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FTC Continues Scrutiny of Influencer Campaigns

The FTC is increasing its scrutiny of brands' use of social media influencers who fail to disclose to a material connection between the brand and the influencer.

For a number of years, the FTC has been scrutinizing brands’ use of social media influencers who fail to disclose to a material connection between the brand and the influencer. The agency has now increased its scrutiny, sending warning letters not just to brands but to the influencers themselves. The FTC, concerned that some influencers and advertisers are unaware of the existing endorsement regulations, has sent over 90 letters to celebrities, athletes, influencers, and advertisers, reiterating the existing regulations and encouraging voluntary compliance.

The FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”) dictate that any material connection between an endorser and an advertiser must be clearly and conspicuously disclosed, unless the connection is to be reasonably expected by the consumer. This disclosure requirement is intended to inform the consumer of a connection that has the potential to affect the credibility that they apportion to the endorsement. The growing use of social media influencers in advertisements, particularly on Instagram, has prompted the FTC to offer some additional guidance on the Endorsement Testimonials, specifically focusing on the types of disclosures that are required on social media posts. By sending these letters to both advertisers and the influencers with which they engage, the FTC has clearly indicated their intention to hold both the advertiser and the influencer responsible for complying with the Endorsement Guidelines. Advertisers are encouraged to monitor the social media posts they have contracted influencers to share, and influencers have been put on notice that they may be held independently accountable for noncompliant posts.

With specific regard to social media posts, the FTC has advised in their letters to advertisers and influencers that terms like “thank you,” “#partner” and “#sp” to indicate that the post is “sponsored,” are too vague to meet the requisite disclosure standards, as they do not indicate a clear enough connection between the influencer and advertiser. In addition, the FTC advised that material connections should be disclosed at the beginning of the post, specifically within the first three lines. The FTC advised that disclosures becoming apparent only after a consumer chooses to click “more” to reveal the entire description are insufficient. The FTC notes that a significant portion of consumers decide against clicking “more” to reveal the entire description, and burying the disclosure at the end of the caption will result in those consumers remaining uninformed as to the existent material connection between the advertiser and influencer. Finally, the FTC advised against hiding the disclosure within an extended series of hashtags. If the influencer discloses their affiliation with the advertiser by including “#sponsored,” but it is hidden amongst several other hashtags, it is less likely that the consumer is going to read the disclosure, therefore the intended effect is lost.

Takeaway: Social media influencers should heed the FTC’s specific advice and interpretation of the Endorsement Guidelines as they relate to social media advertising. Disclosures of material connections must be clear, unambiguous, and transparent, so that consumers are immediately aware of the material connection between influencer and advertiser. It is also incumbent upon brands to monitor the social media posts of the influencers with which they are engaged, as they too may be held liable for social media posts that fall short of the guidance outlined by the FTC.