This month, online gaming social media influencers Trevor Martin and Thomas Cassell settled the Federal Trade Commission’s first charges against individual failure to disclose material information in social media endorsements. Martin and Cassell are both operators of YouTube channels with millions of subscribers in the online gaming community and owners and officers of CSGOLotto, Inc., an online gambling service in which players use collectible in-game weapon “skins” as virtual currency. Between November 2015 and June 2016, Martin and Cassell promoted the service online using free skins from CSGO Lotto and allegedly paid other influencers thousands in dollars and skins credits to do the same. Aside from occasional mention of sponsorship in video description boxes “below the fold,” videos snagged over 5.7 million views without adequately disclosing compensation, Martin’s and Cassell’s vested interests in the company, or third party contractual obligations against impairing CSGO Lotto’s reputation.

The order demands clear and conspicuous disclosure of connections between endorsers and promoted products and services that would have a material impact on consumer choice. The settlement was the first of its kind against social media influencers, who have come increasingly to the Commission’s attention as it focuses on the adequacy of testimonial and endorsement disclosures. The settlement was accompanied by several other actions by the Commission in the endorsement space.

Along with the settlement against Martin and Cassell, the FTC announced that it has sent warning letters to 21 social media influencers it had contacted earlier this year regarding the adequacy of disclosures in their Instagram posts. The letters cited specific posts of concern and reminded the influencers of the agency’s Endorsement Guides and the requirement that material connections between the endorser and the marketer of a product must be clearly and conspicuously disclosed, unless the connection is already clear from the context. As we reported in April, the Commission sent educational letters to 90 social media influencers and brands.

Furthermore, the FTC issued updated guidance on material connection disclosure by updating the Endorsement Guides and including additional FAQs. The additional guidance targets social media influencers and marketers in particular by addressing topics such as Snapchat and Instagram disclosures, tags in pictures, disclosure of free travel, placement of the disclosure within the post and how well certain disclosures work to inform consumers, such as #consultant or #ambassador.

Takeaway: Over the past few years, the FTC has paid very close attention to social media developments and how influencers are disclosing their connections in this evolving context. This latest crop of guidance and warning letters, coupled with the unprecedented targeting of two influencers themselves, indicates that this continues to be a primary area of concern for the Commission. Advertisers can protect themselves by making sure that all parties they work with are well acquainted with the FTC’s rules in this area and by aiming to comply with the FTC Endorsement & Testimonial Guides in social and new media.