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Consumers frequently feel a personal relationship with the influencer they like, subscribe to, or follow. Marketers tap into this relationship and attempt to use it as a proxy to sell their own products and services. This has become a major part of businesses’ advertising strategies; during the pandemic, there was a trend to use less-scripted content as channels like TikTok rose in popularity.
As with any new medium in the digital world, this type of advertising created a murky legal landscape. Now, however, regulators have established legal requirements for disclosing relationships with brands and are enforcing those rules. If you are aspiring to become an influencer or are considering working with one to build your business, it is important to be aware of the new rules for the digital world, which include Federal Trade Commission (FTC) requirements, the Children’s Online Privacy Protection Act (COPPA), and special rules for “kidfluencers.“
The wild west no longer: FTC reaches out to influencers
The Federal Trade Commission is the United States government body that watches the marketplace for unfair and deceptive practices, including on social media. In April of 2017, the FTC wrote 90 letters warning top influencers to make sure they disclose their relationships with advertisers. These letters indicated that “influencers should clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.” In September 2017, 21 of those influencers received a follow-up letter identifying specific social media posts that FTC staff was concerned might not be in compliance with FTC’s endorsement guides. Today, individuals looking to become influencers or businesses looking to partner with them should look closely at the FTC guidelines to avoid legal trouble.
FTC Guidelines: Disclosures 101
To help influencers and content creators follow the regulations, the FTC released Disclosures 101 for Social Media Influencers, which focuses on the importance of disclosing when an influencer has a “material connection” with a brand or advertiser. A material connection could be a financial, employment, personal, or family relationship with a brand, and includes free or discounted products. If a material connection exists, the influencer should disclose it. It’s that simple.
Best practices for disclosures include:
- Use simple and clear language in posts or videos that states there is a material connection.
- If making an endorsement of a product in a video, the disclosure should be in the video itself and not just in the video’s description on the platform.
- Disclosures should be at the top of a longer post or article (before a user has to scroll down or tap “more”). Remember that smart phones sometimes show less than a computer screen, so disclosures must take mobile into account. Disclosures in an “About Me” section do not count; it needs to be with the posting.
- Avoid placing disclosure hashtags where they can be missed by consumers. For example, if an #ad hashtag is at the very end of a long post or in the middle of a long string of text, the consumer might miss it.
- If making an endorsement in a livestream, repeat the disclosure a few times, in case a viewer has started watching later in the stream.
The FTC recommends in their Endorsement Guide:
- Clearly disclose when you have a financial or family relationship with a brand.
- Do not assume that using a platform’s disclosure tool is sufficient.
- Avoid ambiguous disclosures like #thanks, #collab, #sp, #spon, or #ambassador.
- Do not rely on a disclosure placed after a CLICK MORE link or in another easy-to-miss location.
In its endorsement and testimonial guidelines the FTC notably underscores that it is better to err on the side of disclosing a relationship with a brand. And critically, influencers should avoid making false or unsubstantiated statements in their posts to avoid legal action against them or their marketers. Therefore, if you’re endorsing a product, you should not make any claims that can’t be backed up by proof, such as scientific evidence that a product can treat a particular health condition. The FTC is currently reviewing these guidelines for possible changes. Stay tuned for any updates.
So, if you are a content creator who’s being paid to promote a new skin clearing product on your preferred platform, make sure you clearly disclose your relationship with your advertiser and avoid making statements that cannot be substantiated with facts and science.
Army of bots: Legal actions regarding fake followers
Disclosing a material connection is not the only legal issue businesses and new influencers should look out for. If you are an influencer and are considering ways to build your impact, don’t be tempted to artificially inflate your followers using “bots” (a computer program that simulates human behavior) or other techniques. Some studies suggest that around 20% of followers for mid-tier influencers are artificial bots; this practice could be subject to government investigation and challenge. The FTC has made clear, for example, that:
If “likes” are from non-existent people or people who have no experience using the product or service, they are clearly deceptive, and both the purchaser and the seller of the fake “likes” could face enforcement action.
In 2019, the FTC took legal action against a company that was allegedly selling fake followers and “likes” that influencers could add to their accounts. The owner of a company called Devumi was fined for allegedly selling fake indicators of influence on LinkedIn, Twitter, YouTube, Pinterest, Vine, and SoundCloud. And it’s not just the federal government that’s looking into this conduct; the New York State Attorney General has also settled with Devumi on the same issue.
Beware of legal issues related to kidfluencers
In the world of influencers and content creators, “kidfluencers” are content creators who are children. Oftentimes, they create videos that share moments of playing, posing, or unboxing a toy. Brands have tried to reach the millions of followers popular kidfluencers have. In some cases, advertisers will pay $10,000 for an Instagram post of a popular kidfluencer or $45,000 for a video on YouTube. Because the kidfluencer space involves making money from children, it has attracted the attention of lawmakers and regulators.
If your child happens to be making money as a kidfluencer, be aware of the FTC disclosure requirements discussed above. Also, consider talking to an attorney about complying with your state’s child labor laws, which may require putting earnings in a trust. Additionally, kidfluencer accounts should be managed by a parent or a guardian. Failure to do so may be a violation of a social media company’s terms of service and could lead to blocking or banning an account.
Complying with COPPA
The Children’s Online Privacy Protection Act, also known as COPPA, is a major law in the United States that covers when you are allowed to advertise to children online.
Recently YouTube modified its practices in the kidfluencer space as the result of a recent FTC and New York Attorney General settlement covering COPPA. Notably, the settlement included a large civil penalty payment by YouTube and its parent company, Google. It also spoke to the obligations of the content creators themselves: content creators who make videos for kids have to clearly label their content as child-directed or they may face liability. This has caused some content creators to alter their practices; some have mixed up their content on YouTube to focus on teen audiences, and others have moved their videos to their own apps and websites. Therefore, if you are thinking of having your child enter the kidfluencer space, consider brushing up with your attorney about your possible obligations under COPPA.
Don’t be deceptive: the digital world depends on trust
We all benefit from the interconnected digital world, including the new opportunities for commerce provided by the world of influencers and content creators. If you are considering becoming an influencer or are working with one to promote your business, be sure to follow the rules to preserve trust for both businesses and consumers.
This is one of two articles about social media influencers. Both articles can be found at BBB.org/Ad-Truth and were created with financial support provided by Google.