As advertising on social media platforms proliferates, the Federal Trade Commission (FTC) (https://www.ftc.gov/) and advocacy groups continue to crack down on celebrity and influencer endorsements on the basis of deceptive advertising. “Unfair or deceptive acts or practices in or affecting commerce” are unlawful pursuant to the Federal Trade Commission Act. (https://www.ftc.gov/sites/default/files/documents/statutes/federal-trade-commission-act/ftc_act_incorporatingus_safe_web_act.pdf)
Recently, Khloe Kardashian posted an Instagram post (https://www.instagram.com/p/BIk7512DvxD/?hl=en) touting the beneficial health results of a pill, without providing a clear indication that the testimonial was sponsored. After the initial posting, the hashtag #ad was added.(http://www.nytimes.com/2016/08/30/business/media/instagram-ads-marketing-kardashian.html?_r=0)
The post may have changed due to assertions by truthinadvertising.org , a nonprofit organization addressing deceptive advertising, claiming that the Kardashian sisters had posted over one hundred posts that skirted FTC guidelines on advertising disclosures (http://www.ecfr.gov/cgi-bin/text-idx?SID=de10601c673ac6ac7500291dbfecca38&mc=true&node=pt16.1.255&rgn=div5). Last year, Khloe’s sister, Kim, encountered a similarly-published transgression (http://www.thefashionlaw.com/home/kim-kardashian-evades-ftc-regulations-with-new-instagram-ad) when she posted a photo of herself on Instagram holding a prescription drug without disclosing sponsorship.
Earlier this year, retail company Lord and Taylor settled FTC charges (https://www.ftc.gov/news-events/press-releases/2016/03/lord-taylor-settles-ftc-charges-it-deceived-consumers-through) that it deceived customers with native advertising (https://en.wikipedia.org/wiki/Native_advertising) where the company paid for a “seemingly objective article” without disclosing that it was paid. It also “paid 50 online fashion ‘influencers’ to post Instagram pictures of themselves wearing the same paisley dress from the new collection, but failed to disclose they had given each influencer the dress, as well as thousands of dollars, in exchange for their endorsement.”
The Other Side
Advertisers often steer clear of advertising or sponsorship disclosures because they find that clear indications of advertising can significantly lower engagement. Some advertisers, in an effort to comply with rules while keeping engagement high, look for creative ways to disclose the nature of the relationship, such as the “Sexy Buttery Love Song” sponsored by Jack in the Box (https://www.youtube.com/watch?v=7E66YIt9egI), which states in a small text box about two minutes into the 2.5-minute song that the video is sponsored by the company.
The Basic Rules
- The FTC Act covers only endorsements made on behalf of a sponsoring advertiser.
- Disclosures should be “clear and conspicuous,” in an easy-to-read font and shade.
- The general rule is: “whether knowing about that gift or incentive would affect the weight or credibility your readers give to your recommendation. If it could, then it should be disclosed.” (https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#when)
- The disclosure should also inform whether the endorser received money in addition to the product itself.
- Mere hyperlinks to disclosures are not sufficient because many people may not click on them. (https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#how)
Considerations for Specific Types of Platforms
Where a celebrity or influencer has a Twitter account and charges advertisers to mention products, the requirement to disclose that relationship depends on whether the followers understand that tweets about products are actually paid endorsements. Disclosure is recommended since determining that can be difficult. (https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#when)
The disappearing and dynamic nature of Snapchat content creates questions around enforcement of the rules. For instance, it is unclear whether, in the Stories feature, one must have a disclosure like #ad or #sponsored on every snap, or whether the disclosure can be on the just the first snap.
The FTC provide the same guidance for videos as it does for blogs and websites (https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#when), for instance, where a person reviews cosmetics products received from advertiser. However, the FTC has not been prescriptive, and it suggests that the disclosure should be “on the screen long enough to be noticed, read, and understood.” (https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#how) Companies should consider when in the video the disclosure will display, its duration, and whether a disclosure should be in the description.
Pinning in itself could constitute an endorsement, even if no affirmative words promote the product or service.
- Live stream, e.g., Facebook Live, or Periscope
Viewers should be able to “see a disclosure no matter when they tune in. There could be multiple, periodic disclosures throughout the stream.” (https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#how)
Anisha Mangalick is a technology attorney* in the Bay Area working with startups. Previously, she held legal and privacy roles at the Wikimedia Foundation, TRUSTe, the U.S. Department of Justice – EOIR, the Legal Assistance Foundation, and also served as a law clerk to the Honorable Richard A. Zimmerman in Minnesota.
*Licensed in New York.