The Federal Trade Commission (the “FTC”) recently brought an administrative complaint against two widely known individual social media influencers who failed to disclose that they were owners of the online betting website CSGO Lotto (“CSGO”) in their promotion of the website. Additionally, the complaint purported that the influencers paid other influencers to promote the CSGO website while prohibiting such paid influencers from making negative statements about the website. The FTC alleged that the failure of the individuals to disclose their financial relationship to CSGO constituted deceptive advertising pursuant to 16 C.F.R. Part 255, which requires that if there is a material connection between an endorser and the marketer or seller of a product that might affect the weight or credibility that consumers give the endorsement, that connection should be clearly and conspicuously disclosed.
As social media channels have continued to develop, the use of social media influencers (users of social media who have a loyal following on their respective channels) in order to market a company’s products and/or services has gained popularity. Although the FTC has previously brought enforcement actions against entities for the failure of its social media influencers to disclose their connection to such entities, this represents the first time the FTC has brought an enforcement action against individual influencers. The complaint quickly settled without immediate monetary penalties, but represents the strongest enforcement action taken yet by the FTC in an escalating effort to prevent deceptive advertising on social media by influencers who are either owners of, paid by, or otherwise have a material interest in products they endorse online.
The FTC also recently sent follow up warning letters to 21 prominent Instagram influencers (who were among 90 that had initially received warning letters earlier in the year) including specific examples of their failures to comply with 16 C.F.R. Part 255 and requiring specific responses including their material connections to brands they had endorsed and what steps they would take to disclose their material connections in the future.
Additionally, the FTC recently updated one of its guidance documents on the topic, “The FTC’s Endorsement Guides: What People Are Asking” (the “Guidance”). Although the Guidance (initially issued in 2010 and previously revised in 2015) has provided insight on material connections and disclosures, the most recent revisions now include information on topics related to specific social media channels including Instagram tags (and whether such electronic tags are considered an endorsement) and disclosures on Snapchat.
This year has also seen social media platforms such as Instagram revise their platform in order for influencers to be able to more easily comply with FTC regulations. The platform revision allows an influencer to disclose that a post is sponsored by selecting “paid partnership” as a tag in the application’s advanced settings. The FTC’s recent enforcement actions and warnings send a clear message to influencers and brands that preventing consumer deception is a priority of the agency.
Influencers and marketers would be wise to become well-versed in the multitude of laws governing their communications to consumers and potential consumers, and to conduct a thorough and comprehensive review of their own practices, as well as the practices of any third-party agents they employ in an effort to minimize the risk for exposure.