Businesses are being advised to draw up iron-clad contracts with Instagram influencers after a Melbourne-based cafe was ordered to pay $1,676 over a social media stoush.
In a case of our times, last week the Victorian Civil and Administrative Tribunal (VCAT) heard a dispute between Melbourne-based cafe Legacy and Instagram influencer Chloe Roberts over social media advertising.
Influencers are becoming an increasingly popular part of the small-business marketing budget, but the emerging nature of the industry is causing a variety of legal teething issues, particularly when things go wrong.
Cafe owner Con Katsiogiannis engaged Roberts for a series of Instagram advertisements, but over the course of their relationship a disagreement broke out over fees, which started at $200 per post and later increased to $300.
Roberts alleged the cafe started running up a tab on her influencer posts, seeking $2,100 in advertising fees, but Katsiogiannis took issue with posts about his cafe being archived by the model.
Roberts claimed 90% of the views on an Instagram image occurred within a week of posting and that archiving was a way to prevent too much old content building up on her page, believing it to be better for followers.
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Archived posts are not visible on Instagram, although account holders can retrieve and re-post images, which in this case is what Katsiogiannis asked Roberts to do, the tribunal heard.
Roberts argued to the contrary, claiming it was in the interests of both parties for her to archive old posts, although the cafe said the capacity of users to scroll through old posts on their phones merited keeping them up.
There was no written contract outlining the business relationship between the two parties, but rather, a series of verbal agreements, which meant there was no firm contract specifying how long Roberts would display posts.
During negotiations, Roberts actually unarchived a series of posts about the cafe but decided to re-archive them after still not receiving payment from the cafe.
Meanwhile, Roberts, who by this stage had increased her follower count from 80,000 to more than 120,000, began to secure larger clients, commanding $1,200 for static posts spruiking a large clothing label.
In coming to a decision, VCAT deputy president Ian Lulham did not believe he was simply able to award Roberts the invoiced sum, minus any damages the cafe may have suffered.
“The respondent did not put its case that way, and it would be very difficult for the client of an Instagram influencer to establish that it suffered damages if a post was archived prematurely,” he said.
“The only sensible way to approach the matter is to look at the value obtained by the Respondent in the circumstances.”
In that vein, Lulham said it was logical to conclude there was some merit in the claim new images are “more valuable” than old posts, but he could not conclude Roberts was entitled to “delete posts” at her discretion without any express agreement.
“The fair value of the Applicant’s services, given that there is no complaint as to the quality of the images but that the posts were deleted prematurely, is two-thirds of that sum being $1,400.00,” Lulham said.
Added with an order to reimburse Roberts for her filing fee ($276), Legacy cafe was ordered to pay $1,676.
Commercial lawyer Richard Pragnell of Viridian Lawyers says while the case was an administrative decision, it is nevertheless likely to inform future court cases in the area of influencer marketing.
“If anything, it’s clear they should have got their agreement in writing … if there’s going to be a long-term relationship it’s usually a good idea to get something in writing,” he tells SmartCompany.
Pragnell says it was interesting to see VCAT take the view the influencer marketing industry is so young that expert witness evidence was impossible.
“It’s very difficult in cases like this to establish damages,” he says.
“If a court was to look at this it would look at the actions of other influencers and what little industry consensus has been formed.”
Legacy cafe declined to comment. SmartCompany contacted Roberts for comment but did not receive a response prior to publication.