Brands are increasingly turning to social media influencers to promote their products and services through organic and immersive content. Social media campaigns using influencers allow brands to benefit from the creativity and likeness of a content creator, resulting in advertising that can feel more natural and authentic to target audiences. Despite this shift, and even when influencers have creative freedom, the legal standards governing commercial speech have not changed; a claim that is deceptive, unfair, or unsubstantiated in a magazine ad or said by paid actors in a TV commercial is equally unlawful when it is tucked into an Instagram Story or Reel by your favorite content creator. Regardless of how organic or bespoke the content may be, brands should apply the same rigor to influencer campaigns that they employ for traditional advertising.
A common misconception is that brands who "gift" products or services are not subject to Federal Trade Commission ("FTC") regulations. These informal arrangements, like a brand simply providing an influencer with free products or services, without any express or implied obligation for the influencer to post, must nevertheless comply with the FTC Guidelines, 16 C.F.R. § 255. Published guidance by the FTC ("Guideline FAQs") makes clear that when a brand sends influencers free, unsolicited products, it should also "ask them to clearly and conspicuously disclose the gift in any resulting social media posts or other endorsements, tell them how it should be disclosed, and ask them to tag the brand." If the fact that the influencer received a free product or service may affect how a brand's audience views the influencer's testimony, disclosure is recommended. FTC enforcement history underscores the risk. In 2020, the FTC extracted a $15.2 million judgment against a tea and skincare product company that had promoted its products using deceptive health claims and endorsements by social media influencers without adequate disclosures.
When it comes to influencer campaigns, focusing on (1) adequate disclosure of influencer/brand relationships and (2) substantiated, accurate, content is key to help ensure legal compliance.
- Adequate Disclosure of Relationship
- Whenever an influencer has a material connection with a
brand—that is, any personal, familial, or financial
relationship between the influencer and the brand, however
fleeting, including the brand providing the influencer with free
products or services—both the influencer and advertiser must
ensure a "clear and conspicuous" disclosure. 16 C.F.R.
§ 255.5. The FTC defines "clear and
conspicuous" as "difficult to miss and easily
understandable."
- The disclosure must be formatted to match the platform's user experience: up-front in the first lines of an Instagram caption, on-screen throughout a TikTok video, or audibly at the start of a podcast. Burying a #sponsored tag under a "more" cut is not a sufficient disclosure. The key is whether the audience can easily understand the influencer's relationship with the company whose products or services are the subject of the post.
- If the influencer omits the disclosure, or buries it in a vague string of hashtags, both the influencer and the sponsoring company face potential FTC action. The FTC has specifically stated that when violations occur, their focus will usually be on the brand before taking any action against the influencer.
- Whenever an influencer has a material connection with a
brand—that is, any personal, familial, or financial
relationship between the influencer and the brand, however
fleeting, including the brand providing the influencer with free
products or services—both the influencer and advertiser must
ensure a "clear and conspicuous" disclosure. 16 C.F.R.
§ 255.5. The FTC defines "clear and
conspicuous" as "difficult to miss and easily
understandable."
- Ensuring Substantiated and Accurate Claims
- While social media campaigns may, by design, look and feel organic and authentic, brands should still be cautious of influencers making unsubstantiated claims or false or misleading comments about their advertised products or services. Influencer endorsements must reflect the "honest opinions, findings, beliefs, or experience" of the endorser. 16 C.F.R. § 255.1(a). Influencers may be held liable for falsely representing that they used a product or making misleading or unsubstantiated claims about the product's performance or effectiveness. Id. § 255(1)(e). Influencers should be especially cautious when promoting health products, as the FTC requires "competent and reliable scientific evidence" regarding their effectiveness. Id. § 255.2.
- While brands are not expected to be aware of every statement made on social media by influencers, the FTC expects that they will take reasonable efforts to know what is being said by influencers on their behalf and take remedial action when violations occur. This requires some level of monitoring to ensure that claims are not false or misleading.
Although the FTC Guidelines govern the content of influencer posts, brands may be exposed to liability for the influencer's non-compliance. Given this potential legal exposure, brands that rely on influencer marketing should institute a compliance architecture that mirrors the one historically applied to traditional ad campaigns. At minimum, that architecture should include: (1) written influencer agreements that impose clear disclosure obligations, prohibit unsubstantiated claims, and grant the brand the right to review and approve content; (2) periodic monitoring to ensure that content adheres to disclosure and substantiation requirements and the ability to pause or take-down content that is noncompliant; and (3) allocation of risk to the influencer (through an indemnification obligation) in the event of an influencer's failure to comply with the FTC Guidelines or any other ground rules set by the brand.
As the technological landscape continues to evolve, it is clear that social media and other immersive marketing will continue to grow. Influencer campaigns merit the same careful oversight traditionally demanded of more familiar advertising media, especially in today's rapid and highly visible online ecosystem. Brands that recognize this and incorporate legal requirements early in their creative process, while maintaining robust review and oversight, significantly lower the risks of facing regulatory sanctions.
Additional resources:
- Disclosures 101 for Social Media Influencers
- Guides Concerning Use of Endorsements and Testimonials in Advertising
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
