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FTC Warns Influencers About Not Disclosing Endorsements

Instagram Money

The FTC has told Instagram influencers to “show me (and your followers) the money” in a series of enforcement actions announced on April 19th regarding violations of its endorsement rules.

After what it described as a review of “numerous Instagram posts by celebrities, athletes, and other influencers”, the FTC says it has sent over 90 letters to influencers on Instagram. The letters contained a  warning that the FTC found the influencers’ posts in violation of the FTC rules regarding endorsements, and offered assistance in learning about how to correct their postings.

The enforcement action was spurred in part by consumer advocacy done to the FTC by groups including non-profit watchdog Public Citizen. The groups have been pressuring the FTC for months about a lack of transparency in influencer marketing on Instagram.

In addition to being a warning that the agency is paying attention to enforcement of the endorsement guidelines, the announcement also offered a glimpse into the agency’s interpretation of the guidelines as they apply to influencers. Some of the warnings sent to the Instagram influencers applied to posts where the relationship was disclosed, but late in a long text so it occurred after the “more” split in the text. The FTC warned the influencers that to be in compliance with the endorsement guidelines, disclosures must occur above the “more” split to ensure they are seen. In addition, the FTC warned against inserting disclosures into a long string of hashtags where they may be overlooked.

To comply with FTC product endorsement guidelines, all social media and blog references to a product must also disclose an author’s material connection to the product if there is one. The disclosure must be conspicuous, unavoidable, and occur before the mention of the product to be in compliance. Links to disclosures on another page are insufficient. For more information, the FTC offers an FAQ with more information on the endorsement guidelines.

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FTC Gives First Hint About Intended Blogger Enforcement

The Federal Trade Commission has given its first hint of how it intends to enforce the new endorsement guidelines that apply to bloggers, by revealing it investigated retailer AnnTaylor for a promotion run by its LOFT brand stores.

(If you are unfamiliar with the guidelines, they can be found in PDF form here. To find out why there is confusion about what they mean, read an interview with FTC spokesman Richard Cleland.)

In January, AnnTaylor invited a group of bloggers to a preview event for LOFT’s  Summer 2010 collection. The invitation stated that bloggers who wrote about the event and submitted their stories to AnnTaylor within 24 hours of the event would receive a mystery gift card worth between $50 and $500.

The blogger promotion was widely reported on in media as an obvious violation of the new FTC endorsement guidelines, and not surprisingly, drew the attention of FTC investigators. The FTC has widely been expected to find a company to use as an example to test the new guidelines on.

On April 20th, the FTC notified AnnTaylor that they have decided not to pursue enforcement action over the event for several reasons:

  • A sign was displayed telling bloggers to disclose the gift cards.
  • AnnTaylor adopted a new policy shortly afterward requiring notification of bloggers requiring their disclosure requirements before gifts are issued.
  • The event was a flop – only a small number of bloggers wrote content, and several who did disclosed the gift cards.
  • AnnTaylor only hosted one such event.

This may be good news for advertisers. It appears that the FTC may not hold advertisers accountable for a blogger’s failure to disclose as long as the blogger was notified of their need to disclose.

Another clue to the FTC’s thinking on enforcement was provided by an interview that Cleland gave in January to Jeff Bercovici of Daily Finance.  In the interview, he suggested that celebrities would be exempt from disclosures because:

The average consumer, Cleland said, might well be aware that celebrities of Paltrow’s stature often receive free clothing, trips and other swag.

The question, of course, is how this applies in a niche market like scrapbooking – does the FTC recognize the existence of “niche market” celebrities who would fall under Cleland’s interpretation? And if they do, how many people in the industry would fall into that category in their eyes?

Many in the scrapbook industry will be watching for the FTC’s future interpretation of these guidelines, due to the widespread use of editorial and designer samples in the industry, and the prevalence of online publishing of materials.

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