It’s Every Influencer for Themselves as FTC Settles Debut Case Against Individual Social Stars
With several enforcement actions against companies, assistance from Instagram’s new paid partnerships tool, and the first ever complaint directly against social media influencers, the Federal Trade Commission has made it clear that they are fed up with deceptive endorsements.
Many brands today consider social media “influencers” an essential marketing tool. But the use of influencers raises important legal considerations. Under FTC guidance, if the person endorsing a product or service on social media has been compensated for that endorsement, the post must disclose the connection between the endorser and the brand. The key under the FTC’s endorsement guides is whether consumers would understand that a particular post is a paid endorsement. If consumers would be surprised to learn that a brand paid (or otherwise compensated) the endorser for his or her post, then the post should include a clear and conspicuous disclosure such as “#sponsored” or “#ad.” The FTC has been aggressive in its enforcement of these mandatory disclosures, but until recently, most enforcement has targeted advertisers rather than influencers.
On September 7, the FTC announced that two social media influencers in the online gaming community had settled their complaint which alleged they had deceptively endorsed the online gambling service CSGOLotto, Inc., paid other influencers to promote the site without proper disclosures, and failed to disclose their joint ownership of the company. The settlement would prohibit the individuals and CSGOLotto from any future misrepresentations of endorsers and require clear disclosures of any "unexpected material connections with endorsers." The FTC also shared that 21 other social media influencers would be receiving follow-up warning letters regarding their Instagram posts after receiving educational letters earlier this year.
The FTC has a list and is definitely checking it twice. This case serves as a reminder for both brands and brand ambassadors that material connections between brands and endorsements must be “clearly and conspicuously” disclosed, and that all parties involved in the promotion can be subject to FTC investigation. The FTC directly stated that this case should send a message regarding influencer-based advertising.
The FTC has updated The FTC Endorsement Guide: What People Are Asking guidance document and provided a Do’s and Don’ts graphic to cover new information for social media influencers. The updates include topics such as tags in pictures, Instagram disclosures, Snapchat disclosures, obligations of foreign influencers, disclosure of free travel, whether a disclosure must be at the beginning of a post, and the adequacy of various disclosures like “#ambassador.”