Hashtag Your Ads: FTC Warns Instagram Influencers

Businesses know that their young customers aren't reading newspapers, listening to the radio, or even watching cable television anymore. Instead, they're consuming information and content through their smartphones and the Internet, and streaming their favorite shows from providers like Netflix and Hulu. Companies are adapting, creating Instagram profiles and Snapchat accounts that enable them to reach new age groups. Some enlist social media "influencers," particularly on Instagram, to hawk their products. Those influencers run the gamut from big-time athletes and actors to small-time reality television stars. But whatever the reason for their star power, influencers offer businesses the allure of seemingly organic exposure: candid moments of a household name using a company's perfume or herbal tea, shared with thousands or millions of followers.

It's precisely that appearance of endorsement, without the standard trappings of an advertisement, which drew the eye of the Federal Trade Commission (FTC). Among other things, the FTC investigates violations of the FTC Act's prohibition on deceptive advertising. For years the FTC has promulgated Endorsement Guides which offer a helpful framework to understand how endorsements and testimonials may be used in advertising. Recently, the FTC again made clear that the laws on deceptive advertising apply to advertising campaigns conducted over social media platforms like Instagram-both to the companies selling the products and the social media influencers carrying out the campaigns.

For the first time, the FTC recently sent out letters directly to social media influencers to remind them that if a "material connection" exists between an influencer endorsing a product and an advertiser, that connection must be disclosed clearly and conspicuously in the endorsement. In other words, if the influencer has a business or family relationship with a company, or receives a payment or free product for an endorsement of that company, there must be a clear disclosure of that fact. The FTC noted specific examples of disclosures that aren't sufficient. For instance, including the hashtag "#sp" (meaning "sponsored post") might confuse consumers unfamiliar with the term. Burying a "#ad" at the end of a long chain of hashtags might not suffice either. Instagram posts only display three lines of a caption, and users must select "more" to see the caption in its entirety. The FTC expressed concern that consumers who did not take this additional step would not know that an Instagram post was an ad.

So what should businesses and social media influencers take away from the FTC's recent blizzard of "reminder" letters? If you are a social media influencer-even someone who serves as a brand "representative" just for the promise of occasional free product-be sure to disclose that fact in any caption to a social media post made for the company. Don't bury your "#ad" at the end. And if you're a business using social media influencers to promote your product, check up on sponsored posts and make sure the connection to your company is clearly disclosed. For more information on this issue or other legal matters, contact Attorney Samantha Clarke at 401-824-5100 or email sclarke@pldolaw.com. We welcome your comments, questions and suggestions.

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