By Jim Bulling and Anabelle Weinberg
Earlier this week, the Australian Competition & Consumer Commission (ACCC) announced that they will be cracking down on misleading testimonials and endorsements by social media influencers. The ACCC is reviewing a range of social media platforms including Instagram, TikTok, Snapchat, YouTube and Facebook, and Twitch.
Stephen Jones, Minister for Financial Services, has supported the ACCC’s action.
The ACCC announcement follows the recent Federal Court decision in Australian Securities and Investments Commission v Scholz (No 2)  FCA 1542 where it found that social media ‘finfluencer’ Tyson Robert Scholz contravened section 911A of the Corporations Act by carrying on a financial service business without an Australian financial services licence (AFSL).
Between early 2020 and November 2021, Mr Scholz:
- used his Instagram page to post stories about particular companies indicating that he had acquired shares in that company or that shares in that company would be a good investment;
- ran seminars, which he charged people for, designed to teach attendees about how to trade on the ASX; and
- facilitated a Discord group which was available through an annual fee in which messages were exchanged by members about share trades.
The Federal Court held that the combination of the above activities constituted a financial services business.
The Federal Court also stated that it did not matter that Mr Scholz’s Instagram stories did not contain any overt recommendation to acquire the shares: it was enough that Mr Scholz referred to a company or its shares in a way which indicated that he liked that company.
As a result of the recent Federal Court decision and increased surveillance from regulators, anyone providing financial services or advice online needs to ensure that they have an AFSL.