Retailer Settles FTC Deceptive Advertising Claims for Product Endorsements on Instagram

Print Friendly, PDF & Email

March 16, 2016

product-endorsementThis Tuesday, the Federal Trade Commission (the “FTC” or “Commission”) announced that it has prospectively reached a settlement with Lord & Taylor, LLC (“Lord & Taylor”) over charges of deceptive advertising in connection with alleged paid Instagram product endorsements for Lord & Taylor’s 2015 Design Lab clothing collection.

What legal precautions should sellers take before seeking out third-party endorsements on social media?

Lord & Taylor’s Design Lab Collection and Related Product Endorsements

Lord & Taylor manufactures and sells luxury women’s, men’s and children’s apparel, accessories, cosmetics and other retail merchandise.  In fall 2014, Lord & Taylor purportedly began planning the release of its new private label Design Lab clothing line, including a comprehensive social media campaign.

According to FTC records, Lord & Taylor provided its Design Lab Paisley Asymmetrical Dress – and payments of $1,000 to $4,000 each – to fifty “fashion influencers.”  The Commission alleges that the influencers were contractually obligated to post a photo of themselves wearing the Lord & Taylor dress to the social media platform Instagram during the weekend of March 27–28, 2015, and include the @lordandtaylor user designation and #DesignLab hashtag with their posts.  Lord & Taylor representatives purportedly pre-approved each of the influencers’ Instagram posts and made certain other stylistic edits to the influencers’ proposed associated text.

The Design Lab Instagram campaign appears to have reached 11.4 million individual Instagram users, resulting in 328,000 brand engagements with Lord & Taylor’s own Instagram account.  The subject dress ultimately sold out.

FTC Investigation and Administrative Complaint

After conducting an internal investigation into the foregoing matter, the FTC initiated an administrative complaint against Lord & Taylor alleging that the retailer’s product endorsement contracts did not require influencers to disclose in their postings that they had been compensated by Lord & Taylor, nor did Lord & Taylor otherwise obligate the influencers to make such a disclosure.  The Commission had reason to believe that Lord & Taylor’s actions amounted to deceptive advertising because the product endorsements would be material to consumers in their respective decisions to purchase the subject dress.

This Tuesday, the FTC announced that Lord & Taylor has agreed to settle the Commission’s deceptive advertising claims.  Under the terms of the prospective consent order, for a period of twenty years, Lord & Taylor and its officers must (among other things):

  • refrain from misrepresenting that an individual providing a paid product endorsement is an independent user or ordinary consumer of the product;
  • clearly and conspicuously disclose all material connections between Lord & Taylor and its endorsers;
  • advise each endorser in writing of his or her responsibility to disclose the endorser’s material connection to Lord & Taylor; and
  • submit reports to the FTC of Lord & Taylor’s compliance with the foregoing.

The draft FTC consent order is subject to public comment through April 14, 2016.

Paid Social Media Product Endorsement? Disclose Before You Post

Broadly speaking, FTC regulations require sellers and advertisers to disclose all financial interests that individuals may receive in connection with providing testimonials or product endorsements.  Sellers must ensure that paid endorsers and testimonial-writers (and, in some instances, the sellers themselves) include prominent disclosures adequately detailing the prospective benefits that such parties receive in connection with their endorsements, testimonials or other promotional efforts.  Failure to do so could result in regulatory action or other adverse legal consequences.  As such, businesses should always consult with a knowledgeable attorney before commencing a marketing campaign involving paid product endorsements.

If you are interested in learning more about this topic, or if you have been served with legal process relating to deceptive advertising, please e-mail us at 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.

Attorney Advertising

Related Blog Posts:

FTC Settles Charges of Illegal Paid Testimonials

Contest Prizes, Endorsements and Testimonials: A Lesson from Lumosity

Sweepstakes Endorsements and Testimonials: What’s Not to Like?

David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, 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.

Schedule a Call
In The Know

Trending Topics

New York Sweepstakes Law blog- Klein Moynihan Turco

New York Sweepstakes Law: Are You Compliant?

Print Friendly, PDF & Email

In general, a lottery exists when entrants pay for the chance to win a prize. States alone reserve the right to administer lotteries. Businesses can eliminate one element of what would otherwise be an illegal lottery, in order to transform it into a legal promotional game. If the requirement to

TCPA surveys

An Ad or not an Ad: NY Weighs in on TCPA Surveys

Print Friendly, PDF & Email

Another day, another court decision that refines constitutes a Telephone Consumer Protection Act (“TCPA”) unsolicited fax advertisement. A Manhattan-based federal court recently issued a decision that removes faxed invitations to participate in a survey from the TCPA definition of advertisement. In drawing this distinction for TCPA surveys, the Court held

NY sports gambling law- Klein Moynihan Turco

Agreement Reached to Enact NY Sports Gambling Law

Print Friendly, PDF & Email

This week, Governor Andrew Cuomo and the New York State Legislature agreed to a budget deal that will bring mobile sports betting to the State through a unique NY sports gambling law.  Upon the Governor’s signature, NY sports gambling is primed to become the nation’s largest market. However, New York

UK and US Social Media Influencer Laws

UK and US Social Media Influencer Laws

Print Friendly, PDF & Email

In September of 2020, the United Kingdom’s (“UK”) Committee of Advertising Practice (“CAP”) reviewed the Instagram accounts of 122 UK-based social media influencers to determine whether content was being properly flagged as advertising in accordance with applicable social media influencer laws. This past March, the UK Advertising Standards Authority (“ASA”)

Share on facebook
Share on google
Share on twitter
Share on linkedin