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ACCC announces probe on shady social media marketing practices

By Zarah Torrazo
19 August 2022 | 10 minute read
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With social media fast becoming the go-to place for businesses when promoting products and services, the Australian Competition and Consumer Commission (ACCC) announced the launch of a probe that looks to crackdown on scams and misleading advertising on major platforms. 

Businesses and consumers are encouraged to share their views on social media services as part of the ACCC’s sixth interim report, which will examine the state of competition for social media services in Australia.

Particularly, it will investigate how businesses were using social media advertising, such as the use of paid influencers and sponsored posts.

The report will also look into consumer protection issues, including the different barriers to entry and hurdles and costs faced by consumers and businesses when they try to switch services. 

Consumers’ experiences with social media, including the impact of scams and the risk of being exposed to misleading or deceptive content by businesses on different digital platforms, will also be covered by the report. 

With Aussies losing over $144 million to social scams on social media in 2021 — almost double the amount recorded in 2020 and four times the amount in 2017 —  the ACCC is seeking views on the use and abuse of social media services for scams and misleading or deceptive content.

“Views on the effectiveness of processes offered by social media platforms for consumers and businesses to report potentially misleading claims in social media advertising are also encouraged,” the ACCC stated. 

ACCC chair Gina Cass-Gottlieb acknowledged that social media had become a vital tool not just for businesses, but for consumers as well.

“Social media has become an essential tool for many businesses as they seek to widen their customer bases and engage and communicate with consumers, and for individual consumers to connect and communicate with each other and access critical information,” she stated. 

She added that the regulatory body is interested in examining “trends” in user preferences and engagement over time.

“We want to hear from businesses and consumers about their experiences with social media services, including with Facebook, Instagram, Twitter, Tiktok and Snapchat,” she said.

Particularly, the regulator stated it would analyse how Australia’s digital landscape has changed since the introduction of video platform TikTok. Other social media sites such as Youtube, Reddit, Discord and even the new entrant to the digital arena, BeReal, will be under the regulator’s microscope. 

Interested stakeholders are advised to submit their views to the commission by 9 September. The final report will be submitted to the Treasurer by 31 March next year.

The report is part of the ACCC’s five-year Digital Platform Services Inquiry, which aims to delve deeper into the broader market of supply of digital platform services such as internet search engine services, digital content aggregation platform services, private messaging services, social media advertising and media referral services.

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