The FTC is closely watching influencers to remind them to clearly disclose material connections to brands. In June 2017, the Commission settled with a trampoline manufacturer for relying on misleading endorsements and, in March, the Commission sent more than 90 letters to influencers and brands to remind them to clearly disclose relationships. The FTC has now made clear that it will target influencers who fail to comply with its Endorsement Guides. While the FTC had previously settled claims against various advertising networks, advertising agencies, and brands for failing to comply with the Endorsement Guides, the FTC has announced that it has settled its first ever enforcement action against social media influencers. In the same press release, the FTC simultaneously stated that it sent follow-up warning letters to 21 influencers that first received letters in March.
The message is clear: influencers that fail to disclose a material connection to brands do so at their own peril—and brands are responsible for implementing clear measures to make sure that the influencers they work with comply with disclosure requirements. Furthermore, the FTC has also made clear that many commonly used disclosure methods and practices are inadequate in its newly revised Endorsement Guides FAQs. Brands and the influencers they work with should take note of these recommendations and ensure that their disclosure practices comply.
CSGO Lotto Settlement
In a recent Complaint, the FTC alleges that Trevor “TmarTn” Martin and Thomas “Syndicate” Casswell, two social media influencers in the gaming community, failed to disclose their ownership interests in the online gaming platform CSGO Lotto in YouTube videos they created regarding the company. Additionally, the Complaint alleges that the pair paid other well-known influencers in the gaming community between $2,500 and $55,000 to post about their experiences using CSGO Lotto on YouTube, Twitch, Twitter and Facebook and contractually prohibited the influencers from making statements that would harm CSGO’s reputation—all without requiring that the influencers disclose their relationships with the company. Much of the resulting content failed to include any sponsorship disclosures and if disclosures were included, they were not adequate (appearing “below the fold” on YouTube, for example).
The FTC charged that Martin, Cassell, and CSGO Lotto misrepresented themselves and other influencers as offering independent and impartial opinions in their videos and social media posts. The proposed Settlement Order is highly prescriptive and requires that Martin, Cassell, and CSGO Lotto clearly and conspicuously disclose material connections in the following ways:
- In solely visual or audible communications, the FTC requires that the “disclosure must be made through the same means through which the communication is presented.”
- If a communication is made through both visual and audible means, the disclosure “must be presented simultaneously in both the visual and audible portions of the communication even if the representation requiring the disclosure (‘triggering representation’) is made through only one means.”
- Audible disclosures “must be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it.”
- The disclosures must be unavoidable, in plain language that ordinary consumers would understand, and in the same language in which the triggering representation appears. Further, the influencer must consider the specific audience targeted with the representation, such as children, the elderly or the terminally ill.
The Order also includes monitoring provisions for CSGO Lotto similar to the provisions included in the FTC’s settlements with Lord & Taylor, Machinima, and Warner Brothers as follows:
- CSGO Lotto must provide each endorser with a clear statement of responsibilities, including the requirement to disclose an unexpected material connection, and obtain a signed and dated statement acknowledging receipt of the statement and expressly agreeing to comply with it.
- The company must implement a monitoring system to ensure compliance.
- The company must terminate and cease payment to any endorser that has misrepresented his independence or impartiality or failed to clearly and conspicuously disclose an unexpected material connection. If the error was inadvertent, the Order allows the company to provide notice of the error but immediately terminate the endorser for any subsequent failure.
The FTC also announced that it revised its Endorsement Guides FAQs to further clarify for influencers how to clearly disclose material connections. Importantly, the FTC made clear that several common disclosure practices are ineffective and made highly prescriptive recommendations regarding the use of disclosures in common social media platforms.
The revised FAQs recommend:
- Influencers should not rely on a platform’s disclosure tool and assume that it is adequate. The influencer should consider whether the tool is clear and conspicuous, is in a simple to read font with a contrasting background, and uses wording that is easy to understand.
- It is not enough to simply disclose a material connection in the description box beneath a YouTube video. The disclosure should be included in the video itself.
- If an Instagram post makes an endorsement through the picture or the first three lines of the description, consumers should not have to “click more” to see the disclosure.
- Influencers can superimpose a disclosure on Snapchat or Instagram Stories, just as they can superimpose any other words on those platforms. The FTC notes that the disclosure should be easy to notice and read in the time consumers have to look at the images. The FTC also cautioned against using an audio only disclosure because followers may watch videos without sound.
- The FTC recommends using a hashtag like #ad or the words Sponsored or Promotion at the beginning of a tweet. The FAQs note that a disclosure is “less likely to be effective in the middle or at the end” and further, if #ad is mixed with other hashtags, followers may not notice it.
- The FTC recommends against mixing “ad” with a company name. No #coolstylead!
- The FTC recommends against “#client” “#advisor” and “#consultant” to disclose that the poster is a paid consultant for a brand.
- #ambassador is not sufficiently clear. #[BRAND] ambassador is better.
- A thank you to a company without explaining that the influencer got something for free is not enough.
- A blanket disclosure on a blog homepage “many of the products I discuss on this site are provided to me free by their manufacturers”is not adequate.
- A hyperlink or button that states “DISCLOSURE” or “LEGAL” that links to the full disclosure is not adequate because it fails to communicate the nature, importance, or relevance of the information.
Companies working with influencers should take note of these developments and update blogger agreements and monitoring guidelines to ensure that influencers are complying with the FTC’s most recent guidance. Importantly, when reviewing influencer posts, advertisers should review disclosures in context to make sure that they are clear, understandable and noticeable and conform to FTC’s recommendations for various social media platforms.