April 21, 2016
Many advertisers, in their endless search for new and creative ways to promote their products, are enlisting the services of so-called social media “influencers” – individuals who are powerful, popular and relevant enough to influence others within their social sphere. These influencers make product endorsements on behalf of advertisers through social media platforms, such as Facebook, YouTube, Instagram, Twitter, Snapchat, Pinterest and Twitch, often in exchange for free products and/or compensation.
Advertisers and influencers alike need to be aware, however, of the fact that regulators have recently begun to clamp down on the product endorsement practices of social media influencers and YouTubers.
How can influencers make legal product endorsements?
Regulation of Product Endorsements
Since the 1980s, the Federal Trade Commission has prohibited certain endorsement activity that could be construed as dishonest or misleading. In recent years, through revisions to the FTC’s Endorsement Guides and related guidance, the FTC has made clear that its regulations extend to online endorsements via social media platforms.
Additionally, a number of social media platforms have now implemented their own internal policies governing product endorsements and testimonials. Failure to abide by these policies could lead to the suspension – or even termination – of an influencer’s social media account.
Although regulations can vary, a social media influencer is generally required to disclose his or her advertising relationships, including when the influencer receives a free product and/or compensation in exchange for his or her endorsement, testimonial or review. Further, a number of social media platforms require influencers to make platform-specific disclosures.
Specifically, each product endorsement should contain disclosure language that is tailored to the applicable product, platform and compensation structure in question.
Regulatory Activity on the Rise
Last month, we reported on an example of Instagram influencers’ product endorsements gone wrong. In that case, Lord & Taylor, LLC (“Lord & Taylor”) paid fifty Instagram fashion influencers to post a photo of themselves wearing a particular Lord & Taylor dress, including the @lordandtaylor tag and one of the company’s hashtags.
After conducting an investigation, the FTC took regulatory action against Lord & Taylor because the subject Instagram influencers did not disclose in their posts that they had been compensated by Lord & Taylor, nor did Lord & Taylor otherwise obligate the influencers to make such a disclosure.
Are Your Product Endorsements Compliant?
Strict social media account policies, and a statement from the FTC that it may start taking action against individual endorsers, place non-compliant influencers and YouTubers at substantial risk. Furthermore, in light of recent crackdowns, social media influencers can expect more and more advertiser written agreements to hold influencers responsible for product endorsement disclosure mishaps.
To date, however, most regulatory action concerning social media endorsements (including the Lord & Taylor case mentioned above) has targeted advertisers, their ad agencies and public relations firms. Advertisers should ensure that their marketing practices – as well as the endorsement practices of their social media influencers – comply with applicable laws and regulations.
In light of these regulatory and contractual risks, influencers, YouTubers and advertisers alike should always consult with a knowledgeable attorney before engaging in endorsement activity.
If you are interested in learning more about this topic, or if you are providing or soliciting product endorsements, please e-mail us at email@example.com or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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