The US Federal Trade Commission (FTC) said in a statement that it will “seek tougher penalties” for brands disguising their advertising as an authentic endorsement or review on platforms like Instagram, YouTube, and TikTok.
According to TechCrunch, FTC commissioner Rohit Chopra published the statement after the FTC voted 5-0 to approve a Federal Register notice that would call for public comments on whether the Endorsement Guides for advertising need to be updated.
Chopra said as influencer endorsements rise and advertisers and social media platforms seek bigger returns on influencer marketing, misinformation continues “to plague” the digital space with the likes of fake accounts, fake likes and fake followers, making it difficult to seek truthful information. At the moment, Chopra believes social media platforms have little incentives to properly disclose paid-for posts and advertisers also need to be held more accountable rather than the smaller influencers themselves who might not fully understand the law.
The FTC used the cases of Lord & Taylor and Sunday Riley as examples. The Lord & Taylor campaign paid 50 social media influencers to post about a dress on Instagram but it did not require that the influencers disclose they were paid for. The FTC later settled the matter for “ for no customer refunds, no forfeiture of ill-gotten gains, no notice to consumers, no deletion of wrongfully obtained personal data, and no findings or admission of liability.”
Going forward, the FTC said it will have to be more “forward-thinking” to stop this fraud from festering and will need to “determine whether to create new requirements for social platforms and advertisers and whether to activate civil penalty liability.” He voiced concerns that when advertisers post deceptive content, it prevents consumers from making informed purchasing decisions and therefore creates an uneven playing field for those that do stick to the rules.
The FTC will take time to create and implement new requirements around paid partnerships and what constitutes as an advert on social media platforms. In the meantime, advertisers should pay close attention to guidelines and clearly state in influencer marketing briefs that posts should be fully disclosed.