The Federal Trade Commission (FTC) has sent out over 90 letters to celebrities, athletes, marketing firms and other influencers, warning them to disclose clearly and conspicuously their relationships with brands when promoting or endorsing products through social media. Advocacy group Public Citizen, which petitioned the FTC to act, said that Instagram had become "a Wild West of disguised advertising" and – in connection with its own investigation last year – named various celebrities including Kim Kardashian and Rihanna as among over 100 influencers who the group claimed had made endorsements without proper disclosures.
The potential for misleading consumers was raised after a review of Instagram posts by the FTC, recognising that if consumers knew that a celebrity was being paid, was benefiting or was somehow associated with the product, service or brand, it could affect their perception and the weight accorded to any claim made through such an endorsement. The FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising applies to individual endorsers, as well as bloggers, marketing companies and sponsoring advertisers. The letters sent out by the FTC noted the following:
- If a post includes "more" to indicate that additional content is available, the disclosure must be before or above that reference; and
- Some disclosures are unclear even when made conspicuously. For example, "#sp" referring to 'sponsored', "Thanks" followed by the name of the product, service or brand, or similar oblique references – especially when placed in a string of other symbols, abbreviations, links, hashtags, emoticons or emojis – are unlikely to be conspicuous or easily understood by many consumers.
Although the FTC did not publicly disclose the names of the letters' recipients or the actual letters themselves, this is the first time that it has directly targeted social media influencers, highlighting the requirements set out in the Guides Concerning the Use of Endorsements and Testimonials in Advertising that any "material connection" (eg, paid sponsorships, contractual obligations, gifts and ownership interests) be clearly and conspicuously disclosed, unless the context already makes the connection clear.
Understanding the nuances of national and international advertising, marketing, promotions and sponsorships can be daunting. Implementing practical policies and practices to avoid problems before they arise, while meeting marketing objectives, building brand recognition and strengthening IP assets, is never simple or easy. The FTC's jurisdiction includes everything from multicultural marketing to promotional campaigns involving user-generated content to sweepstakes and contests, as well as the privacy and data mining implications of marketing and promotional activities. Whether reviewing endorsements, native advertising, product placements or branded entertainment; trying to enhance customer loyalty, affinity, co-branded marketing or reward programmes; or simply looking at new and innovative ways to use technology – including mobile technology and social media – to advertise, promote and market a brand, product or service, understanding the laws and regulations that surround these activities is essential.
For further information on this topic please contact Joseph I Rosenbaum at Rimon PC by telephone (+1 212 363 0270) or email (firstname.lastname@example.org). The Rimon website can be accessed at www.rimonlaw.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.