I saw a video the other day that had tips to go from $0 to a $100,000 per month by starting Social Media Marketing Agency (SMMA). The SMMA content creator included some real examples of how they had gotten their clients amazing results like doubling their revenue with Facebook ads.
Make $1,000/day (while working 9-5)!
– Every video ever, when you fall down the ‘side hustle’ rabbit hole
Social Media Management service providers often provide valuable insights and techniques for businesses, but SMMAs, social media managers and content creators need to tread with caution as there is consumer and trade practice law that could mean that some of the strategies they suggest to ‘double’ their clients revenue could be illegal and have real consequences.
Misleading or Deceptive Pricing by SMMA
A common strategy that I have seen being promoted by SMMA content creators is to push paid Facebook ads for clients that have a “limited time” deal on services. This in itself is a valid strategy, but issues arise if the price is not actually cheaper than the business’s usual pricing.
In Australia, we have laws about misleading or deceptive conduct1 and false or misleading representations about goods or services.2 Businesses can be issued infringement notices and fined thousands of dollars by the Australia Competition and Consumer Commission (ACCC), or even millions for companies that end up going to court.
Misleading ‘Was/Now’ or ‘Two Price Comparison’ advertising, such as ‘Was $1,000 / Now $500’ can get businesses into serious trouble if they aren’t true. The ACCC has cracked down on, and issued infringement notices to major jewellery companies, computer companies, mattress and furniture companies, music stores… the list goes on. These companies have paid thousands of dollars in penalties. Businesses need to be able to substantiate their ‘Was/Now’ pricing.
In the US and in many other countries, there are also similar laws relating to misleading conduct, so SMMAs running overseas should seek their own legal advice locally.
Is an SMMA liable if a client is in breach of consumer law?
If a SMMA has suggested or implemented advertising strategies that breach consumer law, there is a risk that the SMMA could be liable directly. If the SMMA is found to be reckless or negligent, the SMMA may be liable directly. This may be the case if you are an SMMA and have suggested to clients or promote content suggesting that the price does not actually have to be lower in advertising copy.
Additionally, if the SMMA does not have well-drafted contracts in place, it could potentially be liable to the client for the penalties and loss of goodwill they incur/suffer as well.
The biggest risk here for ‘side hustle’ SMMAs in particular is that many are starting up as sole traders, not as companies. In Australia, this means that any penalties and liabilities would be against you personally. Therefore any personal assets you have such as a family home, may be used to pay for business debts if the business does not have sufficient funds to pay.
Practical steps for SMMA
If you are a social media manager or have a SMMA, consider a business structure that minimises risk of personal liability, like a company entity, with appropriate insurance in place.
SMMAs need to have terms and conditions with their clients that have well-drafted liability and indemnity clauses to ensure a client is responsible for the accuracy of content and content they approve of – in addition to the Was/Now pricing risks above, there are many other reasons why an SMMA does not want to have any liability for the advertising copy it produces for a client such as potential liability for other laws.
Ideally, SMMA should also run by the advertising copy through a qualified lawyer. One way to implement this is to build it into your pricing structure. We also recommend having a regular training program in place for laws around marketing and advertising for you and your team.
We offer tailored terms and conditions and subscription packages for SMMAs that want regular legal oversight on their advertising copy, feel free to get in touch to find out more.
1 Competition and Consumer Act 2010 (Cth), sch 2 (Australian Consumer Law), s 18.
2 Australian Consumer Law, s 29.
What is ‘The Side Hustle Series’?
‘Side hustle’ culture has been trending for a while now, especially amongst those tired of their 9-5 grind.
Starting a side hustle or business is exciting and a great way to make some extra cash. However, a lot of the content you see on social media platforms like Youtube, Facebook, Instagram and TikTok focus on the practicalities of starting a ‘side hustle’ or ‘side gig’, without thinking about legalities.
This can be a huge risk, especially because so many people are starting their businesses without setting up a company first, meaning that they as people, are personally liable for the business.
In this series, I walk through how to protect yourself legally if you are starting a ‘side hustle’ by going through some of the most popular trending side hustles.
