As more people turn to online and mobile sources for news and entertainment, the advertising industry has followed. Instead of focusing on traditional advertising methods, many brands now engage in “influencer” marketing campaigns. Paying celebrities to endorse your products on their social media pages is not a new practice, but now typical celebrities are not the only ones cashing in on their popularity. Brands pay bloggers and social media users with large followings to promote their products through Instagram, YouTube, Facebook, Twitter, Pinterest, and Snapchat. Being “Instagram-Famous” is a full-time job.

The problem is that influencers do not always clearly disclose to followers that their content is an advertisement. It makes an ad less effective to include #ad or #sponsored in a tweet or tell viewers on YouTube that the company paid you to positively review their product. The Federal Trade Commission has taken action to address deceptive influencer advertising by creating guidelines for endorsements that emphasize transparency. The guidance applies to traditional media, blogs, and all forms of social media.

The FTC has also recently taken action against companies who engage in deceptive endorsements. Earlier this year, Lord & Taylor settled with the FTC concerning an accusation that the retailer deceived its customers with its influencer campaign for a new dress it wanted to promote. Lord & Taylor gave the dress to fifty fashion influencers and paid each influencer between $1,000 and $4,000 to post a photo wearing the dress. The retailer did not require any of the pre-approved posts to disclose that the influencer was paid. The dress sold out. This past summer, Warner Bros. also settled FTC charges that it deceived consumers by paying influencers thousands of dollars to promote its new videogame, Middle Earth: Shadow of Mordor, on YouTube and not requiring the influencers to disclose that they were paid. Companies and content-creators have taken notice. Just last month, popular Snapchat influencers started labeling their snaps as advertisements using hashtags, despite Snapchat’s lack of clear rules regarding paid endorsements.

On Friday, October 21, multiple advocacy groups filed a complaint with the FTC against Google (the owner of YouTube), Disney’s Maker Studios, and DreamWorks-Owned AwesomenessTV, asking the agency to take its fight against undisclosed influencer marketing one step further. The Center for Digital Democracy (CDD), Campaign for a Commercial-Free Childhood (CCFC), and Public Citizen argue that social media and YouTube stars are being paid to market toys, junk food, and other products to children and the advertisements are unfair and deceptive. Even though disclosure is required, the complaint includes examples of young YouTube celebrities, who are popular with children, endorsing products and failing to include any disclosures that their videos are advertisements. The groups argue that influencer marketing directed towards children should be banned entirely because children are less able to effectively distinguish between advertisements and content, unlike adults.

The FTC’s current endorsement guides focus on honest disclosure. Endorsers should express their honest opinions and disclose any connection between the influencer and the product’s seller that might “materially affect the weight or credibility of the endorsement.” FTC guidance prohibiting influencer marketing aimed at an entire category of viewers might raise other legal issues, however, like the scope of the FTC’s authority on the issue.

Katherine Dashwood

 

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