The Federal Trade Commission (FTC) recently issued warning letters to social media influencers regarding inadequate disclosures in their product-promoting content. This is notable because influencers often depend on sponsored posts for monetary or product compensation. Influencers typically disclose these posts as sponsored or advertisements. However, the FTC’s updated guidelines impose stricter disclosure requirements. As explained below, content creators must “clearly and conspicuously” disclose all sponsored posts to avoid potential penalties of up to $50,120 per violation.
In November 2023, the FTC sent official warnings to twelve social media influencers and two trade associations for failing to adequately disclose their connections to each other in social media posts. The American Beverage Association (AmeriBev) and the Canadian Sugar Institute had been working with influencers to create content that either endorsed aspartame as a safe artificial sweetener, or promoted the consumption of products that contain sugar.
The FTC’s issue with these posts were that the influencers’ working relationships with the trade associations were either not disclosed in the sponsored posts or were disclosed in a way that was difficult for followers to see. As a result, the FTC deemed these posts to be deceptive and misleading for the average consumer.
Per the FTC’s updated advertising guidelines, properly disclosing material connections to a company is the best way for content creators to avoid getting into trouble. Importantly, it should be noted that simply using a social media platform’s in-house disclosure tool (such as the sponsored tool on Instagram) may not be enough. Depending on the type of content being created, there are a few ways to properly disclose a content creator’s relationship with a brand or company.
For video content, such as a TikTok or an Instagram reel, content creators should disclose that the video content is sponsored in two different ways. First, the content creator should audibly disclose in the video that the content is sponsored and explain the material connection with the product or company. Second, the content creator should make sure that there is a written disclosure in the caption or text of the video that explicitly states the content is sponsored. This written disclosure should be easy to find and should not require the consumer to have to scroll down and open the entire video.
Text and Photo Posts
Sponsored content that are photos, like posts on Instagram, or text only, such as tweets, should also include explicit, written disclosures about the content being sponsored. Like video posts, this written disclosure should be easy to locate. Disclosures in the form of a hashtag, like #sponsored or #ad, are allowed, but these disclosures also need to be easily found and not buried in the comments section.
The penalties for violating the FTC’s new advertising guidelines could be costly. For example, the influencers and trade associations involved in the aspartame and sugar sponsored posts were given 15 business days to let the FTC know what they have done to address its concerns. Otherwise, the respondents could face civil penalties up to $50,120 per sponsored post. With that kind of liability in mind, it is imperative that content creators and influencers adequately disclose sponsored content and promotional relationships.
An experienced attorney can work with content creators to ensure they are complying with all of the FTC’s guidelines. Contact a member of our team to learn more.