FTC Following ‘Influencers’ for Deceptive Brand Promotion

Companies must ensure paid endorsers reveal connections on social media, according to FTC guidance

The federal government wants to make sure consumers can tell when social media users are getting paid to plug a product online — even if that disclosure has to fit within 140 characters.

The Federal Trade Commission’s recent landmark settlement with a pair of social media “influencers” highlighted a growing area of enforcement by the consumer protection agency. While the FTC is now holding endorsers accountable for transparency in their online messaging, the companies that pay them are also on the hook for any deceptive practices, according to the commission’s guidance.

Marketing departments are increasingly relying on influencers, or social media users with a significant online following, to push their products and services. Advertisers in certain industries have an easier time reaching large audiences through influencers than they do directly through their own content. A Pixability study found that 86 percent of the most-viewed cosmetics-related videos on YouTube in 2016 were posted by what the marketing company considered influencers, and only 14 percent of the top videos belonged to the beauty brands themselves.

This so-called “brand ambassadorship” on Instagram, Twitter, Pinterest and other platforms is growing more popular as ad-blocking software makes traditional online advertising less viable for companies. In a survey published in November 2016 by marketing firm Linqia, nearly half of the 170 marketers the company polled planned to spend more on influencer marketing this year.

To read this story and other complete articles featured in the September 25, 2017 print edition of Law Week Colorado, copies are available for purchase online.