Two weeks after presenting Keys to Celebrity & Paid Endorsements in Social Media at the ABA Business Law Section Spring Meeting, the Federal Trade Commission has sent out over 90 letters to celebrities, athletes, marketing firms and other influencers, warning them to clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media (see, FTC Staff Reminds Influencers and Brands to Clearly Disclose Relationship). An advocacy group, Public Citizen, which petitioned the FTC to act, said Instagram had become “a Wild West of disguised advertising” and in connection with its own investigation last year, named celebrities including Kim Kardashian and Rihanna, among over 100 influencers who the group claimed made endorsements without proper disclosures.
The potential for misleading consumers was raised after a review of Instagram posts reviewed by the FTC, recognizing that if consumers knew that a celebrity was being paid, gained a benefit or was somehow associated with the product, service or brand, it may well affect their perception and the weight accorded any claims made through such endorsements. As mentioned in the presentation to lawyers at the ABA meeting, the FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising applies to individual endorsers, as well as to bloggers, marketing companies and sponsoring advertisers. The letters sent out by the FTC noted that if a post includes “more” to indicate there is additional content available, the disclosure must be before or above that reference and that some disclosures weren’t clear even when made conspicuously. For example, “#sp” referring to ‘sponsored’ or “Thanks (name of product/service/brand)” or similar oblique references, especially when placed in a string of other symbols, abbreviations, links, hashtags (#), emoticons and emojis are not likely to be conspicuous or easily understood by many consumers.
Although the FTC did not publicly disclose the names of the recipients of the letters or the actual letters themselves, this is the first time the FTC has directly targeted social media influencers themselves, highlighting the requirements set out in the Guides that any “material connection” (e.g., paid sponsorship, contractual obligation, gifts, ownership interest, etc.) must be clearly and conspicuously disclosed unless the context already makes the connection clear.
Understanding the nuances of national and international advertising, marketing, promotions and sponsorships can be daunting. Implementing practical policies and practices to avoid problems before they arise, while meeting your marketing objectives, building brand recognition and strengthening your intellectual property assets is never simple or easy. The FTC’s jurisdiction includes everything from multicultural marketing, promotional campaigns involving user-generated content, sweepstakes and contests, as well as the privacy and data mining implications of marketing and promotional activities. Whether you are reviewing your current slate of endorsements, native advertising, product placement or branded entertainment, trying to enhance customer loyalty, affinity, co-branded marketing or reward programs, or if you are simply looking at new and innovative ways to use technology, including mobile and social media, to advertise, promote and market your brand, your products or your services – you need to understand the law and regulation that surround these activities.