The Federal Trade Commission (FTC) has focused its attention on social media influencers. An effective part of any social media campaign, influencers frequently have the power to create online buzz about a product or service based on their reviews. As influencers become more successful, frequently their reviews are sought out directly by organizations with influencers receiving free samples, payment, and other incentives for their reviews.

This compensation has received attention by the FTC in November 2019 with their new publication “Disclosures 101 for Social Media Influencers.” Concerned over whether online users really understand the relationship between influencers and the brands whose products they review, the FTC has put forth these new guidelines regarding the degree a social media influencer must disclose his or her relationship with an organization. These new guidelines suggest that influencers must have greater transparency in their online reviews, and disclose the true nature of their relationship with brands.  Compounding this issue is that social media influencers operate in a variety of social media platforms that have different norms of communication (think Twitter versus Instagram).  These different platforms may mean disclosure will look differently depending upon what platform an influencer works within.

The new “Disclosures 101 for Social Media Influencers” is straightforward, and summarizes the FTC’s approach to disclosure requirements.  It also provides guidance for communicators in how disclosures should be made when the influencer has a “material connection” with a brand.  Here are a few of the highlights from the new FTC publication:

  • Influencers must disclose any relationship between the brand and themselves. This includes “financial, employment, personal, or family relationship.”[1]
  • The FTC defines financial broadly, so disclosures need to made if there is any type of value received by a brand. “Anything of value” is their definition of financial relationship, which means free products and discounts constitute financial relationships.[2]
  • The disclosure has to be obvious, and take into account the platform. Disclosures need to be conspicuous and placed upfront. The FTC is specific about picture disclosures stating that in a picture the disclosure needs to be superimposed. For a video the disclosure should be embedded, and that while hashtag disclosures are acceptable, they cannot be mixed into a series.[3]
  • Language matters on the disclosure. It can’t be a non-obvious abbreviation like “spon.” “collab” or an unclear term like “thanks” or “ambassador” that do not underscore the true relationship between influencer and brand. Acceptable language must clearly show the relationships, and, although not required, hashtags are acceptable. The FTC also points out that social media influencers aren’t insulated from U.S. law just because they post from outside the United States. Any endorsement online that reaches the United States is subject to these FTC regulations.[4]

Of course, those who are engaging in brand management and social media endorsements should read the full publication by the FTC as it contains more information on the technical aspects of disclosure and the nuances of what triggers disclosures online. The FTC social media influencer disclosure brochure can be found here and its video on the subject can be found here.  More updates from FTC can be found at their Twitter account @FTC.

None of this should be unexpected for the communication field. The Institute for Public Relations first addressed FTC regulations of social media endorsements in 2014. What has changed in the past five years, however, is the awareness of deception on the internet regarding products and services, and the rise of third-party endorsers, ambassadors, and influencers. The FTC has also stepped-up its own investigations into deceptive online endorsements. In 2017, the FTC settled its first social media deceptive endorsement case.[5]  That case involves two social media influencers who promoted an online gaming site without disclosing that they were actually joint owners of the site. In October 2019 the FTC issued a statement about stopping two incidents of deceptive online marketing. The first instance involved a company that sold fake endorsements, including likes and followers, that were used by a variety of organizations, including public relations firms, to boost online reputation. The second was an incident where a company actively posted deceptive reviews that were written by employees posing as customers, which is in violation for the Federal Trade Commission Act.[6]

Communication practice is now in an era where online deception and fake news is a constant concern. Compounding this issue is the reality that peer endorsements and influencers are now, more than ever, one of, if not the, greatest tool to generate awareness of a brand. In the past it has been a truism that the law lags in catching up with technological development. However, what is happening, as evidenced by the FTC’s work, is that law is increasingly regulating norms and behavior online.

Cayce Myers, Ph.D., LL.M., J.D., APR is the Legal Research Editor for the Institute for Public Relations. He is an associate professor at Virginia Tech’s Department of Communication where he teaches public relations.

References

[1] Disclosures 101 for Social Media Influencers, Federal Trade Commission, dated November 2019, https://www.ftc.gov/system/files/documents/plain-language/1001a-influencer-guide-508_1.pdf, 3
[2] Ibid, 3.
[3] Ibid, 4
[4] Ibid, 5.
[5] “GSGO Lotto Owners Settle FTC’s First-Ever Complaint Against Individual Social Media Influencers,” Federal Trade Commission, dated September 7, 2017, https://www.ftc.gov/news-events/press-releases/2017/09/csgo-lotto-owners-settle-ftcs-first-ever-complaint-against.
[6] Devumi, Owner and CEO Settle FTC Charges They Sold Fake Indicators of Social Media Influence; Cosmetics Firm Sunday Riley, CEO Settle FTC Charges that Employees Posted Fake Online Reviews at CEO’s Direction, Federal Trade Commission, October 21, 2019, https://www.ftc.gov/news-events/press-releases/2019/10/devumi-owner-ceo-settle-ftc-charges-they-sold-fake-indicators.

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Heidy Modarelli handles Growth & Marketing for IPR. She has previously written for Entrepreneur, TechCrunch, The Next Web, and VentureBeat.
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