Celsius Influencer Lawsuit Reminds Us To Ask: Are You Monitoring Your Influencers?
by: Jamie Rubin
We all know by now that if a brand gives something of value to an influencer (like money, free merch or a sweepstakes entry), the brand must tell the influencer to say that it got that thing for free from the brand. Likewise, the influencer is required to make that disclosure. These requirements originate from Guides issued years ago by the Federal Trade Commission, and which have now been updated over time to account for digital and social media. The FTC pursues brands and influencers who fail to abide by these Guides, resulting in costly enforcement actions and settlements. The National Advertising Division of the BBB also hears cases involving influencers who fail to disclose their connection to brands in social posts. Now we are starting to see class actions against brands for the same problem.
Indeed, in a class action lawsuit filed earlier this year, Mariana Dubreu sued Celsius Holdings Inc. (the company behind the famous Celsius energy drinks) and three of its influencers alleging that they engaged in a scheme to artificially inflate prices and boost sales for Celsius products. Mariana contends that the influencers misrepresented their relationship with the brand by pretending to be disinterested consumers, all while being paid for their endorsements. In other words, the plaintiff alleges that the influencers did not disclose they were paid by Celsius in social posts promoting Celsius. According to the complaint, this undisclosed advertising misled the plaintiff and other consumers into purchasing Celsius products at a premium, all in violation of Federal and California state law.
It is notable that this complaint names the influencers as defendants too, and not just Celsius. The case is in its infancy, so we do not yet know what compliance measures Celsius had in place in connection with its influencers. Of course, brands should have a process for requiring its influencers to disclose if they are paid to endorse the brand. But the FTC enforcement actions in this area and business guidance from the FTC discuss an often missed element of a compliant influencer program: monitoring influencers for compliance.
Indeed, the FTC wrote: “Advertisers need to have reasonable programs in place to train and monitor members of their network” and “take appropriate action if [they] find questionable practices.” We find that many brands have a set of written requirements they give to influencers, but just do not have the internal resources to monitor influencers to find out if they are complying with those requirements. Monitoring influencers and taking action for non-compliance can help shield a company from liability. Here at InfoLawGroup, we launched a monitoring service for our clients that is primarily managed by our amazing paralegals. Give us a call and we can help!
Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE.