Many San Diego businesses are using social media “influencers.” This has been an emerging trend in personalized marketing for several years now. Social media influencers use and wear various products from various manufacturers — usually of luxury goods. Social media influencers are often called “brand ambassadors.” Such influencers have various social media accounts like Facebook and Instagram. Posts and photos are uploaded with the influencers using or consuming goods, or visiting a travel location, for example. Influencers often have hundreds of thousands of followers. Influencer campaigns have been very successful.
However, there are some legal “red flags” that must be addressed by every San Diego business using influencers as part of their marketing. Recently, the Federal Trade Commission (“FTC”) issued its updated guide to disclosures for social media influencers. See here. The FTC is the federal agency tasked with monitoring and enforcing various federal laws that prohibit false, misleading, and deceptive business practices. If done incorrectly, the use of social media influencers can constitute false advertising or deceptive business practices. The result can be an investigation by the FTC and substantial fines and penalties imposed for violations. If you are using social media influencers, you should retain an experienced San Diego corporate attorney to ensure that you are in compliance with the FTC guidelines.
The gist of the guidelines is disclosure. That is, to avoid violation of the laws, any social media influencer must disclose, and disclose fully and conspicuously, any of the following:
- Any payment or thing of value received — including receipt of free products and/or services
- Any other value received by a manufacturer or distributor or licensor or seller of the product(s) being endorsed
- Any employment or contract with a manufacturer or distributor or licensor or seller
- Any ownership interest — present or future — that the influencer (or family member) has with the brands, products, and services being endorsed
- And any other material fact
Research has shown that endorsers have more influence if their followers believe that they have not been paid or given something of value or have a vested interest in the product. This is why it is considered false and misleading to fail to disclose a material connect to the brand, its manufacturer, or distributor. This is one reason that some influencers are reluctant to disclose. However, the concern is overblown. Many consumers are not dissuaded from buying a product or service just because the recommendation has been compensated. Most followers are following a celebrity or influencer for a reason. As such, there is not as much “downside” to disclosure as one might expect and there is plenty of “upside” from a legal standpoint.
A key aspect of complying with the disclosure rules is conspicuousness. The new Guidelines require that the disclosures be “easy to find.” This means that the disclosure should be in large font and on the front page of the website or article or video if the disclosure is in writing. If the disclosure is done orally, it should be among the first pieces of information provided. It should not be done as the last item of information buried in the last paragraph or stated in the final sentence. Many consumers do not read the full article or watch to the very last words.
Following the new FTC Guidelines will help your San Diego business avoid an FTC investigation
Contact San Diego Corporate Law
For more information, call Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. Mr. Leonard can be reached at (858) 483-9200 or via email. Like us on Facebook.