To Disclose or Not to Disclose: What You Need to Know About FTC Regulations on Influencers

Under-The-Table

Brand communicators beware: The Federal Trade Commission (FTC) has declared open season on social media influencers who fail to disclose that they are paid for endorsing a brand’s products and services. Not only that, disclosures must take a specific form; they also should be ubiquitous in some cases.

Late last year the FTC issued a long-awaited policy statement regarding native advertising and influencers, which was a follow-up to an earlier FAQ on the topic. Not even three months after it issued the later document, it “put industry on notice,” says Allison Fitzpatrick, partner at Davis & Gilbert in its marketing, promotions and PR practice groups, by slapping a penalty on high-end retailer Lord & Taylor ( PRN, March 21). The brand tried to blame its missteps—failing to disclose that it paid for a post to appear in an online fashion publication and neglecting to have 50 fashion bloggers disclose they were paid to wear and later endorse a paisley dress on Instagram—on an outside agency it hired to handle its influencers. That wasn’t good enough for the FTC, which blamed the retailer nonetheless. “If [a brand] hires an agency, [the brand] is not off the hook; it must follow-up with the agency,” she says.

After speaking with Fitzpatrick, an attorney, and Josh Habursky, adjunct professor at West Virginia University Reed College of Media, the rules seem fairly straightforward: If an influencer is paid to endorse a product or receives a free product or service, the FTC requires disclosure in a resulting blog, Instagram post, tweet or YouTube video, for example.

Regulatory Rage: Where things get a bit tricky is in deploying the disclosures themselves. In the Lord & Taylor example above, influencers donning the paisley dress used the retailer’s hashtag, but that failed to meet FTC regulations. They should have used #paidpost or #sponsoredpost. While #paid #ad or #sponsor are acceptable disclosures in a tweet, Fitzpatrick says, #spon doesn’t cut it, for example.

Along the lines of word shortening, a favorite device on social, using #sweeps to denote a sweepstakes or contest on social won’t suffice. Incidentally, there are a plethora of regulations when it comes to sweepstakes and social media, both Fitzpatrick and Habursky add.

Oh, and let’s say your paid influencer takes a photo of your product, and posts it, sans words, on his or her Instagram account. This photosharing is tantamount to an endorsement and proper disclosure is required, Habursky says.

Video: The FTC is particular here, too. While an influencer must disclose that he or she was paid to endorse your product at the start of a video, the FTC says the disclosure should occur several times, as viewers might miss it at the beginning. On the other hand, Habursky notes having a single disclosure on a homepage or a webpage “is not sufficiently conveying an endorser-to-advertiser relationship.”

An Education Issue: Why are brands running afoul of FTC regulations with regard to social? There are several answers. For Fitzpatrick, some marketers, advertisers and influencers “just don’t like to disclose” that there’s a paid relationship. “There’s a conception of the Internet as open…that you can do what you want,” Habursky says. In addition, until March the FTC hadn’t enforced its regulations on influencers and native advertising. Beyond that, influencers who began doing a blog that suddenly caught fire and attracted advertisers “genuinely don’t know about these regulations,” Habursky says.


Three tips about influencers and disclosure

1. When in Doubt Disclose: “It’s better to be safe than sorry” with disclosure, Habursky says. While influencers and marketers sometimes balk, the prudent brand communicator should recall the FTC’s edicts that disclosures be “clear and conspicuous.”

2. And Do It Often:Particularly with larger works, disclosing more than once is advised. As noted above, the FTC has recommended placing disclosures on videos at several points throughout a video, and at least at the beginning and the end.

3. Explain The Rules: Fitzpatrick and Habursky stress it’s important for brands to, at a minimum, have a 15-minute phone call with its paid influencers at the start of employment so that FTC rules can be explained. Fitzpatrick adds that a copy of the FTC guidelines should be included in the influencer’s onboarding package and that regulatory language appears in the influencer’s contract with a brand. Habursky says, “it’s essential” that brands create their own written rules for influencers as well as observe the FTC rules.

For Subscribers: Sample influencer rules and agreements from Fitzpatrick and Habursky are available to you at: http://www.prnewsonline.com/pr-news-pro-essentials/

Editor’s Note: Joshua Habursky will speak at PR News’ Digital PR & Marketing Conference, June 6-8, in Miami. Details at: http://www.prconferencemiami.com

CONTACT: AFitzpatrick@dglaw.com jmhabursky@gmail.com