#Sponsored – FTC Warns Social Media Influencers to Clearly Disclose Material Connections

Kim Kardashian touting weight-loss teas. Tom Brady plugging Aston Martin. Jennifer Aniston shilling SmartWater. In this time of Facebook, Instagram, Twitter, Snapchat, and countless other social media platforms, it can sometimes be difficult to tell whether a so-called social media influencer’s post gushing about a product or service is organic, or in fact sponsored by the underlying brand.

“Influencer marketing” is the concept of using key individuals, identified as leaders or notable figures to a particular subset of people, to promote a brand’s message to that market. Influencers can range from household-name celebrities, to athletes, bloggers, and even non-celebrities whose social-media savvy results in a significant number or target population of followers. The Federal Trade Commission (“FTC”) is tasked with ensuring that American brands, advertising agencies, and influencers do not deceive consumers with this potent and relatively new form of advertising, particularly given the speed with which social media trends come and go.

In April 2017, the FTC sent over 90 “reminder” letters to notable influencers in an effort to curb undisclosed sponsored posts. The template for these letters is posted here. Although the FTC has communicated with advertisers and brands about sponsored posts in the past, these letters mark the first time that the agency has reached out directly to social media influencers.

In the letters, the FTC reminded social media influencers of its Endorsement Guides, which state that a “material connection” between an endorser and the marketer of a product (i.e., financial payment, business or family relationship, or free products to the endorser) must be “clearly and conspicuously disclosed” in such sponsored posts. As to the manner of disclosure, the FTC noted that clarifying hash tags such as #sponsored should appear in a prominent location, as opposed to at the bottom of a lengthy string of tags or links. For Instagram in particular, disclosure wording should be above the “more” button at the end of the first three lines of caption text; otherwise, the odds that readers will click “more” and eventually see the sponsorship indication are minimal.

With these letters, the FTC has indicated for the first time that it is not only aware of the pervasiveness of influencer marketing on social media, but also that it is savvy to some of the tactics that influencers may have used to hide or downplay their material connection to a brand in sponsored posts. Going forward, marketers and promoters should take care to “clearly and conspicuously” indicate when posts are prompted by a material connection between the two parties, and should avoid burying disclosures in a lengthy string of hash tags. Influencers and advertisers should also bear in mind that sponsored social media posts imply a commercial context for other IP considerations such as trademark, copyright, and right of publicity issues.

This article appeared in the May 2017 issue of MarkIt to Market. To view our past issues, as well as other firm newsletters, please click here.