FTC's Letter to Paid 'Influencers'

In the digital age, the Federal Trade Commission (FTC) has been keeping tabs on the growing trend of brands hiring so-called “influencers” — athletes, celebrities and others with large followings — to promote their products on social media.

The consumer agency has taken the view that advertisement without proper disclosures can mislead consumers and has put the burden of ensuring proper disclosure on the brands. Last year, the FTC reached a settlement with Warner Bros. Home Entertainment over a lack of disclosures for paid promotions of video game Middle-Earth: Shadow of Mordor. (See, “FTC Settles with Warner over 'Paid Influencers',” in our August 2016 issue.) But it did go after the likes of the popular YouTube personality “PewDiePie” and other influencers who were paid for positive videos and social media posts about the game.

In April 2017, the FTC turned its attention downstream to the “influencers” themselves. The federal agency sent 90 letters to influencers and marketers informing them of their responsibility to “clearly and conspicuously” disclose the business relationships behind social media posts. For influencers, a “material connection” to a brand could be a payment, a business or family relationship or the provision of a free product.

“I think it's a recognition that, in this new age of advertising, everyone needs to be somewhat responsible. The FTC is finally realizing that if companies are going to use these new types of advertisements, the folks who are getting the immediate benefit from it — the influencers — need to be on the same page,” said Greenberg Traurig partner Nathan Muyskens, who represented Lord & Taylor in a settlement with the FTC last year over Instagram posts in which influencers failed to disclose that they had been paid and provided with a paisley dress.

What new steps is the FTC taking? The mass-mailing of 90 letters represented the first time the FTC has directly contacted influencers to provide guidance on proper disclosure. That education — spelled out in the FTC's Endorsement Guides — doesn't mandate specific wording. But the FTC has a few ideas.

“If you see a post labeled 'Ad,' 'Promotion' or 'Sponsored,' or with a hashtag like '#Ad,' the person posting it is giving you important information about their connection to a marketer,” wrote Ari Lazarus, an FTC consumer education specialist, in a blog post.

The Guidance shows a sensitivity to the word limits such as Twitter's 140-character cap on individual tweets. The FTC has pointed out in the past that “the words 'sponsored' and 'promotion' use only 9 characters. 'Paid ad' only uses 7 characters. Starting a tweet with 'Ad:' or '#ad' — which takes only 3 characters — would likely be effective.”

Who got the FTC letters? That remains to be seen. The agency didn't reveal the recipients of the letters, only that it wrote them after “reviewing numerous Instagram posts by celebrities, athletes and other influencers.” Of the 90 letters, slightly more than half — 47 —went to influencers, according to the FTC.

Is anyone in trouble? No, or at least not yet. While the agency did not identify the recipients, the FTC did provide a copy of the form letters showing that the agency pointed out particular Instagram posts to influencers. The FTC said the letters were “informed” by petitions from Public Citizen and affiliated organizations concerning Instagram advertisements, along with the FTC's review of Instagram posts.

“In sending the letters,” the FTC said, “the staff did not predetermine in every instance whether the brand mention was in fact sponsored, as opposed to an organic mention.”

Why does this matter, and where is it all going? The FTC's letters may signal a deeper appreciation for the role of paid influencers in ensuring consumers know when a brand is behind an advertisement on social media.

“The FTC has held big companies liable for what these influencers do, even though you've done everything in your power to do the right thing. A lot of times, it's outside of your control,” said Muyskens, who was a partner at Loeb & Loeb at the time of the Lord & Taylor settlement last year. “By the nature of influencers, these are individual people who run their Twitter or Instagram accounts and do their own thing. Some of these people are not the easiest to deal with.”

Muyskens said most big companies “know the rules” when it comes to disclosures. “They know influencers need to make clear that they're being compensated or got a free product,” he said. “The problem is a lot of the influencers think they have to maintain their own credibility, so they don't necessarily want to put that designation on their postings.”

The FTC's form letter can be found at http://bit.ly/2pLISjB.

*****
C. Ryan Barber writes for the National Law Journal, an ALM sibling of Entertainment Law & Finance. He can be reached at [email protected]. On Twitter: @cryanbarber.

In the digital age, the Federal Trade Commission (FTC) has been keeping tabs on the growing trend of brands hiring so-called “influencers” — athletes, celebrities and others with large followings — to promote their products on social media.

The consumer agency has taken the view that advertisement without proper disclosures can mislead consumers and has put the burden of ensuring proper disclosure on the brands. Last year, the FTC reached a settlement with Warner Bros. Home Entertainment over a lack of disclosures for paid promotions of video game Middle-Earth: Shadow of Mordor. (See, “FTC Settles with Warner over 'Paid Influencers',” in our August 2016 issue.) But it did go after the likes of the popular YouTube personality “PewDiePie” and other influencers who were paid for positive videos and social media posts about the game.

In April 2017, the FTC turned its attention downstream to the “influencers” themselves. The federal agency sent 90 letters to influencers and marketers informing them of their responsibility to “clearly and conspicuously” disclose the business relationships behind social media posts. For influencers, a “material connection” to a brand could be a payment, a business or family relationship or the provision of a free product.

“I think it's a recognition that, in this new age of advertising, everyone needs to be somewhat responsible. The FTC is finally realizing that if companies are going to use these new types of advertisements, the folks who are getting the immediate benefit from it — the influencers — need to be on the same page,” said Greenberg Traurig partner Nathan Muyskens, who represented Lord & Taylor in a settlement with the FTC last year over Instagram posts in which influencers failed to disclose that they had been paid and provided with a paisley dress.

What new steps is the FTC taking? The mass-mailing of 90 letters represented the first time the FTC has directly contacted influencers to provide guidance on proper disclosure. That education — spelled out in the FTC's Endorsement Guides — doesn't mandate specific wording. But the FTC has a few ideas.

“If you see a post labeled 'Ad,' 'Promotion' or 'Sponsored,' or with a hashtag like '#Ad,' the person posting it is giving you important information about their connection to a marketer,” wrote Ari Lazarus, an FTC consumer education specialist, in a blog post.

The Guidance shows a sensitivity to the word limits such as Twitter's 140-character cap on individual tweets. The FTC has pointed out in the past that “the words 'sponsored' and 'promotion' use only 9 characters. 'Paid ad' only uses 7 characters. Starting a tweet with 'Ad:' or '#ad' — which takes only 3 characters — would likely be effective.”

Who got the FTC letters? That remains to be seen. The agency didn't reveal the recipients of the letters, only that it wrote them after “reviewing numerous Instagram posts by celebrities, athletes and other influencers.” Of the 90 letters, slightly more than half — 47 —went to influencers, according to the FTC.

Is anyone in trouble? No, or at least not yet. While the agency did not identify the recipients, the FTC did provide a copy of the form letters showing that the agency pointed out particular Instagram posts to influencers. The FTC said the letters were “informed” by petitions from Public Citizen and affiliated organizations concerning Instagram advertisements, along with the FTC's review of Instagram posts.

“In sending the letters,” the FTC said, “the staff did not predetermine in every instance whether the brand mention was in fact sponsored, as opposed to an organic mention.”

Why does this matter, and where is it all going? The FTC's letters may signal a deeper appreciation for the role of paid influencers in ensuring consumers know when a brand is behind an advertisement on social media.

“The FTC has held big companies liable for what these influencers do, even though you've done everything in your power to do the right thing. A lot of times, it's outside of your control,” said Muyskens, who was a partner at Loeb & Loeb at the time of the Lord & Taylor settlement last year. “By the nature of influencers, these are individual people who run their Twitter or Instagram accounts and do their own thing. Some of these people are not the easiest to deal with.”

Muyskens said most big companies “know the rules” when it comes to disclosures. “They know influencers need to make clear that they're being compensated or got a free product,” he said. “The problem is a lot of the influencers think they have to maintain their own credibility, so they don't necessarily want to put that designation on their postings.”

The FTC's form letter can be found at http://bit.ly/2pLISjB.

*****
C. Ryan Barber writes for the National Law Journal, an ALM sibling of Entertainment Law & Finance. He can be reached at [email protected]. On Twitter: @cryanbarber.