FTC Sends Warning to Brands and Social Media Influencers

Perkins Coie

Perkins Coie

The Federal Trade Commission (FTC) recently issued more than 90 letters to marketers and their social media influencers warning that influencers must clearly and conspicuously disclose material connections in social media posts that promote the marketer, unless the connection is already clear from the context of the posts. A “material connection” is a relationship between the marketer and influencer that might materially affect the weight or credibility that consumers give to an endorsement posted by the influencer. For example, the FTC Endorsement Guides state that a material connection exists if a marketer provides an influencer with payment or meaningful free products to promote the marketer or its products. Key guidance from the FTC’s warning letters follows:

  • Endorsement Disclosure Requirements Apply to Marketers and Influencers: The FTC letters were directed to both marketers and influencers, making it clear that the FTC holds both parties responsible for endorsement-related compliance requirements.  
  • Use Unambiguous Language: The letters discourage the use of disclosures that many consumers may not understand, such as #sp, #Thanks[Brand] or #partner. While the FTC leaves some discretion as to the exact language used, it advocates for clear and easy-to-understand terms such as #ad, #gotfreeproduct or #paid (as applicable) or phrases such as “I received free product from [company/brand name].”
  • Do Not Hide Disclosures: Burying a material connection disclosure in a longer string of tags, hashtags or links may obscure the disclosure so that it is not effective. The FTC therefore advises that advertisers place the disclosures at the start of the hashtags or within the text of the post so the disclosure is not lost or obscured. Similarly, when viewing Instagram posts on mobile devices, the viewer typically only sees the first three lines of a longer post unless they click “more.” The FTC warned influencers and marketers to make the disclosures above the “more” button. Also, while the recent FTC letters mentioned Instagram, the disclosure principle applies to all space-constrained platforms, i.e., the disclosure must be easy to find and read so the reader can understand the relationship between the marketer and influencer. 
  • Implement Strong Social Media Policies: The FTC letters remind marketers to monitor influencer and brand posts for compliance with the Endorsement Guides and to verify that their social media policies adequately address disclosure of material connections.

Bottom Line: The FTC has made compliance with its Endorsement Guides a priority in recent years, and the recent warning letters serve as a clear reminder to both marketers and influencers to comply with the Guides, including by disclosing relationships between influencers and brands on social media platforms. FTC warning letters also often precede enforcement actions, and, if non-compliance continues, we may see further enforcement activity in this area. We therefore recommend reviewing your company’s applicable social media policies and adopting procedures to improve compliance with the FTC’s guidelines.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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