With the holiday shopping season in full swing, companies will soon begin the annual fight for every consumer dollar. But before companies can make the sale, they will face an even more daunting task: grabbing customer attention in the crowded world of online shopping.

As social media companies integrate shopping features into their base platforms, an industry shift often called “social commerce,” influencer marketing becomes an increasingly important method for driving sales.

As innocuous as those 30-second influencer marketing social media clips may seem to be, companies and influencers should be aware that the Federal Trade Commission (FTC) is keeping a watchful eye. This month, the agency issued dozens of warning letters to influencers for the lack of adequate disclosures in their social media posts as required by the recently updated FTC Endorsement Guides.

Among other requirements, the guides state that influencers must disclose any material connection between the influencer and the product they are marketing, noting that material connections are those that might affect the weight or credibility that consumers give an endorsement.

These disclosures must be clear and conspicuous, which the FTC defines as difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers. Disclosures should match the method of marketing used for the advertisement. The guides should also specifically indicate that social media disclosures need to be unavoidable. For example, if the influencer’s post incorporates both visual and audible elements, the disclosures should also be visual and audible as well.

Certain recipients of these most recent warning letters appeared to rely on the social media platforms’ built-in functions for influencer marketing and their disclosure tools, which generally allow for generated descriptive captions to be placed beneath each “paid partnership” post.

Within the letters, the FTC reiterated the agency’s concern with the conspicuousness of these disclosures built through the provided tools, noting that it often finds these tools inadequate under the “clear and conspicuous” standard. The FTC identified several issues, including the following:

  • Longer descriptions are generally truncated, with only the first two or three lines displayed unless viewers click on the text description
  • Text descriptions are usually small print, located at the bottom of the screen, are sometimes in a poorly contrasting appearance, and fail to stand out
  • Videos have many competing elements, making those disclosures even less prominent
  • Insufficient context is provided with the disclosures, with some relying solely on “#sponsored”
  • In a pair of recent warning letters to two associations, the FTC urged those associations to review their social media policies to ensure compliance

Not only are advertisers subject to liability for their influencers’ failure to make sufficient disclosures; companies are also liable for misleading or unsubstantiated statements. Companies contracting with or utilizing influencers should approach this marketing method with caution, as mistakes can be costly: civil penalties of up to $50,120 per violation may be issued.

It may be a busy shopping season, but the FTC is not as easily distracted by bright lights and cheerful videos.

For a broader discussion on the newly updated guides, watch our recent webinar, “From Clear and Conspicuous to Unavoidable? The FTC’s Updated Endorsement and Testimonial Guides.”

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