United States: With Great Influence Comes Great Responsibility: Potential Liabilities In The Growing Influencer Marketplace

Last Updated: December 5 2019
Article by Tamany Vinson Bentz and Carolina Veltri

"You guys...@flattummyco just dropped a new product. They're Appetite Suppressant Lollipops and they're literally unreal," gushed Kim Kardashian in a now-deleted Instagram caption. Below a photo of herself with a lollipop in her mouth, Kim urged her 110+ million Instagram followers to use her unique promotional code on their purchase so they, too, could curb their food cravings at a discount.1

Sponsored social media posts like this are ubiquitous, showcasing a wide array of products and raising issues beyond the irony of an appetite-suppressing dessert. What responsibility, if any, falls on the influencer for these endorsements?

Like the efficacy of Flat Tummy Tea lollipops, the answer has yet to be elucidated. Both government and private plaintiffs have tried to sue celebrity endorsers directly for false or deceptive advertising, but with mixed results.

According to the Federal Trade Commission's website, "FTC law applies to endorsers and influencers, too." In 2017, the FTC issued its first charges against social media influencers for deceptive endorsements for failing to conspicuously disclose a material connection between the influencer and the company – in this case, that the influencers also owned the online gaming service they promoted.2 While this case, like many, ultimately settled without court review, it suggests that the FTC will enforce regulations against influencers. Courts, however, have yet to apply a theory of "endorser liability" to an influencer.

In 2004, the FTC took the rare step of suing a celebrity endorser under a theory of "endorser liability" for false advertising and misrepresenting the results of a dietary aid.3 The case reached the Ninth Circuit, but the court held that the spokesperson at issue did not meet the FTC's own standard for liability because he was not "recklessly indifferent to the truth or falsity of a misrepresentation, or had an awareness of a high probability of fraud along with an intentional avoidance of the truth."4

Similarly, private plaintiffs have attempted to sue celebrity endorsers, but again, courts have yet to definitively hold that such endorsers can be liable to consumers. Investors in what turned out to be a Ponzi scheme brought suit against an actor who had appeared in commercials endorsing the "investment opportunity" in In re Diamond Mortgage Corp.5 In denying the actor's summary judgment motion, the court held that as an endorser, the actor "had a duty pursuant to the FTC Guides to substantiate the truthfulness of the endorsements and obtain independent and reliable information regarding the financial stability" of the endorsed investment.6 The case later settled and the question of whether this duty had been breached was never answered.

Other cases facing this question have sidestepped it, with courts instead rendering the issue of endorser liability moot by finding that the celebrities in question were not endorsers.7 Still more cases settle and avoid court decisions on this issue altogether.8

But as influencers' pockets are deepening and celebrity marketing is capturing ever more interest from consumers and the FTC, it is highly likely that the issue of endorser liability will steadily move to the fore of advertising law.

Footnotes

1. huffingtonpost.co.uk/entry/kim-kardashian-west-slammed-for-promoting-appetite-suppressant-lollipops_uk_5afbfc1be4b0a59b4dff0a27

2. ftc.gov/news-events/press-releases/2017/09/csgo-lotto-owners-settle-ftcs-first-ever-complaint-against

3. F.T.C. v. Garvey, 383 F.3d 891, 901, 903-04 (9th Cir. 2004)

4. Id. at 901

5. 118 B.R. 575 (Bankr. N.D. Ill. 1989)

6. Id. at 583.

7. See, eg, Luman v. Theismann, 647 Fed. Appx. 804 (9th Cir. 2016); Kramer v. Unitas, 831 F.2d 994 (11th Cir. 1987).

8. See, eg, Brady v. Basic Research, LLC, No. 13-cv-7169 (SJF) (E.D.N.Y. Dec. 21, 2016).

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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