“Using an AI-generated image of a politician or celebrity is not automatically illegal in Australia, because there is no broad, standalone ‘image right’ that gives a person complete control over every commercial use of their likeness,” Hale said.

The firm’s commercial practice leader, Phoebe Chester (pictured, right), said: “Subtlety rarely translates over social media, so if a post is intended to be a joke, it’s safer for that joke to be taken to the extreme so that it’s so over the top it reduces the risk of misunderstanding.”

Under Australian Consumer Law, corporations risk pecuniary penalties of up to $100 million, or 30 per cent of adjusted turnover, and individuals can face up to $2.5 million for “false or misleading representations”.

“Any information or claim that a business provides about its products or services must be accurate, truthful and based on reasonable grounds,” the Australian Competition and Consumer Commission(ACCC) said on its website, confirming that this rule applies to social media, including posts on the business’s own account, paid platform advertising, and influencer content.

Hale said: “The ACCC makes clear that images, social media posts and testimonials can all be misleading if they create a false overall impression, regardless of whether the business intended to mislead.”

Chester said: “Businesses should assume consumer law may apply whenever the post promotes the business, its services, its brand, or a commercial position.”

“The distinction is less about whether the post is labelled ‘ad’ and more about whether it is made in trade or commerce and likely to affect customers. If the content also concerns electoral matters, Australian Electoral Commission authorisation issues may arise, particularly where paid promotion or political entities are involved.”

Hale said: “The legal risk starts when a post creates the impression that the person endorsed, approved, sponsored, or attended the business.”

Hale added that the repercussions of misleading social media posts could be takedown demands, reputational damage, legal complaints, and claims under Australian Consumer Law, passing off, defamation, or privacy law.

“While identifiable figures like Anthony Albanese could pursue defamation claims if these realistic AI posts imply an improper commercial relationship or dishonesty, a business’s legal exposure certainly does not stop there,” Chester said.

“If content has already been posted, advisers should assess the caption, image, comments, and reach together. The next step may be editing, adding source context, removing the post, issuing a correction, or moderating comments. Where the post is political, clients should also check whether authorisation rules apply before paid amplification.”

Hale stressed that although a disclaimer can help, it is not a cure if the overall impression is still misleading, emphasising that the line is crossed more quickly when the image used is commercial, realistic, undisclosed, or tied to a false claim.

The key issue is how a viewer understood the post, not whether the business intended the post to be a joke, Chester said. “Satire, exaggeration, cartoon-style imagery, AI labels, and humorous captions help, but they do not fix a factual claim that is likely to mislead,” she added.

Chester said that before posting, consideration must be given to how the viewer is likely to interpret it, including the technological savviness and media literacy of the audience. “A business with predominantly young customers with high AI literacy may be at lower risk of misleading those consumers with a joking post. However, if the post is published publicly for anyone to see, then there’s a risk that it can be misunderstood by anyone who comes across it,” Chester added.

“Practical safeguards include keeping the claim to opinion, linking to the source material, avoiding fake quotes, avoiding real logos unless clearly necessary, and monitoring comments that may create a misleading impression. Businesses are also responsible for false or misleading comments and posts on their own pages, so moderation cannot be an afterthought.”

“Legal practitioners should move the conversation from ‘Will this go viral?’ to ‘What factual claim will people take from this post?’”

“For SME clients, the practical advice is to separate humour from assertion, keep records supporting any claim, and review posts before they are boosted, shared by staff, or sent to influencers.”

This article was originally published on Cyber Daily’s sister brand, Lawyers Weekly.