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FTC TELLS INFLUENCERS TO DISCLOSE CONNECTIONS ON SOCIAL MEDIA

By Allison Fitzpatrick of Davis+Gilbert LLP, Vejay G. Lalla formerly of Davis+Gilbert LLP & Paavana L. Kumar of Davis+Gilbert LLP on April 28, 2017
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clem-onojeghuo-220471The Federal Trade Commission (FTC) sent more than 90 letters to celebrities, athletes and other influencers – as well as to marketers – highlighting the need for influencers to “clearly and conspicuously” disclose their relationships to brands when they promote or endorse them on social media. The FTC letters mark the first time that the FTC has reached out directly to social media influencers, indicating that influencers could be subject to their own FTC actions if they fail to disclose their relationships on social media.

FTC’S ENDORSEMENT GUIDES

The FTC’s Endorsement Guides, which apply to endorsers and marketers, provide that if there is a “material connection” between an endorser and the marketer of a product that might affect the weight or credibility that consumers give an endorsement, that connection should be “clearly and conspicuously” disclosed. A material connection includes a business or family relationship, a monetary payment and even the provision of free products to an endorser.

FTC’S LETTERS

The FTC learned about the posts after receiving petitions from Public Citizen and related organizations, and sent the letters after reviewing a sample of Instagram posts by influencers making endorsements or referencing brands without any disclosures. Notably, before sending the letters, the FTC did not conduct an investigation to determine whether the brand mentions in the posts were sponsored or organic.

In its letters to influencers, the FTC referenced each influencer’s Instagram post(s) endorsing the specific brand and reminded them of their obligations under the FTC Endorsement Guides to disclose their material connection in “unambiguous language” and to make the disclosure “stand out.”

The FTC specifically referenced Instagram streams on mobile devices, observing that consumers typically see only the first three lines of a longer post unless they click “more” and that many consumers do not click “more.” Therefore, according to the FTC, any material connection should be disclosed above the “more” button.

The letters also noted that readers may skip over multiple tags, hashtags or links, especially where they appear at the end of a long post. In the FTC’s view, a disclosure placed in such a string was not likely to be “conspicuous.”

Last, the FTC advised that certain disclosures in Instagram posts – such as “#sp,” “Thanks [Brand],” and “#partner” – were not sufficiently clear because “many consumers” would not understand that they meant that an Instagram post was sponsored. According to the FTC, while there is no one-size-fits-all way to make a disclosure, influencers should avoid unfamiliar abbreviations or words that are subject to multiple interpretations.

FTC’S RECOMMENDATIONS

The FTC’s letters to marketers provided similar guidance, as well as the following recommendations:

  • Companies with a social media policy should evaluate how it applies to endorsers’ posts;
  • Companies that do not have a social media policy should consider implementing one; and
  • Companies should review their social media marketing to ensure that posts contain necessary disclosures and that they are clear and conspicuous.

TAKEAWAYS

The FTC’s letters should serve as a reminder for all influencers and marketers, even those who did not receive the letters, to review their social media policies in the context of the FTC’s Endorsement Guides.

In particular, disclosures should be:

  • Unambiguous and should not include unfamiliar, cryptic or vague terms to explain the relationship between an influencer and a marketer;
  • Hard to miss, rather than hard to find. In fact, the FTC’s position is that people should be able to spot a disclosure “easily;” and
  • Easy to read and not placed in a “jumble of hashtags” that readers are likely to skip over because they are not conspicuous.

THE BOTTOM LINE

The FTC’s letters to influencers and marketers highlight the importance of ensuring that “material connections” between influencers and marketers are “clearly and conspicuously” disclosed. Marketers should review their social media marketing policies because failure to comply could result in action against the marketer, as well as any of its influencers who fail to disclose their material connections.

FOR MORE INFORMATION:

Allison Fitzpatrick
Partner
212.468.4866
afitzpatrick@dglaw.com

Vejay G. Lalla
Partner
212.468.4975
vlalla@dglaw.com

Paavana Kumar
Associate
212.468.4988
pkumar@dglaw.com

Photo of Allison Fitzpatrick of Davis+Gilbert LLP Allison Fitzpatrick of Davis+Gilbert LLP

An established thought leader in the digital media space, Allison Fitzpatrick brings to her clients a thorough understanding of the power of social media, influencer marketing, native advertising and other forms of emerging media.

Allison has witnessed firsthand the explosive growth of influencer…

An established thought leader in the digital media space, Allison Fitzpatrick brings to her clients a thorough understanding of the power of social media, influencer marketing, native advertising and other forms of emerging media.

Allison has witnessed firsthand the explosive growth of influencer marketing on social media. As popular bloggers transformed themselves into social media influencers — with marketers signing them to lucrative contracts — she was instrumental in shaping those contracts and developing her client’s social media policies. Whether dealing with “micro” influencers in niche categories, or with major celebrities representing national brands, she helps clients navigate the rapidly evolving social media landscape.

Children’s marketers — as well as operators of child-targeted apps and websites — look to Allison for guidance in their online marketing efforts. Knowing the unique power digital media has over children, she routinely reviews websites, apps, privacy policies and marketing campaigns to ensure compliance with the Children’s Advertising Review Unit’s Self-Regulatory Guidelines, the Children’s Online Privacy Protection Act and other laws.

Having worked on some of the industry’s most successful promotions, Allison bore witness to digital media’s dramatic transformation of the promotions industry, as she helped her clients transition from their traditional reliance on print and direct mail promotions to the social media world, where she advises clients on their sweepstakes, contests, free offers, loyalty rewards programs and other promotions.

Even as she keeps a close eye on emerging media platforms, Allison knows how to adapt the traditional principles of truthfulness in advertising to all aspects of her practice, whether advising clients on endorsements and testimonials, price advertising, claim substantiation, negative option marketing, or any other legal issue where those principles apply.

Read more about Allison Fitzpatrick of Davis+Gilbert LLPEmailAllison's Linkedin Profile
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Vejay G. Lalla formerly of Davis+Gilbert LLP

Vejay Lalla is formerly with Davis+Gilbert LLP

Read more about Vejay G. Lalla formerly of Davis+Gilbert LLPEmail
Photo of Paavana L. Kumar of Davis+Gilbert LLP Paavana L. Kumar of Davis+Gilbert LLP

Paavana Kumar helps major advertisers and retailers assess risk as they create compelling campaigns, run high-exposure promotions and streamline the online customer experience. She is a particular asset to clients seeking to leverage influencer talent, engage more creatively on social media, and reimagine…

Paavana Kumar helps major advertisers and retailers assess risk as they create compelling campaigns, run high-exposure promotions and streamline the online customer experience. She is a particular asset to clients seeking to leverage influencer talent, engage more creatively on social media, and reimagine their online e-commerce and subscription programs.

Paavana’s ability to assess problems and provide quick, efficient risk assessments enables her to partner effectively with companies across industries, especially those pursuing a deeper e-tail focus. She is a sounding board for C-suite executives and general counsel when making high-stakes judgment calls about social media opportunities, FTC disclosure requirements and major changes to their business models.

As many clients move toward subscription models, Paavana’s knowledge of the highly regulated automatic renewal and negative option laws across all 50 states enables her to help companies draft transparent marketing disclosures and design compliant user flows. She also advises on high-exposure consumer promotions, including sweepstakes, contests, loyalty rewards and gift cards, cause marketing and donation programs, text message and email marketing, and major entertainment and sports collaborations.

Whether she’s counseling on a discrete issue or working with global legal teams for clearance for an international campaign, Paavana delivers practical advice with enthusiasm and a sense of humor. She is a recognized thought leader who frequently speaks and writes about leading-edge e-commerce and influencer marketing topics for in-house counsel and industry stakeholders.

Paavana actively supports the firm’s recruiting efforts and enjoys mentoring summer associates.

Read more about Paavana L. Kumar of Davis+Gilbert LLPEmailPaavana's Linkedin Profile
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  • Posted in:
    Intellectual Property
  • Blog:
    ILN IP Insider
  • Organization:
    International Lawyers Network
  • Article: View Original Source

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