The FTC is continuing its scrutiny of social media influencers who fail to disclose paid endorsements and other compensatory arrangements. In September of this year, the FTC took its first law enforcement action, settling charges with YouTube broadcasters Trevor Martin and Thomas Cassell, known on their channels as “TmarTn” and “Syndicate.”
Martin and Cassell were charged with using their platforms to deceptively endorse CSGO Lotto by failing to disclose they were joint owners of the online betting service, and with allegedly paying other influencers to promote the site without requiring disclosures.
Meanwhile, the commission continues to send warning letters to high-impact influencers, including celebrities and athletes, and has updated its guidance for influencers and marketers. For business owners and marketers, the takeaways are two-fold:
1) When endorsing a product online, you must disclose when you have a financial interest or family relationship with a brand.
2) When providing compensation to online influencers, you must require them to provide “clear and conspicuous” notification of the sponsorship. This applies whether you provided monetary compensation or gave an influencer something of value.
The FTC has issued guidance on what constitutes a clear sponsorship disclosure, indicating that such disclosures should be evident to the consumer at a glance, without having to click through a posting. In Instagram posts, for example, sponsorships or other material connections should be made within the first three lines of text that are viewable without clicking on the “more” link.
FTC Endorsement Guidelines are issued under the Consumer Review Fairness Act, which protects consumers’ ability to share their honest opinions about a business’s products, services, or conduct, and provides transparency for consumers who are evaluating others’ endorsements.