The industry of influencer marketing is growing at an unprecedented rate. It was worth as much as $8 billion in 2019 and is on track to be worth up to $15 billion by the year 2022. Because of this unprecedented growth, virtual media influencers, also known as Social Media Influencers, are protecting their names, images, and content by using different forms of intellectual property. To avoid losing their intellectual property rights, Social Media Influencers must be diligent in maintaining, registering, and enforcing these rights through, inter alia, copyrights, trademarks, and the right of publicity.
As a result of the influencer market taking over social media and becoming a permanent part of corporate marketing campaigns, the Federal Trade Commission (FTC) provides guidance on the proper use of endorsements and testimonials in its guides to prevent fraudulent and deceptive practices in advertising.
FTC-Mandated Disclosures Required for Social Media Influences
For social media influencers, the FTC requires disclosure where the influencer has a “material connection” with the brand. This may include any of the following relationships with the brand:
- financial relationship (the influencer received monetary payment, free or discounted products, or anything else of value for mentioning the brand’s product)
- employment relationship
- personal relationship
- family relationship
In order to prevent endorsement and testimonial advertisements from being subject to FTC enforcement, influencers must follow the FTC endorsement guidelines to avoid claims of fraudulent, deceptive, and unfair business practices.
These guidelines require the influencer to make sure people will see and understand a disclosure. This may be in the form of an #ad or #sponsored hashtag to indicate that a social media post is sponsored. The disclosure should be placed so that it is not hard to miss. This means that it must be placed with the endorsement message itself and not combined within a group of hashtags or links or appear in the “about me” profile page. A hashtag may be sufficient at the end of the post, however it must be placed “above the fold.” In other words, if it appears after the “more” button to reveal additional text on Instagram or Facebook it is not considered “easily noticed and understood” by the FTC.
Additionally, the FTC is not the only entity regulating such material. If the sale of a security is involved, the Securities and Exchange Commission (SEC) can regulate an endorsement post. For example, the SEC requires the influencer to disclose how much money they received to make such a post.
Finally, the post must represent the influencer’s honest experience and opinions. They cannot post about a product or service if they have not tried it. The endorser must have been a bona fide user of the product at the time of the endorsement. The company/advertiser can continue using the advertisement so long as it has good reason to believe the endorser remains a bona fide user.
As a result of the growing and expanding influencer market, the FTC, SEC, and other regulatory agencies have taken on the issues surrounding social media advertisements through the introduction of the guidelines mentioned above. It is therefore important for influencers to familiarize themselves with the FTC Endorsement Guidelines as well as Section 17(b) of the Securities Act.
If you want to ensure you are adhering to the guidelines or want to safeguard your social branding, our intellectual property attorneys are here for you. Call (831) 228-5619 or contact us online.