How to Stay Compliant with the FTC in the Influencer Era by Lexton Garrett
Imagine you’re watching a YouTube video from your favorite YouTuber. Now imagine that in the middle of the video, the YouTuber starts talking about a particular product, and thanks the brand for sponsoring the video. After hearing this, you scroll down to the description and see #sponsored and #ad. Why do YouTubers do this? Well, it might surprise you to learn it’s actually against the law for YouTubers not to disclose a sponsorship.
The Federal Trade Commission (“FTC”) regulates how influencers may endorse a product or service. When an influencer has a relationship with a certain brand, the FTC requires the influencer to disclose that relationship when endorsing the brand. But the question is, what qualifies as an “endorsement”? According to the FTC, an endorsement is any promotional message for a product that consumers are likely to believe reflects the opinions of the influencer. So, if an influencer promotes a particular brand they have a relationship with, the influencer will be subject to certain FTC endorsement requirements.
General Endorsement Requirements
When an influence endorses a product or service from a brand they have a relationship or connection with, the FTC requires that the influencer actually use the product or service. The endorsement must also reflect the influencer’s honest opinion of the product or service. So, if an influencer tries a particular product or service and thinks it’s terrible, an influencer can’t lie and say they love it.
Disclosure Requirements
The FTC specifies that an influencer must disclose any financial, employment, personal, or family relationship with a brand when endorsing that brand. When disclosing this relationship, an influencer should ensure the disclosure is clear, easy to understand, and hard to miss. The FTC recommends placing the disclosure within the endorsement itself, by either thanking the brand for the free product or by using terms such as “ad,” “advertisement,” or “sponsored.”
For cases where it’s unclear whether an influencer has a relationship with a brand, the FTC has explained that an influencer should disclose the potential relationship if it would affect the “weight or credibility” the audience gives to the endorsement. Additionally, a material connection with a brand needs to be disclosed when “a significant minority of the audience for an endorsement does not understand or expect the connection.” All FTC disclosure requirements ensure that influencers and brands are not engaging in deceptive advertising practices.
The FTC’s endorsement and disclosure requirements only apply to influencers who have a formalized or legal relationship with a brand. If an influencer buys a brand’s product on their own and has no relationship with that particular brand, the influencer has no obligation to disclose the lack of a relationship with the brand.
