In April, the Federal Trade Commission (“FTC”), after reviewing Instagram posts by celebrities, athletes, and social media influencers, issued 90 letters reminding influencers and marketers about the FTC’s requirements that influencers clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.  In this case, the FTC focused on influencers’ posts on Instagram.

These letters and the FTC’s attention to this issue should not come as a surprise to the letter recipients, given the FTC’s 2016 Lord & Taylor enforcement action. In 2015, Lord & Taylor developed a multilayered advertising campaign, including a large social media influencer photo bomb push on Instagram.  Although Lord & Taylor ultimately settled the FTC’s charges, Lord & Taylor is now required to ensure that its influencers clearly disclose when they have been compensated in exchange for endorsements.

As additional background information, in 2016, Public Citizen, a consumer rights advocacy group, sent a letter to the FTC identifying 113 Influencers and celebrities who appeared to have published sponsored posts without properly disclosing their paid relationships to various brands (the “2016 Public Citizen Letter”).   Public Citizen asserted that Instagram had, “become a platform for disguised advertising directed towards young consumers.”  The 2016 Public Citizen Letter requested that the FTC act promptly and aggressively, “to change the culture around paid endorsements on Instagram.”

Thus, On April 19, 2017, a little over one year following the Lord & Taylor settlement and the 2016 Public Citizen Letter, the FTC released guidance entitled, “Influencers, are your #materialconnection#disclosures#clearandconspicuous”.  In its guidance, the FTC noted that it is concerned that some social media influencers may not be aware of the truth-in-advertising standards for endorsements and disclosures.   So, the FTC decided to spend some time on Instagram.  Consequently, the FTC sent 90 plus letters to social media influencers, to “influence influencers to comply with those established principles in their Instagram posts.”

The FTC provided the following advice on making effective disclosures on Instagram:

1. Keep your disclosures unambiguous.  The FTC suggests making your disclosures very clear and avoiding vague terms like, “#partner,” or “#sp” because such disclosures are unlikely to explain that there is a material connection between the influencer and the brand.  One should avoid unfamiliar abbreviations or cryptic words that are subject to several interpretations. Further, the FTC recommends that the parties ask themselves, “In the context of this post, how can I make the connection clear?”
2. Make your disclosures hard to miss.  When posting, the influencer’s and marketer’s goal should be to post in a way that makes the disclosures easy to spot.  All disclosures should be placed above the “more” button.
3. Avoid hard to read hashtags. Avoid placing a disclosure in a string of hashtags because consumers are unlikely to read it.

Building upon the FTC’s advice, Instagram recently unveiled a new disclosure tool to a select group of influencers.  The tool is designed to streamline compliance with FTC disclosure requirements and bring more transparency to the platform.  Previously, influencers were responsible for how and where to disclose the sponsored nature of their posts.  Instagram’s new tool, however, removes this discretion by providing one clear, conspicuous and standardized form of disclosure.  Instagram describes its new tool as a “first step” and promises to take additional actions in the area of sponsored posts.

Following Instagram’s unveiling of its new tool, Public Citizen issued another letter (the “2017 Public Citizen Letter”) to the FTC arguing that the Instagram sponsored feature “needs to be refashioned” to better protect consumers. More specifically, they argue that Instagram should create an even more noticeable disclosure format by placing a red box labeled “advertisement” around every sponsored photo. The letter also urges the FTC to “work with Instagram to develop a system that makes it easy to denote paid posts consistent with FTC guidelines.”

Public Citizen also observed a limited immediate impact of the FTC’s 90 warning letters. Public Citizen claimed that since receiving the FTC’s letters, only one of the influencers has consistently disclosed sponsorships in compliance with FTC guidelines. Consequently, Public Citizen requested that “the FTC bring enforcement actions and seek penalties for posting nondisclosed sponsored content, especially for influencers and brands that are repeat offenders.”

While we are not aware of any public actions being brought against individual influencers, it is clear that the marketing and advertising industry views the new feature as part of a larger, ongoing conversation about sponsored posts. Instagram designed its new tool as a “first step” towards finding a practical, middle-ground solution that satisfies FTC Endorsement Guidelines.

Disclosure responsibility works both ways and the FTC’s Endorsement Guides applies to both brands and influencers, yet evidently public advocacy groups want more disclosure, while brands and influencers are trying to balance their business interests with regulatory requirements.

Clearly, the FTC’s view of how to avoid consumer deception will continue to evolve just as the forms of advertising and digital media advance; however, regardless of this evolution the FTC will continue to reinforce tried and true advertising principles.  Consequently, educating influencers and brands will be paramount, along with providing the technology and practical tools that enable these stakeholders to achieve their goals, while still protecting consumers.