What is influencer marketing?
Influencers get either paid a lump sum and/or get free products that they endorse and present to their followers.
Use of Social Media Bots
Social Media Bots are browser extensions that automate social media activities. Bots can imitate users and post content. The FTC considers social media bots as a violation of the FTC Act. The FTC Act protects people from deceptive and unfair practices in the marketplace. The FTC states that social media bots generate fake content by misleading the consumer to believe that actual people have made the posts, started following a company, or liked a post. The full report can be found here:
Social Media Bots cannot only pose legal issues, but they also don’t serve you to generate new and real content. We recommend working with “real” people and influencers instead of using Social Media Bots.
What do Influencers need to do?
- Disclosure of relationship to the brand
Influencers cannot deceit their followers about their relationship to the brand. The FTC published guidelines for Social Media Influencer in “Disclosure 101 for Social Media”. Influencers have to disclose if they have a material connection with the brand they post about.
A “material connection” to the brand includes a personal, family, employment, or financial relationship This is the case if the brand is paying you or giving you free or discounted products or services.
Financial relationships aren’t limited to receiving money. You have to disclose the relationship if you got anything of value to mention a product.
Under the FTC Act, a claim is deceptive if it is likely to mislead consumers acting reasonably in the circumstances, to their detriment. A practice is unfair if it causes or is likely to cause substantial consumer injury that consumers cannot reasonably avoid and which is not outweighed by benefits to consumers or competition.
The FTC rules state that Influencers have to reveal their relationships to advertisers and the brand. Followers need to understand whether the influencer states his or her own opinion in an organic post or whether this is some sort of collaboration with a brand.
The FTC has published Guides concerning the use of endorsements and testimonials in advertising. These Guides include examples stating whether a post is an endorsement that has to be disclosed or not.
- Where to disclose
Place the disclosure where people can immediately see and understand it. The disclosure should be placed with the post. Don’t place it at the end of the post, especially when users have to click the “more” button. Put your disclosure first, do not hide it in a text or in hashtags.
If you use a picture on Snapchat or in your Instagram Stories, superimpose the disclosure over the picture and make sure viewers have enough time to notice and read it entirely.
If you post a video, the disclosure should be in the video and in the audio and not just in the description of the video.
If you post a live stream, the disclosure should be repeated periodically so viewers who only see part of the stream will get the disclosure.
- How to disclose
Use simple and clear language. The FTC states that simple explanations like “Thanks to brand X for the free product” are often enough if placed in a way that no one can miss. The disclosure should be in the same language as the endorsement itself. You can use terms like “advertisement,” “ad,” and “sponsored.”
On a space-limited platform like Twitter, the terms “BrandName+Partner” or “Brand name Ambassador” are also options.
It’s good (but not necessary) to include a hashtag with the disclosure, such as #ad or #sponsored.
Don’t use vague or confusing abbreviations like “sp,” “spon,” or “collab,” or stand-alone terms like “thanks” or “ambassador”.
Please note, it is not required to use the terms that the FTC suggests, but it is highly recommended to use these terms. The FTC might not fine you for using terms that they recommend.
- No disclosure required
You do not have to add “sponsored post”, or “paid partnership with..” when there is no such relationship with a brand. Meaning if you purchase a product yourself and review it on your social media platform, there is no material connection to the brand that has to be disclosed. Your post must reflect your honest opinions, findings, beliefs, or experience. You do not need to disclose that you don’t have a relationship with the brand. However, this does not apply if the product was gifted to you.
- Liability for statement
Influencers can be liable for the statement itself. You can be subject to civil penalties and damages, as well as private lawsuits under state consumer protection laws or trademark laws. The FTC is considering civil penalties. So make sure you verify information that is given to you by the advertiser. Do not post statements that are false or not scientifically proven, like “ this product will cure cancer”, or “ this product will help you lose 50 pounds in 2 days”. Also, don’t post about a product that you have not tested.
What do advertisers need to do?
- Disclosure of relationship
According to the FTC Guides, Advertisers are subject to liability for failing to disclose material connections between themselves and their endorsers. If you post an influencer’s review or link to his or her website, make sure you disclose if you have a relationship with the influencer. Make sure to remind the influencer to comply with FTC’s disclosure rules as well.
Advertisers need to consider the legal nature of their relationship with the influencer. Most partnerships with free gifted products are based on trust and the parties do not enter into agreements. If a partnership is paid, meaning a post is only made for receiving a payment, some parties enter into a simple agreement.
You might want to consider signing an agreement with the influencer. It is recommendable to ensure that the influencer will not only receive your free products but also post about them.
The agreement should at least contain the following terms:
- Partnership term: what does the influencer get (free sample, which one, how many, when) and what will he or she give in return (post, how many, when, where), what happens if the influencer does not post about a free product.
- Intellectual Property rights: stipulate who will own the rights to posts, videos, pictures about your products.
- Ethical obligations include the terms that the influencer has to follow including the FTC rules and your brand’s reputation, values.
- Data Protection and Privacy Laws: ensure that influencers and their websites, blogs comply with data protection laws. This is especially important if you work with international influencers located outside the U.S.
- Licensing: consider if you have certain rights to pictures, songs, etc. that an influencer might want to use.
Before signing a contract and while negotiating it is recommended to sign an NDA. Make sure confidential information exchanged with the influencer is not disclosed in the post or to any other person.
- Liability for influencer’s statement
The advertiser can be liable for misrepresentations made through the endorsement by the influencer. It is important to only communicate true facts to the influencer. Do not present facts about your products that do not exist. An advertiser can even be liable if he does not present false facts but if the influencer posts false or misleading facts. Controlling the influencer’s post can be tricky since the influencer is supposed to give his or her own honest opinion.
To limit its potential liability, the advertiser should provide guidance and training to its influencers concerning the need to ensure that statements are truthful and substantiated. The advertiser should also monitor influencers and take the steps necessary to halt the continued publication of deceptive representations when they are discovered.
We recommend working with known influencers that can be trusted to follow the rules. Scroll through an influencer’s profile before collaborating and double-check other posts.
What happens if Influencers and advertisers do not comply?
Violating FTC rules can result in penalties and fines if the FTC has reason to believe that the influencer has violated the rules. Influencers can also be subject to private lawsuits brought by users or the brand. Advertisers can be subject to private lawsuits brought by followers that read the influencer’s post.