Social Media Influencers and advertising

Social Media, #Influencers, and the FTC

In Business 101, Creative Entrepreneurs by Shannon MontgomeryLeave a Comment

Social Media advertising is a billion-dollar industry. Make that $19.3 billion in 2018 in the United States. It’s no wonder everyone wants to be an influencer, work with influencers, or be the brand every influencer wants to work with. So it’s also not surprising that the Federal Trade Commission (the FTC) is continuing to disrupt influencer marketing by handing out fines and lawsuits when their guidelines aren’t followed.

Recently, the FTC accepted consent orders settling some pretty intense false advertising charges against a PR firm, the CEO of said firm, and a magazine and its owner, over an advertising campaign developed and utilized during the Rio Olympics. I won’t get into details of that claim here, however, neither the PR firm, the magazine or the influencers involved in this campaign took the necessary steps to ensure the public understood that what they were looking at were advertisements and not merely organic posts by the influencers. And this my friends is a big no-no in the eyes of the FTC.

The Rules

The FTC Endorsement Guides require that any material connection between an influencer and the product or service they are posting about must be clearly disclosed. How these disclosures are made can happen in a variety of ways. For example, the use of hashtags that say sponsored or paid advertisement is often seen as appropriate especially if paired with a statement from the influencer regarding the connection. The FTC clearly indicates in its Enforcement Policy Statement on Deceptively Formatted Advertisements, that messages (posts, videos etc.) that are not readily “identifiable as advertising to consumers are deceptive if they mislead consumers into believing they are independent, impartial or not from the sponsoring advertiser itself.” In other words, don’t make it look too organic or the FTC is going to come after you.

What You Should Do

The consent orders coming out of this settlement are pretty clear on what brands should do when working with influencers to avoid facing the same issue. And, it places a lot of responsibility on the influencer. So, if you’re an influencer it’s important that you know the rules and that you follow them precisely!

Here’s what the FTC wants to see in your influencer contracts:

  • Provide influencers with a clear statement of their responsibilities to disclose clearly and conspicuously, and in close proximity to the post, video etc., the influencer’s material connection to the product or service.
  • Obtain from each such influencer a signed and dated statement acknowledging receipt of that statement and expressly agreeing to comply with it;
  • Establish, implement, and maintain a system to monitor and review the influencers’ activities as it relates to the campaign you’re doing with them;
  • Immediately terminate and cease payments to any influencer with non-complying posts. Although brands may provide notice of failure to adequately disclose, and an opportunity to fix the issue prior to terminating the relationship if the failure to disclose was on accident. Any subsequent failure to disclose will result in immediate termination;
  • Create reports showing the results of the monitoring being done as it is required by these provisions.

So you can see as a brand you need to beef up your contracts a bit, or actually start using them…and as an influenc,er you are going to want to get extremely familiar with the FTC guidelines and all the updates they are constantly making to them. Or, get someone on your team that can do that for you (like me!).

This recent FTC action highlights the importance of playing by the rules in the Social Media world. As the brand or advertising agency be open and honest with the influencer on what is legally expected from them, monitor their actions and ensure they are following the law. As the influencer, take responsibility for knowing the law and following it because the FTC will make sure you do!

If you’re an influencer or a brand working with them and you have questions about this, send an email to Shannon@montgomerypllc.com and let’s see if I can help you out!

 

Please note that this is not meant to be legal advice for you or your situation, this is merely some legal research and knowledge on the given topic.

 

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