Social media campaigns have proliferated as consumers' online presence has grown significantly. Companies across all industries and sectors are using social media to generate buzz about their products, services, and events without any policies or guidelines in place beforehand. Influencers and employees with social media followings can expand the reach of traditional advertising. However, because social media campaigns are informal and viral, this type of marketing is particularly susceptible to advertising laws and regulations.
General Rules Regarding Advertising. The first rule of advertising is always to be truthful – that is, make statements about your brand that you can support. Secondly, make sure the source of the product or service you're promoting is always clear, avoiding false advertising and false association claims. The latter task becomes even more complicated in the world of social media marketing, where celebrities and social media “influencers” post on behalf of companies on their own social media accounts.
Risks for brands and influencers. If you or a brand owner have partnered with a social media influencer or celebrity to promote your product or brand, you may be held liable if the influencer fails to provide proper disclosure. For example, a brand may be held liable for violating the Federal Trade Commission's (FTC) endorsement guidelines or for false advertising under the Lanham Act (15 USC §§ 1051 et seq.), as well as under various other regulations and state laws. Historically, only brands were held liable for social media endorsement violations. However, recently, the FTC shifted its focus to social media influencers and endorsers, settling its first-ever complaint against individual influencers. In that case, two influencers failed to disclose their ownership interests in a company they promoted on their YouTube channels. Regarding CSGOLOTTO Inc.Case No. 162-3184 (FTC Sept. 7, 2017).
Enforcement of the FTC's social media guidelines. Social media campaigns that do not comply with advertising laws and FTC regulations can lead to consumer complaints, reputational damage, FTC enforcement actions, and lawsuits. In 2017, several social media campaigns were reported to the FTC for violating the Endorsement Guidelines. Also, the lack of disclosure in Fyre Music Festival's social media campaigns was the subject of a fraud and false advertising class action lawsuit. To highlight the guidelines, the FTC sent a series of letters reminding influencers of their obligation to disclose required information. Additionally, the FTC updated the “Frequently Asked Questions” section of the Endorsement Guidelines. All of these actions represent an increased risk of liability and reputational damage for brands and influencers.
What do brands and influencers need to know about social media disclosures?
Please disclose any financial ties or sponsorships: Your disclosure must clearly and conspicuously communicate your financial relationship. Using #SPONSORED or #AD at the beginning or end of your post's caption is sufficient. For social media formats that don't allow text captions, the disclosure should be overlaid on the image so it's visible to viewers.
Avoid using vague terms: Don't use vague disclosure formats like #SPON, #PARTNER, #COLLAB, #THANKYOU, or #AMBASSADOR. Even if a marketing campaign is classified as a brand ambassadorship, the term doesn't necessarily communicate to consumers that the influencer has been compensated or paid in any way to endorse the brand. The FTC recommends combining #AMBASSADOR with the full name of the sponsoring brand (for example,#[BRAND]Ambassador).
Disclose every time: Disclose in every post. Even if an influencer and brand are working on a long-term marketing campaign, every post should include some sort of disclosure. New consumers may see new posts and may not be aware of the sponsorship.
Don't clutter your disclosures: Don't hide your disclosure by using multiple tags, hashtags, or links. This format is confusing, especially when multiple hashtags are used at the end of a long caption, as readers are more likely to skip over them and miss your disclosure.
Clarify the relationship: Disclose any employer-employee or ownership relationship. If a social media influencer has been hired by a company to promote a campaign, product, event, contest or sweepstakes, they must disclose their employment relationship. Use a hashtag that combines the company name and “employee” (for example,#[COMPANY]While the words “my company” or “my employer” may be sufficient in some contexts, the FTC suggests that you should clearly state “my company” or “my employer” in the body of your post.
Don't rely on links: Don't assume that tagging a brand or including a hyperlink to the brand's website is sufficient disclosure – readers who don't click on the link won't see the disclosure and won't understand the influencer's relationship with the brand.
Consider the benefits: Always disclose relationships if there is a benefit: If an influencer has received free products, travel, hotel accommodations, or any other form of compensation, monetary or otherwise, some disclosure is required.
Is there anything else brands should be doing to protect themselves?
Social Media Guidelines for Partnerships. When partnering with social media influencers or celebrities for online marketing campaigns, be sure to detail obligations and responsibilities in your contracts. Rather than inserting a general clause in the contract that all parties follow the FTC guidelines, brands should also develop social media guidelines to attach to each influencer agreement. Specific guidelines not only help avoid liability to the FTC, but also provide an opportunity for quality control of intellectual property. For example, if your brand incorporates certain colors into its logo or trade dress, it can encourage its social media partners to incorporate those colors in their campaigns and further require them to avoid colors used by competitors in all marketing efforts.
Intellectual property considerations. Although social media marketing feels more informal, intellectual property rules still apply, and brands should consult with intellectual property counsel to ensure that use of reposted content such as images, logos, videos, and even “memes” does not infringe on third-party rights.
