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Consumers are becoming increasingly aware of paid influencer marketing. And many are taking to social media to voice their displeasure at and resentment of some of the practice’s more dubious tactics.

Case in point: in early 2019 the luxury watch brand Audemars Piguet was a target of consumer wrath on social media. The use of influencers to promote the launch of its new watch collection, Code 11.59, went awry, creating a sense of distrust among certain consumers.

Consumer backlash isn’t the only reason influencers should be transparent about their relationships to the brands they tout. But consumer concerns go hand in hand with the concerns of watchdog agencies like the Federal Trade Commission (FTC). The user’s comment perfectly sums up the problem — the confusion caused by the lack of disclosure in influencer marketing. Learn more about the importance of disclosure by reviewing these recent FTC developments involving influencers.

The FTC’s Role

It’s getting crucial for influencers and the businesses that work with them to keep up to date on FTC guidelines and actions on sponsored endorsements. The FTC is a U.S. government agency. It’s tasked with protecting consumers and ensuring that businesses don’t mislead them or engage in anticompetitive practices. Ignoring or defying these developments, especially when it comes to disclosing endorsements, could potentially bring influencers, marketers, brands and businesses legal trouble.

The FTC takes the business of online influencer endorsements very seriously. It recently took action against influencers whose practices it deemed misleading — YouTubers Thomas Cassell and Trevor Martin. The reason? Although Cassell and Martin owned CSGO Lotto, a gambling website, they endorsed it on social media without disclosing that it was their company.

CSGO Lotto Law Enforcement Complaint and Settlement

In 2015, Martin started posting some specific videos on his YouTube channel. These featured him gambling on and praising the CSGO Lotto site, even tweeting that he had won $13,000 on the site in five minutes. In Cassell’s videos, he also enthusiastically claimed to have won thousands of dollars on CSGO Lotto.

The videos and tweets portrayed Cassell and Martin as impartial users of the CSGO Lotto site. And they had a wide reach — Cassell’s videos alone racked up more than 5 million views. The problem? Neither Cassell nor Martin followed the FTC guidelines to disclose their material connection to the company — the fact that they owned it.

The FTC’s complaint also charged that Martin and Cassell paid gaming influencers to post about their big wins on CSGO Lotto on social media sites. These influencers also portrayed themselves as impartial users of the site and failed to disclose that they had any connection to the company.

The FTC settled the charges with an order prohibiting Cassell, Martin and CSGOLotto, Inc. from misrepresenting endorsers as independent users. The FTC also mandated that they make clear and conspicuous disclosures of material connections.

Brands and Influencers Get Warnings

In April 2017, the FTC sent more than 90 letters to brands and influencers, including well-known athletes and celebrities. These letters were intended to alert and/or remind the recipients about remaining up front about their relationships with brands and marketers.

The FTC even sent follow-up letters to 21 influencers warning that certain social media posts might not meet the FTC’s endorsement guidelines. The FTC asked recipients to clarify their relationships with brands and businesses in those posts and clearly disclose any material connections to the brands.

Updated FTC Guidance About Influencer Endorsements

It became clear to the FTC that there was a big need to explain ground rules in the wild, rapidly evolving world of influencer endorsements. So, the organization released a new version of The FTC’s Endorsement Guides: What People Are Asking. The brochure answers common questions about endorsements, influencers, bloggers and social media.

Below are some of the brochure’s most important requirements and tips for influencers to ensure that they’re complying with the FTC law. The law falls under Section 5 of the FTC Act prohibiting deceptive advertising.

  • Spell out clearly any financial or family ties you have with a brand. Consumers need to know if you have a connection that might affect your objectivity in posts about the product or service.
  • Don’t rely on a platform’s built-in disclosure tools to do the job for you. These types of disclosures might not be clear to consumers.
  • Make sure your disclosure is very clear and easy to understand. Don’t use abbreviations or lingo like #spon or #thanks that could be confusing or vague to consumers. Make it crystal clear that you got something for free and/or were paid for your post. It can be as simple as “[Name of company] gave me this product to try.”
  • Put your disclosure in a place that’s easy to see. For example, don’t put it after a “Click More” link. If your platform only has images, put your disclosure right over the image in a font that’s easy to read. Don’t hide your disclosures in a string of hashtags where they’re difficult for consumers to notice.
  • When it comes to video, make sure the disclosure stays on the screen long enough for people to read and understand it. Audio disclosures should be easy to hear and understand.

The guide also includes specific suggestions on how influencers should disclose gifts like free meals from restaurants, products or trips from travel industry providers. It also addresses the need for influencers to be truthful in their reviews. For instance, if the product or experience was awful, the review must reflect it. The influencer must have also actually tried a product or service in order to review it.

The FTC’s response to the brave new world of influencer marketing has prompted a host of questions from marketers and influencers. It’s left many wondering about what exactly constitutes adequate disclosure.

To that end, the guide answers questions on topics like disclosure when company employees post on review sites discussing their employers’ products. Additionally, the guide outlines how disclosure requirements apply to programs like social media contests, sweepstakes, affiliate and network marketing, and live-streaming.