Brands are increasingly partnering with influencers who have millions of followers, and the “creator economy” could surpass advertising spending on traditional formats such as TV, audio, print and film. However, as influencer marketing becomes a vital part of the advertising industry, a new wave of deceptive marketing class actions targeting influencers and the brands they represent has emerged.
Allison Fitzpatrick, a partner in the Advertising + Marketing Practice Group at Davis+Gilbert, shared her insights in FTCWatch regarding the growing legal risks brands and influencers face amid rising class actions, as well as the new challenges posed by AI influencer endorsements.
Class actions seeking tens to hundreds of millions of dollars in damages for alleged failures to clearly disclose when social media posts are paid advertising is “a new and scary trend,” according to Allison. She noted that “every major brand — and even minor brands, to some degree — engage in influencer marketing. So, they all may have a target on their backs right now.”
While the FTC provides marketers and influencers guidelines to make proper disclosures, the agency has reduced its enforcement efforts in recent years. “There’s a pressure on brands to not want to make these disclosures, and for a lot of them, there hasn’t been a lot of enforcement over the last couple of years — so they’ve been taking the risk, despite what we’ve been telling them,” Allison explained.
As the landscape continues to evolve, the rise of AI-driven influencers presents an even greater challenge for transparency and authenticity in advertising. The main concern with the advent of AI influencers is that they’re not human. Allison remarked. “If you start having AI influencers — these are not real people — and they start making claims about products they’ve never used, food they’ve never tasted, vacations they’ve never gone on … that’s where we’re going to see real deception and fraud.”
To learn more about the legal risks brands and influencers are facing in today’s evolving advertising landscape, read the full article below.