In late 2017, the Federal Trade Commission (‘FTC’) updated its Guide which makes it very clear that, when making a paid endorsement on social media (such as Twitter, Facebook and Instagram), the endorser must openly disclose that they are being paid to make the endorsement. The FTC has commenced enforcement against both companies and influencers. The term influencer includes models.
For influencers, an endorsement may include, not only saying something positive about the product or client, but also merely appearing with, wearing or mentioning a client or its products in a social media posting. For example, simply tagging a brand that has provided compensation to an influencer, even without further description or promotion of the product, is an endorsement that requires disclosure. Compensation includes not only the payment of money, but also non-monetary benefits, such as free clothing, health club classes, discounts, contest entries, free travel, or the making of a donation to a charity of the endorser’s choice. Additionally, if there is a “material connection” between the endorser and the company that the endorser is promoting, such as a familial or employee relationship, that connection must also be disclosed, even if the influencer has not received anything.
For the purpose of disclosure, it is irrelevant how an influencer got a free product. Whether a company gives the influencer a code, ships it to the influencer or gives the influencer money to buy it, it’s all the same for the purpose of having to disclose that they got the product for free. Additionally, if an influencer receives free products from a company in the hope that the influencer reviews it, the influencer must disclose that they got the product for free, even if the influencer wasn’t required to review it.
There is no special wording required by the FTC to disclose that an influencer is being paid to make an endorsement. The point is to provide consumers with relevant information. “Company X sent me this product to try, and I love it” works. Or “I am being paid by Brand Z.” Even saying “I love working for this company” can get the point across. The influencer does not need to state the amount of the payment. The FTC does not mandate any particular words but has approved disclosures that include the words “Sponsored,” “Promotion,” “Paid Ad” and “Ad.” Hashtags such as #thanks, #collab and #spon, or company name followed by “ad,” e.g.#ABCcompanyads, are insufficient.
Influencers should also be cautious about using the built-in disclosure features on social media platforms. There is no guarantee that these built-in modules are an effective way to disclose material connections. Additionally, writing or saying “thank you” to a company is not sufficient disclosure. “Thanks, XYZ, for the free product” or “Thanks, XYZ, for the gift of X product” would be good enough.
Notice about the compensation needs to be clear and conspicuous. That means consumers should be able to easily find, see and understand it. A single general notice buried in a home page or in a hyperlink which generally states that the influencer is sometimes paid to endorse some of the products mentioned in his or her social media feed is not sufficient. A disclosure should be placed where it easily catches consumers’ attention and is difficult to miss. A disclosure is more likely to be seen if it’s very close to, or part of, the endorsement to which it relates.
There are 5 general rules. The disclosure should be: 1) close to the claims to which they relate (don’t put them at the very end); 2) in an easy to read font; 3) in a shade that stands out against the background; 4) for video endorsements, on the screen long enough to be noticed, read and understood; and 5) for audio endorsements, recited in an easy to understand way.
Platform-specific disclosure rules include:
Instagram: If an Instagram post makes an endorsement through a picture or the first three lines of the post description, any required disclosure should be presented without the user having to click “more.”
Snapchat or Instagram Stories: Endorsers can meet the disclosure requirements by superimposing disclosure on Snapchat or Instagram “stories” or posts. The disclosure should be easy to read within the timeframe the endorser allows for users to look at the image. Endorsers should give their followers and other users sufficient time to look at the image, ensure that there isn’t a lot of other text competing with the disclosure language, and ensure that the disclosure is large and contrasts well against the image. Audio-only disclosures may not be sufficient.
YouTube: For sponsored content on YouTube, the disclosure must appear clearly (e.g., by using the phrase “This video was sponsored by...”) in the video description and before the “Read More” drop-down section of the description. Sponsorship disclosures must be included in the video itselfand appear as simple text or in simple, unambiguous spoken language. Having the sponsorship notice at the beginning of the video is best, and having multiple disclosures during the video is even better.
Twitter: Twitter is a bit of a challenge. Sponsored posts on Twitter often go undisclosed for lack of space, but even Tweets must properly disclose paid promotions. Including the hashtag #ad, and tagging the brand is generally sufficient.
Putting all of the above aside however, if an influencer is well known as the face of a brand, the relationship does not need to be disclosed in a social media posting about a promotional event for that brand, since consumers already associate the influencer and the brand. But this is the exception, not the rule.
Randy Friedberg is a partner with White and Williams LLP in New York City. He has over 30 years experience in counseling clients, with particular focus on the protection, licensing and enforcement of intellectual property rights. His practice encompasses trademark and copyright law, unfair competition, trade secrets, advertising matters, internet and cyber matters, rights of privacy and publicity, and entertainment law, as well as general corporate and litigation matters.