FTC Plays ‘Red Light, Green Light’ With Influencer Marketers

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Earlier this month, the Federal Trade Commission (FTC) broke new ground by announcing its first enforcement action against social media influencers for failing to disclose material connections with a brand they were promoting. In this case, the influencers, video gaming personalities, TmarTn and Syndicate, owned the site they were promoting, CSGO Lotto, without disclosing their ownership of the site.

However, the FTC alleges that the two also engaged in a laundry list of “what-not-to-do” behavior with other gaming influencers they paid to promote the CSGO Lotto site on social media outlets, such as YouTube, Twitch, Twitter, and Facebook. This included not requiring the influencers to disclose their connections with CSGO Lotto and prohibiting the influencers from making negative statements about the site.

Here’s Where Things Get Interesting

As novel as the FTC’s action against TmarTn and Syndicate may be, another recent move by the Commission is a clear omen of bigger things to come. On the same day it announced the CSGO enforcement action, the FTC sent 21 “warning letters” to social media influencers. These new letters were significantly different in substance and tone from the “educational letters” the Commission sent to brands and influencers earlier this year.

The warning letters were sent to 21 influencers who received letters from the FTC during the previous “educational” campaign, and whom the FTC believes may have continued to endorse products via social media without adequately disclosing their material relationships with the brands they endorsed.

Each letter calls out specific social media posts and specifies the ways in which the FTC believes the influencer(s) failed to provide adequate disclosures. The letters conclude by requesting that the recipient provide a written response to the FTC no later than Sept. 30. Those responses must advise FTC staff whether the influencer(s) has/have a material relationship with the brands mentioned in the posts, and, if so, what steps the influencer(s) “are or will be taking” to ensure that future social media posts featuring brand endorsements properly disclose material connections between the influencer(s) and the brand(s).

There is little doubt that, after two letter campaigns and countless public statements and publications in the eight years since the release of the FTC’s revised “Guides Concerning the Use of Endorsements and Testimonials,” the Commission considers brands and individual social media influencers duly warned. An enforcement action involving a social media influencer (or influencers) – based on the alleged failure to disclose material connections – likely will not be too far behind the recent warning letter campaign.

How About a Little Guidance

To its credit, the FTC has gone out of its way in the years since the release of the revised endorsement and testimonial guides to understand how consumers process online disclosures by influencers, and it has continually refined its guidance on how brands and influencers can provide effective disclosures.

Accordingly, the FTC released an updated version of its 2015 “The FTC’s Endorsement Guides: What People are Asking” document, featuring 20 new questions and answers to help brands and influencers understand compliance obligations. The FTC also released an infographic highlighting some of the additions to the revised document.

What About Brands?

Historically the FTC has been much less indulgent of brands than individual influencers when it comes to enforcing influencer disclosures. Brands that engage in influencer marketing should review their influencer guidelines and consider whether those guidelines need to be updated in light of the new guidance contained in the revised FTC publication. In addition, this is an ideal time for brands to audit their compliance programs to ensure that they effectively ensure influencers conform to the brand’s disclosure policies.

Experienced counsel can assist brands in auditing their influencer guidelines, determining whether current policies effectively ensure influencer compliance, and revising such policies, if needed.