Big Sis Briefing: HiSmile, the ACCC and the Feeling Before The Fine

14 June

Before we start: I am not your lawyer and this is not legal advice. This is commentary on a matter that is already public, written so everyone in the room can follow it.

The video you have scrolled past

You know the format. A regular looking person picks up a product, uses it on camera and acts pleasantly surprised that it actually works. No studio, VOX POP style in the street and no script that you can see, just a stranger sharing a find.

This week the ACCC had something to say about exactly that format and the brand in the frame is one that a lot of us know.

What actually happened

HiSmile, a Gold Coast oral care company, has paid $138,600 in penalties after the ACCC issued it seven infringement notices over misleading representations in its social media advertising. The company also gave a court enforceable undertaking, which is what matters most for the lessons that follow.

There are two issues worth pulling apart, because they are different problems and most people might blur them together.

Issue one: the people in the videos were not random members of the public. They were HiSmile employees. The videos were styled to look like genuine, unprompted customer reactions. According to the ACCC, the people presented as everyday shoppers were staff. HiSmile admitted that posting the videos was misleading under the Australian Consumer Law.
This is the fake testimonial problem in a modern outfit. It does not matter that the product might be perfectly good. The deception is in the staging, in dressing up an insider as an outsider so the endorsement carries weight it did not earn.
Issue two: the product claim oversold what the product actually does. HiSmile promoted its Glostik Tooth Gloss in a way that could lead you to believe it removed stains from your teeth. The ACCC’s position is that the product only concealed stains temporarily.
As part of the undertaking, HiSmile agreed not to claim that Glostik or its other products produce permanent results when that is not the case. Temporary versus permanent sounds like a small word swap. In consumer law it is the difference between a fair claim and a misleading one, because it changes what you thought you were buying.

Put simply, the Australian regulator was not impressed by who was talking or by what they said the product could do.

The public admission

This next bit is editorial, so read it as my read rather than the ACCC’s. Part of the undertaking requires HiSmile to publish notices about the action on its website and social channels.

Publishing a correction is the price of this kind of resolution. There is a difference, though, between publishing something and making sure anyone sees it.

A correction posted where it is least likely to interrupt the feed is technically compliant and practically invisible. If you have ever watched a brand tuck bad news between two pieces of cheerful content, you have seen the move. It is worth noticing, because how a business handles the apology tells you how seriously it took the problem.

This is bigger than one brand

If you run an e-commerce business and your stomach just dropped, breathe. This is not a witch hunt aimed at one company and it is not a sign that the regulator has decided your industry is the enemy.

It is part of a sustained ACCC focus on online marketing that has been building for years. The regulator ran its first social media sweep back in 2023 and did not love what it found. Of the 118 influencers it reviewed, 81 per cent were making posts that raised concerns under consumer law. A parallel sweep of online reviews flagged concerns with more than a third of them.

Earlier this year the ACCC issued its first penalty over undisclosed influencer gifting, when the operator behind PhotobookShop paid fines totalling $39,600 after editing a review and obscuring a gifting arrangement. HiSmile is the latest name on a longer list, not the start of something new.

The good operators have nothing to fear from this. The standard the regulator is enforcing is not unhinged.

Do not pretend your staff are strangers.
Do not promise permanent when you mean temporary.
Disclose the commercial relationship.

Do teeth, hair and gummies cop it harder?

A quick word for the founders building in beauty, wellness and supplements. There is a reason this category attracts sharper scrutiny than, say, a brand selling notebooks.

When a product touches your body, your health or your appearance, the cost of a misleading claim is not just a wasted purchase. It can be a person making a decision about their health on bad information.

That is why teeth, hair, skin, vitamins, gummies and sleep products sit under more watchful eyes and why more than one regulator can be involved. The ACCC handles the consumer law piece, while bodies like the Therapeutic Goods Administration regulate therapeutic claims and they coordinate on who is best placed to act.

The higher the potential for harm, the lower the regulator’s patience for creative marketing. That is the system working as intended, even when it might feel inconvenient from the inside.

For the in house lawyers: this is a risk appetite story

When a business ends up giving an undertaking to build a compliance program, that usually tells you the program was thin to begin with. The obvious question to a senior corporate lawyer like myself is not whether someone in marketing made a mistake but why the guardrails were not there to catch it in the first place?

The uncomfortable truth is that a general counsel or a leadership team can look at the cost of a full consumer law compliance program, look at the likelihood of enforcement and then quietly decide the risk is worth running.

That is a risk appetite decision and it is often made without anyone saying it out loud or making a minute in a board meeting. I’m not suggesting that was the case here but there are unlimited examples of leadership either ignoring or neglecting to ask for legal advice and taking a calculated commercial risk anyway.

But when there is no real compliance program, especially in a consumer facing product business, the marketing team is left to work out where the legal lines sit on their own, usually while chasing a campaign deadline.

The two issues in this matter, staff posing as customers and overstated product claims, are exactly the kind of thing a functioning compliance program is built to catch before it posts.

When your gut says something is off

If you are early in your career and you have that quiet, persistent feeling that something at your workplace is not right, start here. Start up life can be loose on policy and guardrails but the law is the law and it doesn’t disappear because the CMO likes to MoVE FasT ANd BreAK THingS.

If you clock issues with advertising methods, product descriptions or methods of selling that don’t seem to have been run through a compliance lens, you are probably not being dramatic. That instinct is information and it is usually worth following rather than talking yourself out of.

A few things to hold onto, in roughly this order.

Protect your own practising certificate first. Your ticket to practise is yours and it outlasts any single employer. Nothing about being a team player requires you to put it at risk.
Write things down. Keep your own notes as things happen and where you raise a concern, raise it in writing rather than only in a hallway conversation that leaves no trace. You are not building a case against anyone, you are protecting yourself and creating a record.
Find out whether there is a whistleblower policy and read it before you need it. Knowing the internal channels and the protections that attach to them quietly changes your options.
Get a sanity check from someone you trust. A mentor, a former colleague, a trusted adviser, someone outside the pressure of the room. You are not asking them to fix it. You are asking them whether you are seeing what you think you are seeing.
Remember that the Law Society ethics line exists. Most jurisdictions have an ethics hotline or ethics counsellors precisely for the moment you are unsure what your obligations are. Using it is not an admission of anything. It is what professionals do.
Pay attention to how safe it feels to raise any of this. If you cannot flag a genuine concern internally without your job feeling like it is on the line, that lack of psychological safety is its own red flag about the place. It does not mean you are trapped. External avenues exist and the point of everything above is to make sure that if you ever need them, you have protected yourself on the way.

The ethics anchor

One last thing for the in house crew, because it can be scarily easy to lose in the noise.

Reminder that your paramount duty is not to your employer. It is to the court and to the administration of justice and that duty sits above the interests of any client, including the client who pays your wage.

In-house lawyers feel this most sharply, because your employer is also your client and the lines between commercial advice, legal advice and your own ethical obligations can get blurry quickly under pressure. Knowing where that line is, before someone asks you to step over it, is most of the job.

For the founders in my DMs

If you are building something, take the cheap lesson rather than the expensive one.

Real reviews from real people, with any commercial relationship disclosed.
Claims you can substantiate, with the same care given to the word temporary as to the word permanent.
A marketing team that knows where the consumer law lines are because someone actually told them, not because they guessed.
None of that slows good marketing down. It just keeps the trust you are working so hard to build from becoming the thing that sinks you.

The brands that win the long and fickle game of consumer trust and loyalty are the ones that never need the regulator to tell them where the line was.

Mel

This briefing is general commentary and not legal advice. If you are dealing with a live issue, please get advice specific to your situation. I can suggest a few excellent experts in this area. DM me.