Canada: FTC Reminds Social Media Influencers To Be Revealing – Of Material Connections, That Is

Last Updated: September 29 2017
Article by Amanda Branch

On September 7, the Federal Trade Commission (the "FTC") settled with online gamers over allegations they had deceptively endorsed an online gambling service that the pair jointly owned. This is the FTC's first action against individual social media influencers and it should send a message to others about the importance of revealing material connections in social media posts.

Trevor "TmarTn" Martin and Thomas "Syndicate" Cassell are online gamers who are widely followed on social media. They jointly own CSGO Lotto, which they endorsed on social media without disclosing their joint ownership. They also allegedly paid other well-known influencers several thousand dollars to promote the company without requiring them to disclose the payments.

The Commissioner's complaint alleges that videos and social media posts made by Martin, Cassell and other influencers failed to disclose their connection to CSGO Lotto. The consent agreement prohibits Martin, Cassell and their company from misrepresenting that any endorser is an independent user or ordinary consumer of CSGO Lotto's products and services. The order also requires disclosures of material connections to be made "clearly and conspicuously", which means that "a required disclosure is difficult to miss". Martin and Cassell are also required to monitor endorsers, including ensuring that social media influencers endorsing their products or services are provided with a clear statement detailing his or her responsibilities to disclose and establishing, implementing and maintaining a system of monitoring and reviewing the representations and disclosures of all endorsers.

The FTC has been cracking down on social media influencers who are failing to disclose material connections. In April of this year, the FTC sent more than 90 letters reminding influencers to clearly and conspicuously disclose their relationship to brands when promoting or endorsing products and services through social media. On September 7, 2017, the FTC sent warning letters to 21 undisclosed social media influencers about certain posts made on Instagram. In the letters, the FTC reminders influencers to disclose "material connections" in a way that is "clear and conspicuous", meaning that the language is unambiguous and the disclosure is easily noticeable by consumers.

The FTC has also issued an updated version of The FTC's Endorsement Guides: What People are Asking and on September 20, the FTC hosted a live Twitter Q&A #Influencer101, to answer questions about dos and don'ts for influencers. The FTC has repeatedly emphasized that the point of disclosure is to ensure consumers are aware of any material connections influencers may have with the product or brand owner so that they can give appropriate weight to the review.

Some highlights from the recent FTC communications:

  • Disclosure Requirements:
    • It may not enough that you have posted #ad – the disclosure must be easily noticeable by viewers, it should not be mixed in with links, handles or other hashtags because readers may naturally skip over all the clutter. The FTC has emphasized the importance of effective communication;
    • #XXPartner (where XX is a brand name) should be okay so long as it is easily noticeable by consumers; however, #ambassador is too ambiguous to be sufficient.
    • #paid is not sufficient disclosure if you are an employee or owner of the company you are endorsing; and
    • A single, general disclosure on your homepage is not sufficient because visitors may read individual reviews or posts without seeing the disclosure on your homepage.
  • Social media, platform-specific requirements:
    • Snapchat or Instagram stories should have a disclosure superimposed over the images and, since Snapchat and Instagram stories expire, you should make disclosure on each post;  
      • Similarly, the disclosure must be easily noticeable, in large enough font that clearly contrasts against the background and is not buried amongst competing text;
    • FTC staff does not think that the built-in YouTube, Instagram or Facebook tools for disclosure are sufficient and recommends that influencers do not rely on these automated built-in tools to meet their disclosure requirements;
    • For video reviews (i.e., YouTube), the disclosure must be in the video itself, both written and verbal (in case viewers have the audio turned off), it is not sufficient to have the disclosure only in the description (although it is good practice to have it appear there as well!);
    • Similarly, if you are live streaming a video, you must make disclosure both verbally and in writing and if there is a chance that a view could tune in mid-stream, then disclosure should be repeated periodically;
    • Facebook "likes" are considered endorsements; and
    • Brief disclosures are sufficient in limited-space posts (i.e., Twitter) and the FTC has signaled that #ad at the beginning of a tweet would likely be effective.
  • When to disclose
    • If you work for a brand, but were not paid for a specific post, you should still disclose your connection to the brand;
    • Even if a company sends you a product for free, without a request to post and no payment to you, if you post about the product, it is still an #ad because it was sent to you in the first place because you are an influencer;
    • Conversely, if you paid for a product yourself and want to mention it, then that is okay.

The FTC reminded influencers that U.S. law applies when it is reasonably foreseeable that the post will affect U.S. consumers. All social media influencers should take a close look at the FTC Endorsement Guides and familiarize themselves with the disclosure requirements for applicable social media platforms; however, Canadian influencers should be also familiar with Canadian requirements. Ad Standards has provided an Interpretation Guideline to Clause 7 (Testimonials) of the Canadian Code of Advertising Standards (the "Code"). In June 2017, Ad Standards reported the first consumer complaint about an Instagram post by an influencer.

We recommend social media influencers in Canada follow guidance released by both the FTC and Ad Standards. The recent actions taken by the FTC and Ad Standards demonstrate that staff members are monitoring influencers and social media platforms in order to ensure disclosure requirements are met and influencers are fully transparent about their connection to products or brands.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Amanda Branch
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