Synopsis: FTC publishes a quick-resource guide for influencers to encourage advertising compliance on social media.
For the last several years the Federal Trade Commission has been addressing the misleading marketing of consumer goods through social media influencers. At the beginning of this month, the FTC reinforced its concern with social media influencers by publishing a short guide and a video directed at those that endorse products online. Misleading influencer conduct triggers Section 5 of the FTC Act, 15 U.S.C. § 45, which prohibits unfair or deceptive acts or practices in or affecting commerce. The focus on educating influencers is part of the FTC's increasingly aggressive action against influencers and companies using online endorsements that do not properly disclose the connection between the influencer and the company.
On April 19, 2017, the FTC announced that it sent out more than 90 letters reminding influencers and marketers to clearly and conspicuously disclose their relationships to products and companies. Less than five months later, the FTC settled its first complaint against individual social media influencers. In that case, the respondents paid influencers $2,500 to $55,000 to promote their company on YouTube, Twitch, Twitter, and Facebook, but the influencers did not disclose this financial relationship in their promotions. At the time, the FTC insisted that the action "should send a message t
hat such connections must be clearly disclosed so consumers can make informed purchasing decisions." The following year, a public relations firm and publisher settled similar claims with the FTC, where they had not only paid two gold medal Olympians to advertise a product but also asked their employees and "friends" to do the same, all without revealing these relationships to the public. In June 2019, the FTC, this time in conjunction with the Food and Drug Administration, sent warning letters to four sellers of e-liquids, in which it "urge[d] [the recipients] to review your marketing, including endorsements by your social media influencers, and ensure that necessary and appropriate disclosures are made."
The new guide "lays out the agency's rules of the road for when and how influencers must disclose sponsorships to their followers." Titled, "Disclosures 101 for Social Media Influencers," the guide contains tips from the FTC staff about when disclosures are required. This publication joins the other existing resources on topic, including the FTC's 2009 Endorsement Guides and 2017 Informal FAQ Sheet. Importantly, the FTC's press release accompanying the new guide underscores that the responsibility of disclosures "lies with the influencer."
Key take-aways from the new guide include:
(1) Material Connection: Influencers are required to make it obvious to consumers when they have a "material connection" to the product or company he or she is endorsing. A "material connection" — "in other words, a connection that might affect the weight or credibility that consumers give the endorsement" — extends beyond a business relationship with the brand and incudes a personal, family or employee relationship.
(2) Financial Isn't Limited to Money: Influencers who receive other benefits in exchange for promoting a product, including discounted products or services, free products or other perks, still have to disclose their relationship.
(3) Endorsements Beyond Pictures: Tags, pins, reposts, likes and other methods of supporting a brand on social media qualify as endorsements.
(4) Clear and Conspicuous Disclosure: Disclosures need to be made so that they are seen by consumers. The FTC advises that, "to be both 'clear' and 'conspicuous,' the disclosure should use unambiguous language and stand out." The disclosure should not be hidden in text, covered with multiple hashtags, or buried in a video. For example, where text for a social media post requires a consumer to click "more," the disclosure should appear above the "more" button.
(5) Be Honest: Influencers cannot attest to a product or experience that they have not tried and misrepresent their true results. Just the same, influencers cannot make up claims about the product.
The foregoing reminders from the FTC are consistent with the prior guidelines and warning letters but are presented in a more concise and current format. The new guide is also accompanied by a short video providing advice for social media influencers. These resources are intended to remind influencers that they need to take responsibility for their role in influencing consumers and not to assume that consumers understand their relationship to the product or services they are endorsing.
This latest guidance from the FTC also serves as a reminder to those involved in social media marketing, whether as a brand, a marketer, or an influencer, to ensure the FTC's guidelines are followed. As the FTC states in its form enforcement letter: "If your company has a written social media policy that addresses the disclosure of material connections by endorsers, you may want to evaluate how it applies to" posts made by your endorsers. "If your company does not have such a policy, you may want to consider implementing one that provides appropriate guidance" and "ensure[s] that posts contain necessary disclosures and they are clear and conspicuous."
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