Social Media Influencers Drawing Scrutiny from Regulators
Regulators are cracking down on social media influencers who do not disclose that they are being paid by the brands they are promoting, according to a story in the Wall Street Journal.
The Federal Trade Commission has been sending letters to influencers, including celebrities and social media figures, asking about financial connections with brands.
Industry brands and many other companies are more and more turning to influencers to help tell their brand stories in seemingly unscripted glimpses of a influencer’s life that happen to show and/or mention products and brand names.
Under FTC regulations, that is deceptive marketing unless influencers disclose they are being paid for the post.
The FTC has sent letters to influencers touting travel services, posting about their great stays in resorts, and showcasing fashion brands.
One example in the story was about an influencer who posted several photos from the Monarch Beach Resort without saying the hotel was giving her something in return. In fact, the hotel had given her one night free and four discounted nights for six Instagram posts.
In its guidelines, the FTC specifically states that saying “Thank you” in the post to whoever is providing the free product or service is not enough. And disclosure needs to be easily visible to readers – it should appear in the first few lines on social media so readers do not have to “click more” to see it.
The same rules apply to Snapchat and Instagram stories. In Instagram stories, since many people view those with the sound off, the sponsorship disclosure needs to be in text.
The general rule for disclosure is it needs to happen if the audience would view an endorsement differently knowing that an influencer had financially benefitted from the brand.
“Knowing the connection is important information for anyone evaluating the endorsement,” the FTC said.
The FTC recommends using #ad or #sponsored in a visible place, or something such as “Brand X brought me to Fiji to learn more about their brand.” The FTC frowns on #ambassador because they don’t think it is clear enough.
The FTC is also reaching beyond the fashion world, according to the Wall Street Journal. Another example cited was influencers who promoted a new online gaming service without disclosing they owned the company.
Just as influencers are responsible for disclosing financial ties to brands, companies are also responsible for monitoring their network of influencers to be sure they are disclosing those financial connections.
The FTC has the power to order influencers to surrender the money they made from brands, and has vowed to increase enforcement in this area.