Under the Influence: Disclosure Rules For Celebrity Social Media Endorsements
More and more brands are paying online “influencers” to engage with, positively review and market their products. However, recent federal actions, as well as a strong push from consumer groups, illustrate the importance of clearly disclosing the sponsored nature of such content. A quick scroll through one’s Instagram account invariably reveals numerous product endorsements, the majority of which fail to comply with guidelines set by the Federal Trade Commission (FTC). Brands, creators and endorsers have long assumed that government regulators would take a laissez-faire approach to enforcing endorsement rules in the social media space, but as recent events demonstrate, the time to clean up your paid influencer program is upon us.
FTC Endorsement Guides
Compliance with applicable advertising laws is critical across all media, regardless of whether the platform has been around for decades (e.g. print, radio, television) or is relatively new (e.g. blogs and social media). FTC Endorsement Guides apply to social media and are intended to offer insight into what the FTC’s attitude regarding various marketing activities, including paid endorsements. The Endorsement Guides themselves do not have the force of law behind them. However, practices inconsistent with the Endorsement Guides may result in law enforcement actions for violations of the FTC Act. Although there are no fines for violations of the FTC Act, law enforcement involvement can result in orders requiring the defendants in the case to surrender money they received as a result of their violations.
Clear and Conspicuous
The FTC does not mandate the specific wording of disclosures. The FTC’s position is that consumers must be presented with the information they need in order to reasonably evaluate sponsored statements. The agency explains that descriptors like “Sponsored,” “Promotion” and “Paid Ad” are effective. They also detail that a message or post with “Ad:” or “#ad” would likely be effective but “#sp” and “#spon” (both commonly used) are not. According to Michael Ostheimer of the FTC’s Ad Practices Division, “If you have seven other hashtags at the end of a tweet and it’s mixed up with all these other things, it’s easy for consumers to skip over that. The real test is, did consumers read it and comprehend it?” Accordingly, Ostheimer suggests that disclosures which appear at the beginning of a message or tweet would better satisfy the FTC’s “clear and conspicuous” requirement.
Consumer Groups Urge FTC to Hold “Influencers” Accountable
Even though the use of disclosures on social media posts is increasing, recent reports suggest that many influencers (most commonly within the fashion and beauty product industries) do not always follow the rules. In September 2016, Public Citizen, Commercial Alert, Campaign for a Commercial-Free Childhood and Center for Digital Democracy sent a letter to the FTC's Bureau of Consumer Protection “requesting that the FTC investigate and bring enforcement actions related to the practice of non-disclosed advertising through ‘influencer’ user profiles on Instagram.” The letter goes on: “Companies pay ‘influencers,’ or social media users with a large following, to post endorsements of their products without disclosure. While there is evidence of the illicit ‘influencer’ market on Twitter and SnapChat, the “influencer” industry on Instagram represents one of the most prominent and ethically egregious violations of FTC policy.”
The letter references specific Instagram influencers who the groups allege represent a growing trend of deceptive native advertising that disproportionately targets young people. Referring to such practice as “serial non-compliance with FTC’s endorsement policy,” the groups urge the FTC to preserve the integrity of fair advertising rules by both directing enforcement actions at infringing advertisers and publically reprimanding high-profile influencers — the latter of which would be a new approach by the agency.
Not only do marketers, celebrities and agencies have to worry about whether the FTC is going to investigate their campaigns, but they must now also operate in fear of being called out by “watchdog” groups. Faced with mounting public pressure and increased regulatory oversight, brands and advertisers are being forced to tighten up their practices with regard to influencers.
Adam Z. Solomon is a partner at Michelman & Robinson, LLP (M&R), a national law firm with offices in California, Chicago and New York. Mr. Solomon represents clients in all aspects of advertising, digital marketing, promotions and compliance. He can be reached at (212) 730-7700 or firstname.lastname@example.org.