FTC Leaves Little Doubt that Influencers are Squarely Within Its Sights

by: InfoLawGroup

Last week was a busy one for the Federal Trade Commission. On Thursday, the FTC gave notice that it is still very much focused on influencers and whether they are properly disclosing any material connections that they may have to a product or brand. As InfoLawGroup’s Benjamin Stein noted, the FTC issued revised FAQ’s to its Endorsement Guidelines which provide additional information and context on how and when influencer disclosures need to be made. In addition to the updated FAQ’s, the FTC also announced two other important items related to influencers.

First, the Commission noted its first law enforcement action against individual influencers for failure to disclose their connections to a product or service. Additionally, the Commission announced that it has sent follow up letters to a number of the social media influencers who it had sent initial letters to previously in its Instagram sweep earlier this year.

In its first ever influencer complaint, the FTC pursued Trevor Martin and Thomas Cassell for allegedly deceptively endorsing the online gambling site CSGOLotto.com (“CSGO”) without disclosing that they owned the company.

According to the FTC, both Martin and Cassell posted a number of videos about the site which touted how cool the site was and how easy it was to win and make money on it, without disclosing the fact the fact they owned the company. Some of their videos received more than 5 million views.

The complaint also indicted that Martin and Cassell allegedly ran their own influencer program for the site and paid gamers to post on social media about their experiences with the site. According to the FTC, the contracts with those influencers specified that they could not make statements that would reflect negatively on CSGO.

Martin and Cassell agreed to settle the matter with the FTC. The proposed settlement requires Cassell, Martin, and CSGO to make disclosures clearly and conspicuously in the future.

In the other influencer news item of the week, the FTC announced that it had sent follow up warning letters to 21 of the influencers that it had sent letters to earlier this year, asking the recipients to confirm whether they do in fact have material connections to the brands or products the identified social media posts, and if they do, to spell out the specific steps they will be taking to clearly disclose their material connections to those brands and products.   A sample of the new warning letter can be found here.

You may recall that earlier this year, the FTC announced that it had sent out what it termed as “educational letters” to approximately 90 Instagram influencers and brands, reminding them of their obligations to clearly and conspicuously disclose any material connections to any products or brands that they are posting about and providing them with examples of disclosures that the FTC did not feel were accurate.

The original round of letters canvassed a wide variety of influencers, from very well-known celebrities like Jennifer Lopez and Sean Combs to a number of “niche” personalities and reality tv stars. The list also included certain international influencers based outside of the U.S. The brands featured in the initial round of letters were diverse as well, with national retailers, quick service restaurants, specialty apparel, footwear, food and consumables and a number of health and beauty products all being included.

The initial letters provided a number of specific examples of disclosures which the FTC felt were not sufficient. The commission noted that disclosures like #sp”, #thanks” or “#partner” were inadequate and even noted that “#ad” is likely to be insufficient if it is intermixed with a number of other hashtags or if it is buried at the bottom of a long post. The newly revised Endorsement Guide FAQ’s outline many of the same disclosure examples that were outlined in the letters. If you are curious on the full list of brands and influencers who received the initial educational letters, copies can be found here.

While we do not yet know the identities of the 21 influencers who received the letters, it will be interesting to see what happens next and how (or if) the influencers respond. In any event, it is clear that the FTC is sending a clear message that influencers are an enforcement priority right now so if you are an influencer or if you do any work with influencers (someone having “Influence Over Influencers” as the FTC would phrase it) make sure that clear and conspicuous disclosure of material connections is at the forefront of your planning. Now would also be a good time to check your forms of agreement that you use when hiring an influencer to make sure that don’t have statements that prohibit the influencer from providing their honest opinions about the product or brands. We would be happy to assist you with that review or help answer any other questions you may have.

Still don’t believe the FTC is serious about influencers? Maybe this video message from acting FTC Chairman Maureen Ohlhausen about the importance of the FTC’s influencer actions will convince you.