FTC warns (again) that social media celebrities, brands, and agencies will be targeted unless financial relationships are disclosed

August 15, 2016: A widely cited article that ran on Bloomberg.com last week contained some very scary news for some social media influencers and the agencies and brands that pay them.

The article quoted Michael Ostheimer, who works in the Federal Trade Commission’s Ad Practices Division. He noted that “we’ve been interested in deceptive endorsements for decades and this is a new way in which they are appearing.” He also said that “we believe consumers put stock in endorsements and we want to make sure they are not being deceived.”

As we’ve mentioned numerous times on this blog, the FTC appears to be waking to the fact that potential consumer deception is becoming a serious problem on social media. Just this year, it went after Lord & Taylor for a deceptive Instagram campaign and took action against Warner Brothers and PewDiePie in another high-profile take-down. And while Mr. Ostheimer didn’t mention any forthcoming actions, there’s no doubt that the FTC is scrutinizing potentially deceptive social media posts more closely than ever.

What the FTC wants to see

The FTC has laid down a set of very clear guidelines for social media endorsements. If you’re contemplating running any kind of social media-based endorsement campaign, you must read them, abide by them, and make sure your whole team – including your agency and your influencer – signs off on them. And while the FTC doesn’t have a simple template you can apply to every social network your campaign runs on, it’s clear that:

1. If you (the social media celebrity) are being paid or the beneficiary of any in kind compensation for the messages you are putting out, you must disclose this relationship. Even if your post is just an image of a product, or a one-word tweet, disclosure must follow. As the FTC notes, “You don’t necessarily have to use words to convey a positive message. If your audience thinks that what you say or otherwise communicate about a product reflects your opinions or beliefs about the product, and you have a relationship with the company marketing the product, it’s an endorsement subject to the FTC Act.”

2. Disclosure must be clear and conspicuous. The disclosure must be 1) close to the claims to which they relate, 2) in a font that is easy to read, 3) in a shade that stands out against the background, 4) for video ads, on the screen long enough to be noticed, read, and understood, and for audio content, read at a cadence (speed) that is easy for consumers to follow. Such disclosure must not be separated from the message to which it refers; for example, it’s insufficient to post a general disclosure on your Twitter profile; you must make sure it accompanies each message issuing from your account.

3. Even if some portion of your audience will understand (perhaps by knowing you) that you are paid for what you say on social media networks, you must take steps to notify everyone who will see your message that it’s paid for.

Influencer marketing without risk

The FTC doesn’t object to agencies or brands paying social media celebrities to peddle products, as long as any paid relationships are disclosed prominently. The problem is that there’s no uniform method of disclosure that’s good for each and every social network. This means that one must use a “reasonable consumer” model and ask whether such a person would know – from the totality of a given message and the context in which it is delivered – that it has been sponsored by a brand.

Such a model is of course subjective, and it’s possible that many marketers and agencies who honestly believe that they are disclosing adequately (perhaps by adding the #ad or #sp tag somewhere in the message) are not actually complying with the law as the FTC interprets it.

When in doubt, it’s always best to err on the side of disclosure, even though the use of such prominent disclosure language may depress CTRs below those which an undisclosed message might obtain. Even though your influencer campaigns may become more expensive to run, they will never run the risk of exposing you to the negative PR – and possible legal jeopardy – that running undisclosed campaigns can.

If you have further questions about what the FTC requires in terms of social media disclosures, you can find its official Endorsement Guide at the following URL:

https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking