Banging the Disclosure Drum: The Once Blurry Line between Advertiser and Influencer Continues to Come into Focus

USFederalTradeCommissionAs we have written about time and time again, and as celebrities and influencers gain more and more followers on social media platforms such as Instagram, Snapchat and Twitter, they must exercise care when endorsing the use of sponsored products and services. Under the current legal landscape, posting endorsements on social media can not only affect the user’s brand, it can also expose one to legal liability. For its part, the Federal Trade Commission provides clear regulations regarding the posting of endorsements for products or services. When a product or service is featured on a social media post, and the poster is receiving some sort of compensation for the post (including receiving the product/service at a discount or for free), a poster may have to disclose that he or she is somehow being compensated, if the audience’s knowledge of the sponsorship would affect the credibility they give the poster’s endorsement. The FTC’s website contains common Q&As regarding when an endorsement must be disclosed on social media and how it must be done.

Nonetheless, within the last month, there has been no shortage of incidents that should remind anyone using social media that there are legal ramifications to what one posts online.

On April 17, 2017, the FTC issued a press release stating that it had recently sent out over 90 letters to influencers and marketers reminding them of its rules regarding these endorsements and that these influencers must clearly and conspicuously disclose their relationships to brands when they are promoting those brands on social media. With the letters, the FTC sent examples of what appeared to be endorsements without disclosure of a possible sponsorship, by pointing out a specific post on each person’s Instagram account. The take away is simple: social media users must understand that the FTC is reviewing what people put on their social media accounts.

But complying with FTC regulations is not the only thing social media users have to worry about these days. As was widely reported in the press, a recent much hyped Fyre Festival was billed as a luxury music festival taking place on a tropical island. Unfortunately, as widely reported, the promoter was not able to deliver on what it advertised, the festival was widely panned online, and the festival was eventually cancelled and postponed. In the days since then, numerous lawsuits have been filed against the organizers of the event. Significantly, there has been discussion as to the liability of some social media personalities that promoted the event on their accounts. In addition to filing lawsuits against the organizers of the event, some plaintiffs have indicated that they were misled about the festival by the social media celebrities who may have been paid to endorse the festival.

Small celebrity missteps and huge PR fiascos alike make clear that the already oft-stressed importance of proper disclosure and careful promotion remains as importance as ever. As advertising continues to stake its claim on social media, consumer protection agencies and consumers themselves are going to increasingly seek to protect themselves from potentially misleading advertisements on the part of influencers.