A new class action charges brands with paying social media influencers to promote their products while failing to ensure appropriate disclosures were made.
The lawsuit names seven Israeli brands (and references companies such as Adidas, Mini Cooper, and Grey Goose), claiming that their social media subterfuge was intentional and often targeted minors. The influencers themselves were not named in the actions.
Advertisers and their influencer partners have struggled in recent years to fulfill the requirements set forth by the Federal Trade Commission (FTC) in the Endorsement Guides and by other regulators, in part due to a belief that sponsored posts—with a “#ad” or “#spon” label—will turn off consumers, who are seeking authenticity.
To date, smaller companies and micro-influencers have escaped regulatory oversight while the FTC focuses on the players with larger followings—think Kardashians and professional athletes—while larger companies have experienced fallout when a high-profile influencer faces a scandal. Some companies are even paying for fake followers in an effort to keep their numbers up and the brand relevant.
Read more about the lawsuit here.
Why it matters: The debate surrounding oversight of social media influencers continues to rage on. Some argue that consumers are so accustomed to sponsorship on social media that they easily recognize it for what it is, regardless of whether a disclosure is attached. Other members of the industry have pushed back against what they see as selective enforcement where regulators have ignored sponsored content on television or music videos and instead have seemingly solely focused on social media.