As we previously reported, the Federal Trade Commission (FTC) released final updates to its Endorsement Guides on June 29, 2023. All parties involved in the dissemination of sponsored content (e.g., influencers, brands, intermediaries) have an obligation to understand, follow and monitor compliance with the revised Endorsement Guides. Below is a summary of the key provisions relevant to influencers, which were mostly previewed by the FTC in May 2022.
Disclosure of Material Connections
Where there is a connection between an influencer and a brand that might materially affect the weight or credibility of the influencer’s statements (e.g., because the influencer was paid by a brand or received free or discounted products from a brand), and that connection is not reasonably expected by the audience, such connection must be disclosed “clearly and conspicuously” (see next section for more on this). In other words, a material connection must be disclosed if a “significant minority of the audience” does not understand or expect the connection. The FTC did not prescribe magic language for purposes of this disclosure, but has generally taken the position that #ad, #advertisement or #sponsored are effective disclosures, if disclosed clearly and conspicuously. To illustrate, the FTC provided the below guidance in its Endorsement Guides Q&A:
The FTC doesn’t mandate the specific wording of disclosures. Regardless of the advertising medium or platform, the same general principle applies: people should get the information they need to evaluate sponsored statements. Starting a post with “Ad:” or “Paid ad” or “#ad” or “Advertising:” or “Advertisement” would likely be effective. The words “Sponsored” and “Promotion” at the beginning of a post might also be effective, but “Sponsored by XYZ” or “Promotion by XYZ” would be clearer (where “XYZ” is a brand name).
Clear and Conspicuous
The revised Endorsement Guides adopt the definition of “clear and conspicuous” that the FTC proposed in May 2022. “Clear and conspicuous” means a disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers. For example, if the endorsement is visible without having to click on the link labeled “more,” but the disclosure is not visible without doing so, then the disclosure is not difficult to miss and thus is not clear and conspicuous. A platform’s built-in disclosure tool may not be sufficient if such a disclosure is easy to miss and thus not clear and conspicuous. To illustrate, the FTC provided the below examples:
An influencer who is paid to endorse a vitamin product in their social media posts discloses their connection to the product’s manufacturer only on the profile pages of their social media accounts. The disclosure is not clear and conspicuous because people seeing their paid posts could easily miss the disclosure.
Assume now that the influencer discloses their connection to the manufacturer but that, in order to see the disclosures, consumers have to click on a link in the posts labeled simply “more.” If the endorsement is visible without having to click on the link labeled “more,” but the disclosure is not visible without doing so, then the disclosure is not unavoidable and thus is not clear and conspicuous.
Assume now that the influencer relies solely upon a social media platform’s built-in disclosure tool for one of these posts. The disclosure appears in small white text, it is set against the light background of the image that the influencer posted, it competes with unrelated text that the influencer superimposed on the image, and the post appears for only five seconds. The disclosure is easy to miss and thus not clear and conspicuous.
Influencer Liability
Influencers may be directly liable for their sponsored content that fails to comply with the revised Endorsement Guides:
Deceptive Statements –> An influencer may be liable for statements in a post that the influencer knows, or should know, are deceptive (e.g., when an influencer falsely represents that he/she personally used a product).
Misleading or Unsubstantiated Statements –> An influencer may be liable for misleading or unsubstantiated statements regarding a product’s performance or effectiveness (e.g., when statements are inconstant with the influencer’s personal experience, were not made or approved by the brand, or go beyond the scope of the influencer’s personal experience).
Failure to Disclose Material Connection –> An influencer may be liable for failing to disclose unexpected material connections between themselves and a brand.
Influencers (and brands that utilize influencers) should review the revised Endorsement Guides against their own policies and practices to ensure they align. If you have any questions, or need assistance updating your policies and practices, please reach out to Lauren Carey.