US proposes crackdown on influencers

US considers changes to tighten its guidelines around influencers  - proposals centre on ensuring influencer/brand collabs are effectively signposted, that influencer agencies understand the liability of their roles and that the definition of “endorsers” should be modified to bring virtual influencers under the guides.

In the U.S. the Federal Trade Commission (FTC) is considering changes to tighten its guidelines around influencers who fail to effectively identify their sponsored content. Other new proposals include explaining potential liability of influencer marketing agencies. These intermediaries may now be liable for their roles in disseminating what they knew, or at least should have known, were deceptive endorsements.

 “We’re updating the guides to crack down on fake reviews and other forms of misleading marketing, and we’re warning marketers on stealth advertising that targets kids.” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Whether it’s fake reviews or influencers who hide that they were paid to post, this kind of deception results in people paying more money for bad products and services, and it hurts honest competitors.”

The FTC is the independent agency of the US government tasked with promoting consumer protection and regulating influencer marketing. Its guides state that advertisers need to be upfront with consumers and clearly disclose unexpected material connections between endorsers and a seller of an advertised product. In February 2020, the FTC sought comment on whether changes should be made to the guides. The proposed changes reflect the extent to which advertisers have turned increasingly to the use of social media and product reviews to market their products.

The Endorsement Guides, first enacted in 1980 and amended in 2009, provide guidance to businesses and others to ensure that advertising using endorsements or testimonials is truthful. Advertisers who lie to consumers via endorsements or testimonials may violate the FTC Act. The guides, among other things, state that advertisers need to be upfront with consumers and clearly disclose unexpected material connections between endorsers and a seller of an advertised product. 

In February 2020, the FTC sought comment on whether changes should be made to the guides. The proposed changes reflect the extent to which advertisers have turned increasingly to the use of social media and product reviews to market their products.

The role of influencer marketing agencies 

The Commission proposes adding a new Section 255.1(f) explaining the potential liability of intermediaries. Intermediaries, such as advertising agencies and public relations firms, may be liable for their roles in disseminating what they knew or should have known were deceptive endorsements.

For example, advertising agencies that intentionally engage in deception or that ignore obvious shortcomings of claims they disseminate may be liable. Agencies may also be liable for their roles with respect to endorsements that fail to disclose unexpected material connections, whether by disseminating advertisements without necessary disclosures of material connection or by hiring and directing the influencers who fail to make necessary disclosures.

In a notice, along with the proposed revisions to the guides, the FTC has also clarified that tags in social media posts are covered under the guides and modified the definition of “endorsers” to bring virtual influencers—that is, computer-generated fictional characters—under the guides.