Social Media Law Today

Brands, marketers, and influencers, take note: the FTC is inspecting social media posts for compliance with the duty to disclose “material connections”: any type of connection, usually financial in nature, that might affect the weight a consumer would give to a post if they knew about the connection between the “endorser” and the brand being endorsed.

Why would the @FTC bother to worry about “sponsored” social media posts? For the FTC, transparency in sponsored social media content is a matter of “truth in advertising”. It is considered misleading not to inform consumers about material connections between social media influencers and the brands they post about.

On September 20, 2017, the FTC hosted on its official Twitter page, @FTC, a Twitter chat on Influencer Marketing Compliance. Using the hashtag, #Influencers101, the FTC featured a live Q&A it called “Office Hours: Social Media Influencers 101”.

At the start of its chat, the FTC tweeted out a link to a press release from September 7, 2017 that announced the three important Influencer-Marketing enforcement actions from Commission:

1. The filing and settling of the Commission’s “First-Ever Complaint Against Individual Social Media Influencers” for failing to comply with the FTC’s sponsored content guidelines (In this particular case, the influencers touted their own company in YouTube videos, but failed to disclose their ownership interest in their company – and they also paid other influencers to promote their company without disclosing their relationship.);
2. The issuance of “warning letters” to 21 influencers and marketers from a group of more than 90 who had previously received “education letters” from the FTC informing them of their duty to make “clear and conspicuous” disclosure of sponsored content (The follow-up letters demanded information relationships and on corrective measures.);
3. Updated its Endorsement Guides with more than 20 additional Q&A on how to disclose “material connections” in social media posts.

The Takeaways from the FTC’s #Influencers101 Twitter Chat

1. Brands, marketers, and influencers each have independent duties to ensure disclosure of “material connections” or sponsored content in social media posts.
2. Receiving a free product without a request for endorsement still requires a disclosure by the recipient if the recipient chooses to post about the product.
3. “Don’t assume that disclosures built into [social] platforms are sufficient”.
4. Current “built-in” YouTube, Facebook or Instagram disclosure tools don’t comply with the FTC’s standards of disclosure, tweeted the FTC. 
5. “#Ad” or “ad” may work as an adequate disclosure. The word or hashtag “ad” may be a sufficient disclosure of a sponsored brand relationship “as long as it’s easily noticed”.
6. Hashtag “XXPartner” may also work as a disclosure “when XX is the brand name.”
7. #Paid may also be adequate as a disclosure when it is easy to see.
8. #Ambassador does not work as a disclosure. It is too “ambiguous”.
9. Beware cluttered (inadequate) disclosures. Placing the disclosure “#ad” in a string of hashtags or links may not meet the required threshold of “clear and conspicuous” disclosure as the disclosure might “go unnoticed”.
10. Be upfront with your disclosures. It is best to place the disclosure “in the beginning of a post” “whenever possible”.
11. In Snap or Instagram (IG) Stories, disclosure can (and should) be made by superimposing an image with the required disclosure – it should be “easy to notice and read”.
12. Every post in a series of “disappearing posts”, like on Snap or IG Stories, does not need to include a disclosure notation. Disclosure on the first post, tweeted the FTC, “could be good enough if it stands out and viewers have time to notice it.”
13. On Pinterest, a proper disclosure could be made superimposed on an image or contained in the image description as long as it is “clear and conspicuous”.
14. An image may be used as a disclosure rather than text “if it stands out, followers can’t avoid it, and they understand it.”
15. Employee/employer relationships. A disclosure of your connection to a brand should be made if you work for a brand and are posting about your brand – even if you weren’t paid for a specific post.
16. “’IF’…your followers know that you are paid to endorse a product…” then no disclosure is needed. The FTC’s commentary on this point continued into a second tweet: “but…If a significant portion of your followers don’t know” of your relationship to the brand or product, the relationship should be disclosed. What’s a “significant portion”? The FTC doesn’t say.
17. Err on the side of disclosure. The FTC tweeted that determining whether followers are aware of a relationship between an influencer and a brand “could be tricky in many cases, so we recommend disclosure.” (The UK’s regulatory authority, the ASA, which follows a standard of disclosure similar to the FTC’s, sanctioned tweets by a well-known soccer player and a well-known brand, rejecting the argument that most of the player’s fans and followers would know of the athlete-brand relationship.)
18. What about when influencers are posting from another country? Sorry, no break here: “US law applies when it’s reasonably foreseeable that posts will affect US consumers”, the FTC tweeted. It also cautioned that foreign law might apply as well.
19. What about non-US influencers? “US law applies when it is reasonably foreseeable that posts will affect US consumers.” (If posting about products or services sold in the US, influencers from other countries should follow the FTC’s standards on disclosure.)
20. What about influencer giveaways? Influencers should disclose when giveaways are sponsored by a third party.
21. There is no FTC process for certifying compliance with disclosure requirements. The FTC did tweet that its staff is “happy to give informal guidance.”
22. A “like” is an endorsement … and could get you in trouble. One tweet asked under what circumstances would disclosure be required when “liking” something. The FTC answered: “Our enforcement policy isn’t changing and we recognize some platforms don’t permit disclosure.” An abundance of caution might counsel against “liking” certain posts or accounts when there is a sponsored or “material” relationship and no mechanism for the required disclosure. – Or one might throw caution to wind considering it to be a trifling (de minimis) infraction. Perhaps echoing this last point, the FTC tweeted: “Before taking any action, we’d have to answer whether simple likes are material.”
23. Brands should monitor and follow up with their influencers to ensure compliance with the FTC guidelines.  “Dismissal” of an influencer by a brand may protect a brand from compliance complaints where an influencer fails to make the necessary disclosures.
24. Affiliate links should be disclosed.
25. The FTC is willing to answer additional questions about Influencer Marketing. Email: ENDORSEMENTS@FTC.gov

 FOR THE LATEST TRENDS IN SOCIAL MEDIA LAW, please join me on Twitter: @NewTechLaw

Additional reading:  FTC ‘s First Social Media Enforcement

September 7, 2017. Washington, D.C.

CISCO LOTTO co-owner, influencer Trevor Martin, jumps for joy – as he wins at his own game.

Although the writer of this post, Glen Gilmore, is an attorney, nothing in this post should be considered legal advice as facts, circumstances and new rules may impact the regulatory obligations discussed. For legal questions, consult with an attorney from your jurisdiction.

Ratcheting up its focus on Influencer Marketing, the FTC announced three new actions in a single day.

1. Law enforcement. The FTC issued its first enforcement complaint against individual social media influencers for failing to comply with its Endorsement Guides, guidelines requiring online endorsers to “clearly and conspicuously” disclosure any “material connection” (i.e., “business or family relationship, monetary payment, or the gift of a free product”) they have to a brand they endorse. It is a hybrid case as the influencers are also the owners of the brand they endorsed.
2. Warning letters. From a group of 90+ influencers and marketers who received an “educational letter” from the FTC in April of 2017 cautioning compliance with the FTC’s social media disclosure requirements, the FTC has issued 21 follow-up “warning letters”. The warning letters require the recipients to respond by informing the FTC whether they have a material connection with brands identified in their subsequent social media posts. ”If they do,” said the FTC, “we’ve asked them to spell out the steps they will be taking to make sure they clearly disclose their material connections to brands and businesses.”
3. Updated guidance for influencers and marketers. The FTC also just updated its Endorsement Guides: What People Are Asking, a question and answer guide about endorsements focused on social media. Its update answers more than twenty new questions concerning influencer marketing and how legally-required disclosures of “material connections” should be made on social platforms.

Academy-Award-Worthy Example of Why Disclosures Are Needed

Online influencers come in many stripes. Gamers are one.

The touchstone of influencers is that they have significant online communities that trust them and are inspired to follow them and the lifestyle choices they share in their posts. Their endorsement of a product or service often inspires action.

A 2016 Influencer study by Twitter found that “Nearly 40% of Twitter users say they’ve made a purchase as a direct result of a Tweet from an influencer.”

In the case of two influential online gamers, Trevor Martin and Thomas Cassell, who are the subject of the FTC’s first-ever enforcement action against individual influencers, their passionate endorsement of a betting site came with much excitement, many tweets, videos, and Facebook posts – but no disclosure of their modest “material connection” to the gambling site. (They were president and vice president, respectively, of the company that owned the gaming site.)

In all the excitement and shouting that takes place in one of Trevor’s online betting episodes, would one ever have imagined from the experience that Trevor owned the betting site he was gambling and winning on? Likely not.

Would you be likely to guess from Thomas’ tweet that he was one of the owners of CSGOLotto? I’m guessing not.

The dynamic duo of Trevor and Thomas also paid other influencers to promote their gaming site. Not surprisingly, they failed to inform the influencers they had hired of their duty to disclose their material connection to the company when promoting the brand.

The FTC separately announced a settlement of the complaint. If you’d like to comment on the case or settlement, you’re certainly welcome to do so here, but know that the FTC is also inviting public comment through October 10, 2017.

21 New Warnings (with Demand for Explanation)

Follow “Educational” Letters

21 of 90+ Instagrammers and marketers who received “educational” letters from the FTC earlier this year informing them of their responsibility to “clearly and conspicuously” disclose “material connects” when they are endorsing brands seem to have failed the FTC’s effort at education. They have now received “warning letters” from the FTC reminding them of the earlier correspondence and demanding more information about recent social media brand endorsements they have made.

A Photo Tag of a Brand IS an Endorsement Triggering Disclosure Duties

In its new warning letter to influencers and marketers, the FTC noted that is staff believes that “tagging a brand is an endorsement of the brand”, triggering disclosure requirements. Celebrities, influencers, and marketers beware!

FTC Issues Expanded Guidelines

What Does NOT Work as a Lawful Disclosure?

Sorry influencers, the FTC just threw out several hashtags commonly used as a subtle way of attempting to disclose sponsored content: #thanks, #collab, #sp, #spon, or #ambassador.  And burying a disclosure so it doesn’t appear on a mobile display, as in below the first three lines of an Instagram post, doesn’t work either.

How Do You “Snap” a Disclosure?

According to the FTC’s latest enforcement guidelines, where a platform only provides for image sharing and a user is sharing sponsored content, the endorser should: “superimpose your disclosure over the picture in a clear font that contrasts sharply with the background.”

FTC Tightens Its Policing of Influencer Marketing

The overarching lesson from the FTC’s latest volley of influencer marketing announcements? The duty to disclose material connections in social media endorsements, regardless of the platform, is a duty shared by brands, marketers, and influencers – and the FTC is proactively scanning social media for compliance.

TAKEAWAYS

• Influencers will now be held personally responsible for their duty to clearly and conspicuously disclose material connections when making endorsements in social media.
• The FTC is shifting its traditional endorsement disclosure compliance focus from brands and marketers, to include influencers.
• If you hire influencers (i.e., give them anything of value), you must educate them on their duty disclose, monitor them for compliance – and take action if they fail in their duty to disclose.
• Tagging a brand in a photo is now considered an endorsement, creating a presumption of the duty to disclose any material connections between the endorser and brand.
• “Ambiguous” disclosures, such as #Thanks or #Ambassador or #Collab are ineffective disclosures.
• If you Snap branded content and have a material connection with the brand, you must superimpose a disclosure on the image you have shared.
• Just because a social network has created a “disclosure” mechanism does not mean that it will satisfy the FTC’s disclosure requirements – you cannot abdicate your duty to disclose by simply relying on a social network’s latest disclosure tool.

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