The Federal Trade Commission (FTC) works to prevent deceptive advertisements and ensure that consumers are not misled by social media and influencers. The FTC released its first Endorsement Guide named “Disclosures 101 for Social Media Influencers.” This guide lays out how the FTC enforces Section 5 of the Federal Trade Commission Act, which prohibits deceptive advertising, including the use of testimonials and endorsements. Brands and third party public relations (PR) agents are required to ensure their influencers make the required disclosures.
How can brands ensure compliance with the regulations?
Influencers are required to make their disclosures clear and conspicuous at the beginning of their post captions. Brands should always have contracts in place when sending products to influencers in exchange for content. In these contracts, brands should require that influencers make an advertising disclosure. The brand should also share the FTC’s “Disclosures 101 for Social Media Influencers” guide when entering into agreements with influencers. Finally, both brands and third party PR or marketing agencies should monitor their sponsored posts to ensure that influencers are properly complying.
Not only are brands required to ensure that influencers are making the proper disclosures, but brands also must ensure that the claims influencers are making are true. Brands can best protect themselves by requiring that influencers submit their captions and content to the brand for approval prior to posting. Even when taking these measures, brands and their agencies should continue to monitor posts for compliance.
What are the consequences of non-compliance with the regulations?
The FTC can sue brands for non-compliance with the disclosure requirements. Typically, the FTC will begin by sending warning letters to brands failing to comply. Continued disregard for the rules will lead to a suit and fines by the FTC. Additionally, consumers can bring suits against brands for misleading advertisements. In 2023, a consumer sued swimwear brand Luli Fama for false advertising because its influencers did not disclose that they were paid to wear and promote the brand on Instagram.
