FTC tells companies, 'influencers' to disclose when Instagram posts are ads

09-May-2017 - Last updated on 10-May-2017 at 15:08 GMT

The Federal Trade Commission has sent 90 letters to brand holders and endorsers emphasizing the requirement to be forthright about business relationships on social media.

The agency sent the letters last month, and the identity of the celebrity endorsers was revealed recently via a Freedom of Information Act request filed by the National Law Journal. The companies included dietary supplement firms, personal care brands, food companies and consumer goods companies like Adidas and Puma. The endorsers included such big names as models Heidi Klum and Naomi Campbell, former NBA star Allen Iverson, singer Jennifer Lopez, NFL player James Harrison and others. Among the prominent nutrition-related brands caught in the dragnet were Glanbia Performance Nutrition, Cytosport, the makers of Muscle Milk, Dunkin Brands, meal kit provider Hello Fresh AG and Nature Delivered, which markets the Graze Snacks assortment boxes.

Attorney Ivan Wasserman, a partner in the firm Amin Talati Upadhye said the action was unusual it scope.

“It’s very rare to see this many letters be sent out at once. It was done a couple of years ago talking about the font size for disclaimers in TV advertising,” Wasserman told NutraIngredients-USA.

Focus on Instagram

This most recent action focuses specifically on posts shared on Instagram. The letters state that the celebrities posted pictures of themselves with products without disclosing the fact that they are paid endorsers of the company. For example, in the case of Dunkin Brands, model Heidi Klum posted a picture of her face mostly covered up by a Dunkin Donuts coffee cup with the caption“Guess what I’m doing today?”

Glanbia Performance Nutrition was warned about its relationship with Swedish fitness model Denice Moberg. Moberg said she had tried one of the company’s pre workout products and posted:“I have tried it a couple of times now and WOW I like it.”

In order to be fully compliant with the law, FTC said endorsers must be fully transparent about their relationship with the company whose product is pictured in the post. This has not been deemed necessary for TV ads featuring celebrity endorsers, Wasserman said, because it has been judged to be obvious that the purpose of the communication is to sell something. But on social media platforms that blur the line between commercial and personal communication, FTC has taken the line in its Endorsement Guides that the relationship must be stated up front.

“If your company has a business relationship with [a given endorser] that relationship should be clearly and conspicuously disclosed in [his or her] endorsements. To be both ‘clear’ and ‘conspicuous’ the disclosure should use unambiguous language and stand out,” the letters stated.

“FTC has correctly believed that people would not expect celebrity endorsers to appear in TV ads out of the kindness of their hearts. But with social media it’s different. Celebrities send out Tweets, Facebook and Instagram posts and other things all the time,” Wasserman said.

While FTC did not specify the precise language that must be used to disclose the endorsements, it was specific about where they should be placed.

“Consumers should be able to notice the disclosure easily, and not have to look for it. For example, consumers viewing posts in their Instagram feeds on mobile devices typically see only the first three lines of a longer post unless they click ‘more,’ and many consumers may not click ‘more.’ Therefore, an endorser should disclose any material connection above the ‘more’ button,”the letters state.

“‘Clear’ and ‘conspicuous’ definitely figures in here,”Wasserman said. “You can’t just bury something like ‘#paidendorser’ in a string of hashtags.”

Warning should be taken seriously

Having to put in clunky disclosure language into the beginning of an Instagram post could very well interfere with one of the attractions of the medium, that being its seemingly free and spontaneous nature. It’s anyone’s guess whether this will dampen brands’ enthusiasm for this method of endorsement, but Wasserman said companies should take note.

“It should definitely be welcome to industry that this not an enforcement action, but a reminder. The most important takeaway is for marketers and companies to have strict social media policies and guidelines in place not only for their endorsers but their employees or anyone who might communicate about their products. Even if the relationship only amounts to giving a person like that free products to evaluate, that would trigger the need to disclose the fact that they received them,” Wasserman said.

Attorney Jason Sapsin of the firm Faegre Baker Daniels, said this latest action is part of a broader move by FTC to come to grips with the rapidly developing social media sphere.

“It’s part of the issue of how companies are best going to negotiate social media,” he said. “To me this is the next iteration of the debate and a signal that FTC is saying they are really serious about this and here is a way to be in compliance,”he said.