ACCC boss Rod Sims in new crackdown on ‘manipulative’ influencers, fake reviews

The consumer watchdog says it will target influencers on Instagram, TikTok and Twitter to make sure they are disclosing payments or gifts for products they are spruiking.

Social media influencers who fail to disclose they are being paid for promoting goods, fake online reviews and retailers who use false low stock warnings to drive digital sales will be targeted by the competition regulator to stop “dark pattern” techniques exploiting online shoppers.

Outgoing Australian Competition and Consumer Commission boss Rod Sims has stepped up the regulator’s focus on the digital economy after taking on the market power of tech giants including Facebook and Google in recent years for their market power.

Mr Sims will take aim at influencers who use social media platforms including Instagram, TikTok and Twitter to make sure they comply with new rules forcing them to disclose payments or gifts for products they are spruiking.

The comments were made as Mr Sims laid out the competition regulator’s enforcement priorities for the coming year with other areas including corporate “greenwashing”, gouging across stretched supply chains and consumers being left without refunds as a result of Covid disruptions in the travel and events sector.

But it is the digital economy that continues to get significant focus, particularly with the Covid pandemic turbocharging e-commerce in Australia.

“Well-functioning online markets are key to a modern economy. To realise the full benefit, consumers must be confident to engage with online businesses,” Mr Sims said in a speech in Sydney.

“Consumers are facing a growing number of manipulative or ‘dark pattern’ techniques to exploit or pressure them”.

These techniques include false scarcity reminders such as low-stock warnings, false sales countdown timers, targeted advertising that uses consumers’ own data to exploit their individual characteristics, preselected add-ons and design interfaces that discourage unsubscribing.

The regulator said it would also be on alert for areas of price gouging as a result of supply chain issues which have been stoking inflation through the economy.

Other areas “that seek to distort or disregard consumer choice” in the digital economy include manipulation of online reviews and search results, and social media influencers who don’t disclose they are paid to promote the products they are pitching, he said.

“All these practices direct consumers towards certain products rather than organic search results that best match their search terms,” Mr Sims said.

The ACCC already has court actions underway against online travel site Trivago for alleged misleading manipulation of search and a separate action against Google and Facebook for alleged misuse of personal data.

Meanwhile the regulator will be on alert for areas of price gouging as a result of supply chain issues which have been stoking inflation through the economy.

“The effects of Covid-related staff shortages, port congestion and transport interruptions have disrupted the supply of many retail goods from fresh food and groceries to clothing and medications. These disruptions have unfortunately led to higher freight rates, and so higher prices for consumers,” Mr Sims said.

“Where we see businesses taking advantage of the situation to fix prices or share markets, we will not hesitate to act,” he said.

Also under focus are questionable environmental and sustainability claims made by businesses, an area known as “greenwashing”. The ACCC will also go beyond consumer goods and examine carbon neutrality claims made by heavy industry including in the manufacturing and energy sectors.

“Consumers are often unable to determine the veracity of a product’s green credentials, reducing their confidence in the market,” Mr Sims said.

“And businesses incurring the costs of genuine environmentally friendly manufacturing processes face unfair competition from those businesses making misleading green claims without incurring the same costs”.

“Where businesses have engaged in false, misleading or deceptive conduct we will act,” he said.

After nearly 11 years in the role Mr Sims will step down four months ahead of his scheduled retirement so highly-regarded corporate lawyer Gina Cass-Gottlieb can take charge at the end of this month, ahead of the federal election.

Mr Sims said the ACCC is an evidence-based organisation that remains focused on providing the greatest overall benefit for consumers and competition.

“The ACCC’s role, simply put, is to make markets work for consumers now and in the future,” he said.

“Not by overriding markets, but by maintaining and promoting competition and fixing market

failure where we can, and by protecting the interests and safety of consumers in the support of a fair marketplace,” he said.