September 25, 2017
On September 7, the Federal Trade Commission (the “FTC”) settled with online gamers over allegations they had deceptively endorsed an online gambling service that the pair jointly owned. This is the FTC’s first action against individual social media influencers and it should send a message to others about the importance of revealing material connections in social media posts.
Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell are online gamers who are widely followed on social media. They jointly own CSGO Lotto, which they endorsed on social media without disclosing their joint ownership. They also allegedly paid other well-known influencers several thousand dollars to promote the company without requiring them to disclose the payments.
The Commissioner’s complaint alleges that videos and social media posts made by Martin, Cassell and other influencers failed to disclose their connection to CSGO Lotto. The consent agreement prohibits Martin, Cassell and their company from misrepresenting that any endorser is an independent user or ordinary consumer of CSGO Lotto’s products and services. The order also requires disclosures of material connections to be made “clearly and conspicuously”, which means that “a required disclosure is difficult to miss”. Martin and Cassell are also required to monitor endorsers, including ensuring that social media influencers endorsing their products or services are provided with a clear statement detailing his or her responsibilities to disclose and establishing, implementing and maintaining a system of monitoring and reviewing the representations and disclosures of all endorsers.
The FTC has been cracking down on social media influencers who are failing to disclose material connections. In April of this year, the FTC sent more than 90 letters reminding influencers to clearly and conspicuously disclose their relationship to brands when promoting or endorsing products and services through social media. On September 7, 2017, the FTC sent warning letters to 21 undisclosed social media influencers about certain posts made on Instagram. In the letters, the FTC reminders influencers to disclose “material connections” in a way that is “clear and conspicuous”, meaning that the language is unambiguous and the disclosure is easily noticeable by consumers.
The FTC has also issued an updated version of The FTC’s Endorsement Guides: What People are Asking and on September 20, the FTC hosted a live Twitter Q&A #Influencer101, to answer questions about dos and don’ts for influencers. The FTC has repeatedly emphasized that the point of disclosure is to ensure consumers are aware of any material connections influencers may have with the product or brand owner so that they can give appropriate weight to the review.
Some highlights from the recent FTC communications:
The FTC reminded influencers that U.S. law applies when it is reasonably foreseeable that the post will affect U.S. consumers. All social media influencers should take a close look at the FTC Endorsement Guides and familiarize themselves with the disclosure requirements for applicable social media platforms; however, Canadian influencers should be also familiar with Canadian requirements. Ad Standards has provided an Interpretation Guideline to Clause 7 (Testimonials) of the Canadian Code of Advertising Standards (the “Code”). In June 2017, Ad Standards reported the first consumer complaint about an Instagram post by an influencer.
We recommend social media influencers in Canada follow guidance released by both the FTC and Ad Standards. The recent actions taken by the FTC and Ad Standards demonstrate that staff members are monitoring influencers and social media platforms in order to ensure disclosure requirements are met and influencers are fully transparent about their connection to products or brands.
Information on this website is for information only. It is not, and should not be taken as, legal advice. You should not rely on, or take or not take any action, based upon this information. Professional legal advice should be promptly obtained. Bereskin & Parr LLP professionals will be pleased to advise you.