach.
A Sydney-based lifestyle blogger has received backlash from followers for ‘rigging’ two competitions that she ran on her Instagram account in 2015 for the giveaway of two bracelets from a local Irish jewellery business. She confirmed that she had given the bracelets to her brother’s girlfriend and another close friend.
As a business, there is always a risk that any influencer that you choose to represent your brand may not act in the best interests of your brand or may lose valuable social following or reputation for another reason. It is particularly risky if you are sponsoring or paying for the promotion – so it is important to ensure that you have an agreement with your influencer on the conditions of your sponsorship. For example, it may mitigate risk to your brand if you ensure that your business selects the winner of a giveaway, rather than the influencer.
It is also easy to forget that giveaways can be considered a ‘trade promotion’ if there is an element of chance involved with winning, rather than skill. Trade promotions are strictly regulated by laws in each state in Australia. In most, if not all states, it is essential that you have compliant competition terms and conditions available to all entrants. Depending on the state that the competition is run in, it may even be necessary to obtain permits for the running of the competition.
Instagram’s Promotion Guidelines suggest that the influencer or social media page owner is responsible for ensuring compliance with the law – but if you are engaging a social media influencer to run a competition on your behalf there is a risk that they may be considered an agent of your business. If that is the case, then you could be at risk of liability for the running of the competition. It is always best to establish clearly in a written contract the nature of your relationship with any influencers and develop competition terms in compliance with the law.
I have extensive experience in the area of competition and trade promotion law. I can assist in legal services such as:
- Advising on whether your competition is considered a trade promotion and provide practical solutions to avoid being categorised in this area;
- Advising on which trade promotion permits you are required to obtain;
- Drafting your competition terms and conditions;
- Drafting your influencer engagement contract; and
- Signing off on advertising materials so that they are in-line with Australian Consumer Law.