Last week, the FTC entered into a settlement with Teami, LLC, a marketer of teas and tea-based skincare products that the FTC alleges promoted its products with deceptive, unsubstantiated health claims and endorsements by social media influencers who did not adequately disclose their material connections to (i.e., monetary payments from) the company. The action highlights the FTC’s continued focus on both health claims and influencer marketing.
According to the FTC’s two-count complaint, Teami and its individual owners claimed, without reliable scientific evidence, that their products would treat cancer, clear arteries, significantly decrease migraines, treat colds, prevent flus, cause “rapid and substantial” weight loss and burn body fat.
The defendants also allegedly misrepresented that social media posts by influencers reflected the views of ordinary users of Teami products, failing to adequately disclose that the influencers were paid for their endorsements. According to the FTC, such disclosures must be clear and conspicuous—and, in this context, because consumers’ Instagram feeds typically display only the first few lines of a longer post followed by an option to read more, that means that endorsers must disclose any material connections above the “more” link.
In addition to filing suit against Teami and its owners, the FTC sent warning letters to ten influencers it alleged made inadequate disclosures on their posts.
The settlement prohibits Teami from making the aforementioned unsupported health and weight‑loss claims and requires clear and conspicuous disclosure of any material connection between endorsers and the defendants or their products. It also imposes endorser monitoring requirements to ensure compliance with the proposed court order settling the FTC’s complaint. The defendants must establish a system to monitor and review endorsers’ posts, and they must immediately terminate and/or cease payment to any endorser who misrepresents his or her independence or impartiality or fails to adequately disclose his or her connections to Teami.
Finally, the order imposes a $15.2 million judgment—representing the total sales of the challenged products—which will be suspended upon the defendants’ payment of $1 million, based on their inability to pay the full judgment. Interestingly, the FTC allowed the company to make installment payments over time, which is not typical of FTC settlements.
In a corresponding statement further emphasizing the importance of the influencer issue to the agency, the FTC warns of its “commitment to battling digital misinformation” by seeking “strong remedies” against deceptive advertising, stating that it “will continue to review [its] approach to injunctive relief, and in particular, whether [its] orders adequately ensure that advertisers under order take responsibility for monitoring their marketing.”
Advertisers using influencer marketing need to pay attention to this action and the order, as it provides a clear view into the FTC’s thinking on this issue.