Industry / Retail

FTC Tells Influencers: If They Pay, You Gotta Say


On June 29, the Federal Trade Commission (FTC) released its final revised guidance on how businesses should handle endorsements, reviews, and social influencer posts.

The agency’s general operating principle is that any person discussing a product online should disclose—clearly and conspicuously—any connection to that item or company.

“The Guides, at their core, reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading,” said an FTC question-and-answer sheet on how to comply. “An endorsement must reflect the honest opinion of the endorser and can’t be used to make a claim the marketer of the product couldn’t legally make.”

Sara Yood, deputy general counsel of the Jewelers Vigilance Committee, says this has long been the FTC’s policy regarding advertising and endorsements. It’s only now updating it to new platforms.

“If I were a brand, I would have my marketing people read through these new rules, particularly the question-and-answer sheet that was provided,” she says. “It gives you a really good idea about how the FTC plans to enforce these principles.”

She also recommended that any brand that works with influencers take another look at their agreements with them.

“It’s really important that, if you have someone endorsing your products, they follow the laws and regulations that apply to influencer marketing,” she said. “In addition, you, as a brand, have to make it clear that your values require them to do so.”

The Q&A gives guidance on how to handle a variety of situations. Among the advice it gives:

• “Endorsements must reflect the honest opinions or experiences of the endorser. You can’t condition an incentive—for example, a discount—on a review being positive, as that may motivate people to give a positive review for reasons unrelated to their honest opinion about your product.”

If businesses do ask customers about their experiences and feature their comments in their ads, they must disclose any financial incentive and benefit, it said.

• Any disclosures should be placed within the endorsement message itself, not relegated to the “about me” section, and they must be clear and conspicuous.

The new rules caution influencers against limiting disclosure to a hashtag or link, or relying on a platform’s disclosure feature. The rules even apply to ephemeral platforms such as Snapchat or Instagram stories, Yood says.

While it’s fine to disclose a sponsorship in a hashtag with terms like #ad or #sponsored, the FTC said, “vague or confusing” abbreviations like spon, or collab, are not considered sufficient—nor are stand-alone terms like thanks or ambassador.

• The rules also apply to negative reviews of competitors, the FTC said—if you have a financial incentive to criticize a company, that must be disclosed.

• Reviewers or endorsers can’t talk about their experience with a product they haven’t tried.

• Endorsers can’t make up claims about a product that would require specific proof that the company doesn’t have.

• If a blogger receives a free room or accommodation from a company for a launch of a new product, that must be disclosed when discussing its products.

• If an influencer tags a dress or piece of jewelry they are wearing, that might be considered an endorsement, and influencers should disclose if they have a relationship with that brand.

• Connections that may require disclosures in product reviews include “friendship, family, or employment relationships, or deals between acquaintances.”

• The rules also apply to things such as Facebook likes, though the FTC admits it’s not always possible to include a disclosure every time you hit a like button.

However, if likes or reviews are from nonexistent people or were purchased from a service, that is “clearly deceptive,” the FTC said, and the company could face enforcement action.

• If a celebrity or influencer endorses a product on a talk show or podcast, they should make it clear if they are being paid by that product.

Photo courtesy of the FTC

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By: Rob Bates

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