Big day at the FTC for influencer announcements! The FTC announced its first ever settlement with social media influencers. At the same time they followed up with a second round of warning letters to a large group of influencers. Finally the FTC updated its FAQs on endorsements with some guidance, including its current views about what phrases are and are not clear in disclosing a material connection. Let’s debrief:
Unlike the unfortunate settling social media influencers, the FTC in its consent order against the online gaming community influencers, Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, is loud and clear about its stance regarding marketing and promoting on social media – clearly disclose any business ties or financial incentives. In other words, a social media influencer must disclose all material connections, if any, to the product or service he or she endorses.
According to the FTC’s complaint against TmarTn and Syndicate, beginning in 2015, the social media influencers operated and advertised the csglotto.com website. The CSGO Lotto name is based on the first-person shooter video game Counter-Strike: Global Initiative. The game allows players to collect virtual items that can be bought, sold, and traded for real money. CSGO Lotto capitalized on this feature by enabling consumers to gamble the virtual items as currency. The charges in the complaint alleged that the social media influencers promoted YouTube videos about their company without revealing their co-ownership role in the company. Additionally, the complaint alleged the TmarTn and Syndicate paid other influencers thousands of dollars to promote CSGO Lotto on YouTube, Twitch, Twitter, and Facebook without requiring them to include any sponsorship disclosures and prohibiting them from making disparaging remarks about the gambling website. While so much of the focus in this case and in general is on material connection disclosure, there are other important elements of the Testimonial and Endorsement Guides. For instance, the influencer’s statements must reflect the truthful experience of the reviewer and, if the claim is performance based, that the result must reflect the typical experience a user can expect. In this action, the FTC was also troubled that the influencers were allegedly required to post only positive comments about the gaming service, without regard to what they really thought. (As an aside, for those who digest each word from the FTC like we do, you might recognize Syndicate as one of the influencers noted in the Machinima complaint as posting about his game experiences without adequately disclosing that he was paid. Makes one wonder if this case came about because the watchful eyes of the FTC’s Enforcement Division were keeping a close eye on his posts?)
As the first of its kind, today’s consent order prohibits TmarTn, Syndicate, and CSGO Lotto from making any misrepresentation that any endorser is an independent user or ordinary consumer of a product or service. The consent order also requires them to clearly and conspicuously disclose any unexpected material connections with endorsers. It is important to point out that the FTC, in this case, charged two specific social media influencers and their company but has yet to charge an independent social media influencer for failing to disclose a material connection to a separate company. However, for the FTC to take this next step, we predict, is a matter of when – not if.
To that point, we previously blogged about the FTC’s sweep of influencers and the 90 “educational letters” it sent. Today, the FTC followed up with 21 “warning letters” (a sample letter can be found here) telling the influencers to disclose their business interests when sharing paid posts about brands or advertisers. The warning letters cite specific social media posts and provide details on why they may not comply with the FTC’s Endorsement Guides. These letters ask the influencers to follow up with the FTC directly.
To cap off a busy day, the FTC’s Endorsements Guides FAQs were updated and the FTC created a useful infographic that includes the “do’s” and “don’ts” for social medial influencers. The updated version of the Guides includes additional information that covers things like Instagram tags and how to meet FTC standards for disclosure on Snapchat or Instagram Stories. A few new tidbits in the FAQs on acceptable disclosure language: (1) #ambassador is not ok but #[BRAND]Ambasssador probably is, assuming the brand name is one people would recognize and (2) #consultant is not ok but #[BRAND]Consultant might be. While the FTC Staff seems to like the brand name in the disclosure, and we know they like #ad, they don’t seems to like #[brand]ad using all lowercase letters, as readers’ might not parse out that the disclosure is explaining the post is an ad for a brand.
If you haven’t been influenced by the FTC enough today, you can watch FTC Acting Chairman Ohlhausen’s message (with all appropriate material disclosures) to influencers here.