The Federal Trade Commission (FTC) recently took to Twitter for a live Q&A on influencer advertising. The chat addressed questions concerning the FTC’s recent updates to its FAQs on the Endorsement and Testimonial Guides. Some of the major takeaways included: (1) #XXPartner is likely a sufficient disclosure where XX is the advertiser’s name, (2) Currently the FTC does not think that the built-in disclosure tools on Facebook, YouTube, and Instagram are sufficient, and (3) the material connections disclosure should be clear, easy to understand, and separate from other hashtags and copy.
As a refresher, the FTC settled its first action against individual social media influencers after the FTC alleged the influencers violated Section 5(a) of the FTC Act by failing to disclose materials connections. The influencers, Trevor Martin and Thomas Cassell each had a YouTube channel primarily focused on online gaming and encouraged consumers to use CSGO Lotto’s gambling services. They also made numerous social media posts stating the same. The FTC alleged that the respondents failed to clearly and conspicuously disclose that Martin and Cassell both had ownership interests in and held positions at CSGO Lotto and were using the service for free, which is a material connection between the two as influencers and the company. The FTC also took issue with CSGO Lotto’s use of other social media influencers, who were encouraged to “post in their social media circles about their experiences using CSGO Lotto.” The FTC alleged that CSGO Lotto did not require these influencers to disclose that they were being paid or provided free credits to play, and also prohibited the influencers from “making statements, claims, or representations...that would impair the name, reputation and goodwill” of the company. The proposed consent order prohibits the company, Martin, and Cassell from misrepresenting that any influencer is an ordinary user of the product and service and requires that the company provide each influencer with a clear statement of his/her responsibility to disclose “clearly and conspicuously, and in close proximity to the endorsement” any material connection.
At the time of the settlement, the FTC also announced that it had sent 21 (unidentified) social media influencers “follow up” warning letters. The FTC initially sent educational letters to more than 90 influencers in April 2017. As a follow-up, 21 influencers received warning letters from the FTC about the influencer’s specified posts. The FTC’s letters asked each influencer whether they had a material connection to the brand shown in the post and, if so, why the influencer failed to comply with the Endorsement Guidelines by clearly and conspicuously disclosing such connection.
The FTC also updated its FAQs on the Endorsement Guides, providing additional examples of scenarios that trigger material connections disclosures, including trading donations to charities for consumer interaction and sending influencers products to review. The revisions also clarified that what constitutes sufficient disclosure, including for example that merely tagging the brand that is endorsed is likely not sufficient, and noting that disclosure tools provided by social media platforms may not be sufficient disclosure. Finally, the revisions also indicated that the FTC obligations extend to foreign influencers if it is reasonably foreseeable that the endorsement will be seen by and effect US consumers. For a summary of all the changes, visit Mini Law Lesson: FTC Updates its FAQs on Endorsements.
TIP: Advertisers that incentivize influencers to post about the advertiser’s brands or products should require that an adequate disclosure is made of the material connection between the advertiser and the influencer, even where the incentive is minimal. Such disclosure should be made up front (e.g., above the fold and apart from other hashtags) and use unambiguous language.