FTC Issues New Guidelines for Social Media Influencers, Brands

FTC Issues New Guidelines for Social Media Influencers, Brands

Jan 27, 2020

Client Alert

Brownstein Client Alert, January 27, 2020

By the end of 2019, social media advertising spend exceeded print advertising spend for the first time, according to projections issued by the Zenith media agency. In late 2019, Facebook reported that over 140 million businesses use its family of apps every month. Look around at countless consumers glued to their phones, and it’s not hard to see why social media marketing is exploding. But with the increasing popularity of digital and social media advertising platforms, the Federal Trade Commission (“FTC”) has again issued reminders to influencers and brands to abide by applicable false advertising law and clearly disclose their relationships.

In November 2019, the FTC issued its most comprehensive guidelines to date for social media influencers and brands. The FTC holds brands responsible for ensuring that influencers comply with false advertising laws, including the FTC’s disclosure requirements and guidelines. The FTC also holds individual influencers responsible for complying with such laws. As the new guidelines make clear, when endorsing a brand on social media, influencers must clearly disclose any material connection with that brand.

Under the FTC’s rules and guidelines, an “endorsement” on a social media platform includes featuring a product or service in a post, but—importantly—also includes tagging or liking brands, “pinning” brands, or commenting on or providing reviews of brands. A “material connection” to a brand means any personal, family, employment or financial relationship to the brand, and includes an influencer’s receipt of free or discounted products or services from the brand.

When endorsing products or services, any influencer with a material connection to a brand must disclose that connection in simple and clear language, and in a clear and conspicuous manner—the disclosure must be hard to miss. The FTC guidelines provide several examples of acceptable and unacceptable disclosures including, but not limited to, the examples summarized below.

Dos:

  • Do provide simple explanations like, “Thanks [Brand] for the free product” in a way that is hard to miss.
  • Do use clear terms like “advertisement,” “ad,” and “sponsored” in a way that is hard to miss.
  • If using a picture platform like Instagram Stories that does not allow viewers to see accompanying text, do superimpose a disclosure over the image such that it is hard to miss.
  • If using a video platform, do make the disclosure both in audio and print in the video itself (social media users often watch videos without sound), and not just in a text description accompanying the video.

Don’ts:

  • Don’t place disclosures in a place where they can easily be overlooked, including in the ABOUT ME section of an influencer’s profile, buried in a series of hashtags, or placed anywhere in text that would require a user to click through to see “more” of the influencer’s profile.
  • Don’t use vague or confusing terms like “sp,” “spon,” or “collab,” or stand-alone terms like “ambassador.”
  • Don’t make disclosures in languages other than the endorsement itself.
  • Don’t assume a social media platform’s disclosure tool is adequate on its own.

The updated FTC guidelines also remind brands and influencers that long-standing rules and guidelines applicable to advertising and marketing claims still apply. Influencers cannot praise a product they in fact thought was terrible, discuss experiences with a product they have not in fact tried, or make up unsubstantiated claims about a product that would require proof that the advertiser does not have.

If it seems like by 2020 these social media advertising rules ought to be instinctive for brands and influencers, recent FTC enforcement activity indicates that some still are not getting the message. In 2016, the FTC filed a complaint against a major retailer for failing to disclose that certain fashion influencers’ Instagram posts were paid promotions. In April 2017, the FTC issued “educational” letters to over 90 individual influencers and brands. In September 2017, the FTC reported that 21 of the influencers who received the April letter received a follow-up warning letter citing specific social media posts that the FTC believed were not in compliance with the FTC’s Endorsement Guides. In late 2019, the FTC announced settlements with two companies accused of, respectively: (a) deceptive online marketing tactics involving the acquisition and sale of fake social media indicators of influence, such as followers, views, subscribers and likes; and (b) posting fake product reviews on online marketplaces and failing to disclose that the reviews originated from company employees. For more information about the FTC’s and Colorado attorney general’s recent enforcement efforts, you may review a tandem client alert summarizing such efforts here.

False or misleading advertising can give rise to claims from individual consumers, classes of consumers and state and federal regulatory authorities, such as state attorneys general, the FTC, and the FDA (for pharmaceutical, nutritional, and cosmetics and beauty products). Such claims can expose brands to injunctions, damages, and civil and criminal penalties.

To help avoid such claims and mitigate the risk of liability arising from social media marketing, brands should consider developing programs to provide advertising guidance and training to influencers, and to ensure influencers’ content and posts are regularly reviewed. 2020 also presents a good opportunity for brands to review or re-negotiate their influencer agreements to make sure that influencers are contractually obligated to abide by all state and federal laws and rules applicable to advertising, including the new FTC guidelines. And, as many influencers professionalize their roles, developing celebrity presence and deep pockets, it seems increasingly reasonable for brands to request indemnities in the event that social media influencers violate applicable advertising rules.

A full copy of the FTC’s latest influencer advertising guidelines is available here.

 

This document is intended to provide you with general information regarding the FTC's guidelines for social media influencers and brands. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

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