On November 5, 2019, the Federal Trade Commission released a, first-of-its kind, guidance targeting online influencers. The new guide titled “Disclosures 101 for Social Media Influencers” informs influencers when and how they must disclose sponsorships with brands to their followers. This is part of the FTC’s increasing focus on making product endorsements more transparent.
When the FTC revised the Testimonial and Endorsement Guides (“Endorsement Guides”) in late 2009, the blogosphere panicked, assuming that the government would target the so-called “mommy bloggers.” However, these fears were assuaged when the FTC’s enforcement activities were focused on brands, advertising industries, and the networks that linked brands to influencers. Beginning in 2017, the FTC’s focus has increasingly shifted to the influencers.
In 2017, the FTC had sent more than 90 educational letters to social media influencers and brands and later, the FTC sent 21 warning letters to social media influencers regarding their Instagram posts. In addition, the FTC settled its first ever case against two social media influencers with an ownership stake in CSGO Lotto, an online gambling service. According to the FTC’s Complaint, the influencers promoted CSGO Lotto without disclosing that they owned the company.
In its November 2019 guidance, however, the focus is squarely on influencers. The FTC released a guidance document, “Disclosure 101 for Social Media Influencers,” designed to give influencers pointers for complying with the Testimonial and Endorsement Guides. In this document, the FTC states “As an influencer, it’s your responsibility to make these disclosures, to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads. Don’t rely on others to do it for you.” (emphasis in original).
Not surprisingly, the guidance document reiterates prior guidance and reminds influencers to disclose material connections, ensure that their reviews reflect actual experiences with the product, and avoid making false claims that the advertiser cannot substantiate. However, the guidance document also underscores the need for the FTC to revise the FTC Guides and update them to the social media ecosystem of 2019. Ten years later, the FTC’s guidance can generate significant confusion about what to disclose and how.
For example, the Disclosure 101 Guidance states that an influencer is required to disclose his or her relationship with the brand “if [the] brand gives [the influencer] free or discounted products or other perks” and the influencer “mention one of its products, even if [the influencer wasn’t] asked to mention that product.” (emphasis in original). The ambiguity of this language can create conflicting expectations between the brand and the influencer. What if the brand has periodically given the influencer free or discounted products but there is no formal relationship? Is the influencer still obligated to disclose the relationship when showing or discussing a product that the influencer purchased but was not gifted? What if a brand takes an influencer on an all-expense paid trip to a tropical location to celebrate a product launch? Is the influencer obligated to disclose that he or she went on that trip when discussing the brand’s products in the future, even when the influencer purchased those products? The FTC’s guidance suggests that some type of disclosure may be needed and the brand should clearly communicate its expectations to the influencer.
Furthermore, the FTC’s guidance suggests that there should be a one-size-fits-all approach for disclosures. We can all agree that the FTC believes that gifting a free product to an influencer in the hopes that the influencer mentions the product to his or her followers constitutes a material connection requiring disclosure. However, how should that relationship be disclosed? In an example in the Disclosure 101 document, shown below, the FTC suggests that the influencer could state “Thanks to Acme for the free product! #AcmePartner #ad” in combination with a post featuring gifted products.
Many brands currently suggest different types of disclosure language to reflect the range of relationships they have with their influencers. It is not clear that #AcmePartner and #ad are interchangeable ways to describe the relationship between the brand and the influencer, as the FTC suggests. Within the social media ecosystem, there are different levels of ties between influencers and brands. A brand “Partnership,” for example, suggests a close relationship between an influencer and a brand that extends beyond receipt of free product. And an influencer’s audience may understand the disclosure “ad” to describe content that the brand pays for and has pre-approval rights. While sending “PR” to influencers without any obligation that the influencer talk about or show the product to their followers indisputably creates a material connection that requires disclosure if the influencer talks about the freebies, the brand does not ordinarily have a right of prior approval for such content. Thus, while the FTC’s guidance recommends #ad as an appropriate disclosure, the brand may prefer the influencer to disclose by stating “Thank you for the free product” to distinguish it from content that the brand directly pays for and controls.
Going forward, brands should consider referring influencers to the FTC’s Disclosure 101 Guide in its agreements as a reminder that influencers are potentially liable for failure to comply with the Endorsement Guides. However, it is equally important for brands to provide clear guidance to influencers to ensure that the brand and the influencer are aligned on disclosure obligations and how best to disclose.