The Federal Trade Commission is trying yet another approach to convey the message that the relationship between a social media “influencer” and the brand he or she is endorsing must be disclosed. This new guidance from FTC staff takes the form of a brochure (with accompanying video) aimed directly at influencers. It bluntly states that influencers “must comply with the law” when working with brands to recommend or endorse products and provides “tips on when and how to make good disclosures.”
The brochure is a distillation of the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”), as well as subsequent FAQs, guidance, and related materials. Arising out of the prohibition under Section 5 of the FTC Act on unfair and deceptive acts or practices, the Endorsement Guides require advertisers and endorsers (i.e., influencers) to, among other things, clearly and conspicuously disclose when the advertiser has provided an endorser with any type of compensation in exchange for an endorsement. This type of arrangement is what the Endorsement Guides describe as a “material connection,” meaning “a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience).” The new brochure delivers this message as follows: “Telling your followers about these kinds of relationships [i.e., material connections] is important because it helps keep your recommendations honest and truthful, and it allows people to weigh the value of your endorsements.”
As we have noted previously, in recent years the FTC has — through enforcement actions, press releases, guidance, closing letters, and letters sent directly to endorsers (including prominent public figures) — made clear its belief that: (1) appropriate disclosures by influencers are essential to protecting consumers; and (2) in too many instances, such disclosures are absent from celebrity or other influencer endorsements. While the FTC initially focused on marketing firms and brands that used endorsers but allegedly did not disclose material connections, this latest guidance strongly suggests that the FTC’s attention is now focused squarely on influencers themselves. Indeed, the brochure states (with emphasis in the original) that:
As an influencer, it’s your responsibility to make these disclosures, to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads. Don’t rely on others to do it for you.
So what, according to FTC staff, should influencers do to meet this responsibility? In answer to this question, the brochure provides bullet-point summaries of when and how influencers should disclose a material connection.
When to Disclose
According to the FTC, influencers should disclose when they have any financial, employment, personal, or family relationship with a brand. A financial relationship is not limited to payment but also includes discounts and receipt of anything else of value to mention a product. The FTC also cautions that an endorsement is not limited to verbal or written narratives but may include things like tags, likes, pins, and other ways of showing that someone likes a brand or product. And, even if an influencer thinks his or her evaluation is unbiased or assumes his or her followers already know about the influencer’s relationship with the brand, the material connection still must be disclosed.
While the FTC does not appear to be breaking any new ground here, these statements should help influencers — and the marketing firms and brands that work with them — understand the basic requirements for marketing products and services using social media endorsers.
How to Disclose
The brochure’s instructions on how to disclose a material relationship are not inconsistent with more formal FTC guidance, but rather lay out the requirements in simple terms, such as that:
While the FTC has turned its attention to influencers, all participants in the online advertising ecosystem should consider this guidance and the related FTC efforts to ensure compliance with the Endorsement Guides. Companies that use social media influencers should consider the policies and procedures they have in place or need to develop to ensure that they and their vendors and influencers meet the FTC’s expectations. And influencers should understand that the FTC believes they have an independent obligation to understand, and comply with, these disclosure requirements — and that they may face liability for failing to do so.