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January 17, 2017 | BusinessFrom the blog

Instagram Famous: The Feds are Watching

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You like to stay on top of the trends, and Instagram is one of the best places to find out what’s new and cool.  One of your favorite celebrities just posted about a new product she says looks great, feels great and IS great. Now you NEED to get it for yourself!

But wait, suppose that celebrity works for the company that sells that product—or at least has been paid by the company to tout it.  Isn’t that something you would want to know when evaluating her glowing recommendation?  You bet.  In fact, it might even make you doubt whether the product is as good as she says it is.

This is the situation the Federal Trade Commission (“FTC”), the government enforcement agency that monitors product advertising on social media, is trying to address.  Social media contracts and influencer agreements are on the rise as companies try to reach consumers on non-traditional platforms.  In June 2015, the FTC issued guidelines relating to online testimonials and endorsements, specifically aimed at online influencers, leading up to a recent crackdown of undisclosed endorsements.  If you are an influencer, athlete or other public figure using social media to help endorse products, here’s what you need to know to avoid trouble with the FTC.

When an Influencer Needs to Disclose

The rule of thumb in this area is as follows:  if there is a connection between you and the marketer (the product or company you’re endorsing) that consumers would not expect and would affect how consumers evaluate the endorsement, that connection should be disclosed.

When does such a connection exist?  When either: (1) the endorser has been paid or given something of value (including the product itself) or (2) the endorser is an employee or a relative of a person in the company.  The obvious connection comes when someone gets paid to mention a product.  In such a case, an influencer would have to disclose such a connection.

The not-so-obvious connection comes when you receive free products or other perks.  If the company gives you a “free” product with the expectation that you’ll promote or discuss the product online, you will likely have to disclose this.  If a company is giving away free samples at random, you may not have to worry.  Again, the distinction is whether knowing about the “gift” of the product would affect the weight or credibility your readers give to your recommendation.  Aside from products, this also applies to sweepstakes, contests and even “free” meals at restaurants.

How an Influencer Can Disclose

The second thing you should know is how to disclose a relationship with the product or company that you’re endorsing.  A disclosure must be a “clear and conspicuous” statement that informs the reader of your relationship with the marketer.  Specific language is not required: a simple disclosure like “Company X gave me this product to try…” will usually suffice.  However, this disclosure needs to be in close proximity to the claims to which they relate, in a font that is easy to read and in a shade that stands out against the background (when applicable).  Video ads need to be on the screen long enough to be noticed, read and understood, and audio ads need to be read in a manner that is easy to follow and understand.

What about when using Twitter, where every character counts?  The FTC says that “sponsored,” “promotion” or even “#ad” would likely suffice to properly disclose your connection to the marketer.  Brands may have specific hashtags that they ask influencers to include in their posts.

If you are interested in soliciting endorsements, it may be a good idea to consult an attorney or talent agent.  An experienced professional can guide you through the best disclosure and compliance practices, give you tips on developing your career, and advise you on your specific situation.

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