5th Edition: Trends in Marketing Communications Law
Regulators and public watchdog groups intensified their focus on paid influencer marketing campaigns in 2017. Last spring, in the wake of petitions published by groups such as Public Citizen and TruthInAdvertising.org, which flagged “suspicious” celebrity Instagram posts, and criticized the adequacy of “built-in” social media disclosure tools, the Federal Trade Commission (FTC) sent more than 90 letters to celebrities, athletes and other influencers – as well as to marketers – calling for influencers to “clearly and conspicuously” disclose their “material connections” in social media.
To bring the point home, the FTC issued 21 follow-up letters to recipients of the original 90 letters, including celebrities like Naomi Campbell, Vanessa Hudgens, Sofia Vergara and Lindsay Lohan, requiring them to provide a written response to the FTC on the status of their “material connections” to brands (and in the event of a brand relationship, to describe what actions they are or will be taking to ensure clear and conspicuous disclosure). In these letters, the FTC stated that ambiguous disclosures such as “#thanks,” “#collab,” “#sp,” “#spon” or “#ambassador,” or simply tagging a brand in a post without a disclosure, were not in compliance with the FTC’s Endorsement Guides. The FTC is clearly heeding the concerns raised by consumer advocacy groups – and in light of the recent investigation by the New York State Attorney General into the practice of creating and selling fake “followers” to boost influencers’ presence online – regulators will continue to closely monitor honesty and transparency in influencer marketing.
The FTC also updated its staff publication “The FTC’s Endorsement Guides: What People are Asking” (the FAQs) to address more than 20 new questions relevant to influencers and marketers. The updates expressly included FAQs regarding Instagram Stories and Snapchat, noting that when scrolling through a “stream of eye-catching photos” (e.g., on Instagram), a viewer may not see a disclosure based on its size, placement, time spent looking at the image, competing text and how well it contrasts against the image.
The FTC also announced its first enforcement action against individual influencers, Tom Martin and Trevor Cassell, for failing to disclose their material connections in YouTube and social media videos. In the videos, Martin and Cassell claimed to have discovered “CS:GO Lotto,” a video game virtual gambling site, and praised the game and touted their purported winnings – all without disclosing that they co-owned and co-operated the site. Further, the pair managed their own influencer program for CS:GO Lotto in which they prohibited paid influencers from making any negative statements about the website, in violation of the FTC’s Endorsement Guides requirement that endorsers only express truthful and honest opinions. Martin and Cassell settled the action by agreeing to refrain from making any such misrepresentation and to clearly and conspicuously disclose their material connections in the future.
- Influencers who do not comply with the Endorsement Guides could be subject to their own FTC action.
- Advocacy groups will continue to monitor influencer campaigns and highlight disclosures that they believe to be inadequate.
- The FTC’s current focus on the form and sufficiency of influencer disclosures does not mean that marketers, publishers, influencer networks and/or agencies can rest easy – or that the other key principles of the underlying Endorsement Guides, such as the need for influencer statements to be truthful and honest, are obsolete.