FTC Cracking Down on Compliance with Disclosure Rules for Influencers

A new report by influencer marketing agency, MediaKix, revealed that as many as 93% of top celebrity endorsements are in violation of the Federal Trade Commission’s rules regarding disclosure and truth-in-advertising.

It has clearly not escaped the FTC’s notice, as they recently sent 90 letters to influencers and their brand partners in April 2017, warning them to comply with existing regulations.

The FTC has previously issued Endorsement Guidelines and Native Advertising Guidelines that require clear and conspicuous disclosures to help consumers understand when a communication is actually an advertisement. The area that most affects social media influencers is endorsements (or testimonials).

An endorsement is “any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”

Disclosure is required whenever an endorser is:

  • Given an incentive – whether financial or other (such as money, gift, free products, experience, etc.)
  • And where knowledge that the endorser has received such incentive would affect the weight and credibility of the endorser’s statements or actions

An endorser can’t talk about their experience with a product unless they’ve tried it:

  • You must be a bona fide user
  • If giving a positive review, you must have had a positive experience

An act or practice is deceptive if it misleads “a significant minority” of consumers – even if some followers are aware of the sponsorship, many might not be.

Simply tagging a post #sp or #spon is INSUFFICIENT to provide adequate disclosure.

The recent FTC letters further clarify these requirements, noting that disclosure is required if there is a “material connection” between the influencer and the brand. Material connections could consist of a business or family relationship, monetary payment, or the provision of free products to the endorser.

In addition, with respect specifically to Instagram posts, the FTC letters specify that the clear and conspicuous disclosure should be placed in the first three lines of the post, so that a consumer does not have to click “More” to see the disclosure.

With influencer marketing on Instagram alone a $1 Billion business – both influencers and brands should make compliance with FTC rules part of their authentic relationship with their fans.

Questions? Contact me to find out more.

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