Legal Concerns for Product Endorsements by Social Media Influencers - Klein Moynihan Turco LLP

Legal Concerns for Product Endorsements by Social Media Influencers

In the endless search for new and creative ways to promote products, many advertisers are enlisting the service of social media influencers (“Influencers”) – people whose online popularity and relevance grant them influence over others within their social sphere. Many influencers will make product endorsements on behalf of advertisers through social media platforms (such as Facebook, YouTube, Instagram, and TikTok) in exchange for free products and/or compensation.

Over the past few years, the Federal Trade Commission (“FTC”) has begun to clamp down on the product endorsement practices of social media influencers. Companies and influencers who engage in advertising campaigns (such as sponsorships and endorsements) must comply with relevant marketing laws or risk regulatory scrutiny and penalties.

How Can Social Media Influencers Make Legal Product Endorsements?

Regulation of Product Endorsements

Dating back to the 1980s, the FTC has prohibited certain endorsement activities that could be construed as dishonest or misleading. Over the past decade, the FTC has made clear that such regulations extend to online endorsements posted by influencers. Recently, the FTC updated its Endorsement Guide and released a guideline on influencer disclosure practices.

In these guides, the FTC requires influencers, in their endorsement messages, to prominently disclose that they have material connections with the brands they promote. In the FTC Endorsement Guide, a material connection to a brand “includes a personal, family, or employment relationship or a financial relationship – such as the brand paying you or giving you free or discounted products or services.” Such disclosures operate to make followers aware of influencers’ potential bias and keep endorsements honest and truthful.

Additionally, social media platforms have their own internal policies that govern product endorsements and testimonials. Failure to abide by the terms of these policies could lead to the suspension – or even termination – of an influencer’s social media account.

General Guidelines Regarding Product Endorsements by Social Media Influencers

Under the FTC regulations, social media influencers are required to disclose their advertising relationships, including when they receive benefits in exchange for their endorsement, testimonial, or review. Notably, influencers can only discuss products that they have used and must give their honest opinion as to such products.

The FTC requires that social media endorsement disclosures be hard to miss and must use simple and clear language (should be in the same language as the endorsement itself). To be hard to miss, disclosures should be: (1) placed within the endorsement (ex., if the endorsement is a video, superimpose the disclosure); (2) close to the beginning of an endorsement and above any “click more” actions; and (3) the first or last hashtag. Disclosures should use clear explanations (ex., “Thanks to [advertiser] for the free product”), simple terms (ex., “advertisement” and “sponsored”), and hashtags (ex. “#ad”).

Further, several social media platforms require influencers to make platform-specific disclosure and provide tools that help people craft such disclosures. The FTC warns, however, that such platform tools may not provide adequate disclosures that comply with the law. Each product endorsement should contain disclosure language tailored to the applicable product, platform, and compensation structure in question.

Are Your Product Endorsements Compliant?

Most regulatory action concerning social media endorsements has targeted advertisers, ad agencies, and public relations firms. Advertisers should ensure that their marketing practices and the endorsement practices of their social media influencers comply with applicable laws and regulations. In light of such risks, social media influencers can expect advertiser-written agreements to hold influencers responsible for product endorsement disclosure mishaps.

In light of these regulatory and contractual risks, influencers 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 providing or soliciting product endorsements, please e-mail us at info@kleinmoynihan.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.

This blog post was originally published in 2016 and updated on November 29, 2021.

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Photo by Maddi Bazzocco on Unsplash

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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