The Federal Trade Commission Published Truth-in-Advertising Guidelines for Social Media Influencers; Here is How to Stay Compliant

The FTC serves as the primary soldier in the fight against deceptive advertising and has since Woodrow Wilson signed the Federal Trade Commission Act in 1914. The agency wields the power to sue businesses, freeze accounts, and collect compensation for victims in any instance where a consumer is defrauded by a business.

The commission enforces the same standards of truth and transparency no matter where the message appears — newspapers, radio, television, and now social media.

Social Media presents a twofold challenge for the commission: not only did it penetrate the market at a rate would incapacitate the media critics who charted the rise of television and the radio, but social media purposefully blurs lines between user-generated content and “professional” production.

With the rise of social-media influencer marketing, brands had years to luxuriate in the volumes of gray area present in the industry.

But that time is no more.

Sponsored posts must be marked under new FTC regulations.

The Federal Trade Commision has officially caught up with the ways in which new media are impacting the consumer with their publication of a comprehensive set of guidelines for social media influencers.

Not only have they clearly laid down what they expect from industry professionals, but they’ve settled their first suit with a criminal miscreant: a gaming YouTuber got popped for failing to mention that he owned the gambling site to where he was directing his often-underage fans.

For 20 other mega-influencers like Kylie Jenner and Lindsay Lohan, the FTC dispatched sternly-worded letters explaining how close these individuals have been to toeing the line. It’s time to wisen up to the guidelines set out by the all-mighty FTC, America’s noble knight of consumer protection.

Here at GeekSmash, we cultivate a healthy respect for the FTC. As consumers and citizens, we appreciate that there is a dedicated group of government employees watching out for the everpresent vipers in the marketing industry.

More than anything else, we just don’t want to take any of the FTC’s precious time. That’s why we’ve compiled a cheat sheet to make sure the influencers we care about can quickly see that they’re on the right side of morality and the law.

What is an Endorsement?

The most relevant statutes to social media influencers regard endorsement. An endorsement is defined as “as an act of giving one’s public approval to someone or something.” An endorsement can be as comprehensive as an earnest YouTube review of a  product, but it can also be as simple as a selfie holding a can of Coca-Cola.

Any endorsement of a product or service from an influencer with a material connection to a brand requires a disclosure.  Both of those concepts have been explained below.

Additionally, endorsements cannot be used as a workaround for the truth-in-advertising law. There is a temptation for companies to try to use 3rd-party endorsements to make claims that they know they are legally unable to make.

The simplest way to check to see if an endorsement features false information is to check the information provided by a potential sponsor against their own marketing materials. You, as a social media influencer, are responsible for any claims you make so think-twice before agreeing to claim that a product can make its users ten-feet tall or rich overnight.

When must an endorsement include an advertising disclosure?

The most important thing about FTC-compliant disclosure techniques is knowing when to use them. Remember though – if you disclose when you have no need, you only waste your time. But if you fail to disclose when the law requires? Bam. You’re breaking the law.

So, when is disclosure necessary? The FTC says that social media influencers MUST disclose when they have a material connection to the brand they are endorsing.

Here are the instances in which an influencer and brand are said to have a material connection:

  1. The brand is paying you. Simple enough: if the brand cuts you a check for any reason then you have a material connection.
  2. The brand is giving you a gift. Love the necklace that came in the mail? Unless you paid for it, then you have a material connection to the brand that sent it to you.
  3. The brand previously paid you or gave you gifts. There is no statute of limitations on material connections. If a brand used to pay you or send you things, then understand that you still have a material connection even if you haven’t been paid in a while.
  4. You, your family, or your business associates own the brand. If an individual in your orbit directly benefits from your endorsement, then you have a material connection to them and their brand.

Note: This guide is intended to help social media influencers interact with brands in a profitable and legal way. It is possible to have a material connection that requires disclosure without ever interacting with a brand. Here is an example from the FTC regarding a book author with a compromising connection to her online writing group.

I’m a book author and I belong to a group where we agree to post reviews in social media for each other. I’ll review someone else’s book on a book review site or a bookstore site if he or she reviews my book. No money changes hands. Do I need to make a disclosure?

It sounds like you have a connection that might materially affect the weight or credibility of your endorsements (that is, your reviews), since bad reviews of each others’ books could jeopardize the arrangement. There doesn’t have to be a monetary payment. The connection could be friendship, family relationships, or strangers who make a deal.

What should a proper disclosure do?

A disclosure is defined as “the action of making new or secret information known.” There isn’t one correct method for disclosing, but the intent of disclosure should always be to reveal to your audience any information which would affect the authenticity of your endorsement.

There are a few surefire ways to disclose material relations with sponsors but it is important to remember that the FTC passes judgment based on intent.

For example, the hashtags “#ad” or “#sponsored” have become standard FTC-approved disclosure on Instagram.

But proper disclosure is not as simple as including #ad somewhere in the post — otherwise, influencers would hide the disclosure in stacks of hashtags or in difficult-to-read colors embedded in the media.

Follow the steps below to hone in on proper disclosure form but remember the goal should always be to clearly communicate to your audience the material connection with a brand — lip service is not enough.

Five Easy Steps to Stay On The FTC’s Good Side

  1. Use sponsored hashtags strategically. The FTC has stated that the best way to stay compliant with the new rules on Instagram to clearly denote which piece of content is an ad. Use #ad or #sponsored at the beginning of your post to delineate clearly what is an ad. Though it’s bland, we recommend always using the very simple hashtag #ad. This is a safety procedure to avoid going being fined! Influencers have been chastised for obsfucating the true nature of their relationship. It may be tempting to use hashtags like #partners or #together but the FTC encourages the use of #ad and #sponored. Here is something that is NOT acceptable: sticking the word “ad” in another hashtag, i.e., #cocacolaad. The FTC has determined that while #partner is not enough, a hashtag that includes both the brand and the word partner is an appropriate measure – for example, #nike_partner.
  2. Use signaling language. When talking about paying sponsors, use the term “partner” or “sponsor.” Avoid terms like “our friends at* and *in conjunction with* or any other term that doesn’t clearly lay out the material connection between yourself and your sponsors.
  3. Be very clear about what you receive for free. There is a temptation to deceive your audience about the perks of being a social media influencer. After all the authenticity and relatability is a big part of the appeal of the emerging medium. Still, being a successful businessperson is about being willing to have tough conversations and admitting to your audience what you are receiving for free is one of those tough conversations. When talking about what you receive, be sure to use the word “gift.” For example: “Thank you to Nike for making such wonderful shoes” is bad. “Thank you to Nike for gifting me such wonderful shoes” is good.
  4. Include the disclosure as close to the media as possible. The FTC has said it is NOT acceptable to put the sponsorship only in the caption of a YouTube video, but for Instagram, the disclosure is always within the caption…except for Instagram stories where “#sponsored” is often overlayed over the image within the Instagram story creation text tools. Again, the intent is the most important thing so never try to “sneak the disclosure in.”
  5. Frame your sponsorship in your benefit. There will always be members of the online community quick to jump to the term “sell out.” Don’t pander to this crowd — you might end up tempted to try to hide your associations. Remind your audience that your sponsors make the show possible and that you need money to survive and keep making content that your audience enjoys.

If all of this instruction seems overwhelming, don’t worry! The FTC has stated that they are focusing on brands and marketing agencies primarily and will only be fining influencers who ignore repeated warnings. Good luck!