Influencer Marketing Ills: Legal Problems on Instagram

The Federal Trade Commission (FTC) has been watching social media influencer marketing campaigns particularly carefully. In the modern world of social media marketing, the line between acceptable business practices and illegal deceptive speech can be blurry. The government agency wants to ensure that consumers are not manipulated with endorsements and testimonials that brands have “bought.” In the first quarter of 2017, the FTC went on the prowl on Instagram to find influencers and brands whose posts may be violating the law. In April, the FTC sent over ninety letters to companies and some celebrity and other social media users, reminding them of the legal requirements for clarity in their influencer marketing.

The FTC has been regularly enforcing its Guidelines for Endorsements & Testimonials and DotCom Disclosure Guides for years. In fact, as recently as 2016, New York settled with Machinima and three other companies for their deceptive endorsements, with penalties of $20,000-$50,000 for each company. The FTC also settled with Machinima over similar charges later in the year. Right on the heels of that case, the FTC announced a consent order with Lord & Taylor. Nonetheless, ambiguity and deception, according to regulators, seem pervasive in social media marketing, particularly when it comes to influencer endorsements.

In August, 2016, the watchdog group Truth in Advertising (TINA) complained to the FTC that the Kardashian family and various brands were engaging in deceptive influencer marketing.  had over 100 posts online endorsing products without proper disclosures. In fact, these family members could be paid up to $300,000 for a single endorsement. TINA’s complaint alleged that the companies sponsoring the Kardashian posts and perhaps the family members themselves were duping consumers by not disclosing the material connection between the brands and the Kardashian clan.

It is possible that the FTC’s latest series of warning letters were in response to TINA and other consumer groups who have asked the FTC to investigate influencer activity on Instagram. The FTC has stated repeatedly over the last several years that social media posts should be crystal clear whether an influencer has been paid, received free products, or any other material inducement for his post. The agency’s April letters dig into Instagram, as a representative example of space-constrained advertising. The agency offers specific recommendations about how to make disclosures on Instagram that will ensure consumers understand when they are seeing paid endorsements.

The mere presence of a disclosure may not be enough to satisfy the FTC. Keeping with well-established principles enumerated in previous guidelines and case law, the FTC offers three suggestions for clear disclosures, using Instagram as a case study:

• Instagram posts are typically up to three lines long followed by the clickable link “more”. Any disclosure should be placed before the “more” button since many consumers will not click through.
• If the post contains multiple hashtags, links, or tags, marketers should be certain to separate the legal disclosures to make sure they are clear and conspicuous.
• If an influencer includes “Thanks [Brand]” or #sp or #partner, these notations may not clearly indicate to the consumer that the post is sponsored. While the FTC has been clear that there are many acceptable ways to make disclosures, it explains that any term that has many interpretations will not provide the appropriate clarity.

The FTC’s letters indicate its continued vigilance regarding influencer marketing. Typically, the FTC moves on, after a period of time, from education to enforcement. State AG’s also have been active in this area, and consumer watchdog groups are clearly stirring the pot.

ACTION STEPS TO TAKE:

Now is the time to review your brand’s

• influencer marketing strategies
• social media campaigns on Instagram and other platforms
• advertising disclosure mandates
• influencer training programs
• agency contracts and responsibilities
• influencer contracts
• internal procedures and stakeholders for social media posting