FTC Cracks Down on Social Media Stars Who Don't Reveal Sponsorships

The Federal Trade Commission sent warnings on Thursday to nearly two dozen social media stars who have continually violated the agency’s endorsement guidelines by not disclosing when companies pay them to promote their products.

The crackdown came the same day the agency settled a lawsuit against two influencers in the online gaming community for endorsing the gambling site CSGO Lotto without disclosing that they jointly owned the company. The defendants, Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, also allegedly paid thousands of dollars to prominent YouTube, Twitter and Facebook figures to endorse the site without disclosing any financial incentives.

When social media influencers post photos sporting the trendiest brands and hottest new items, they’re often compensated by the marketers of those products. The FTC’s truth-in-advertising principles require such relationships to be revealed to consumers, but many influencers fail to do so, allowing companies to essentially disguise sponsored content as personal posts.

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Though the crackdown on social media personalities is fairly recent, acknowledging connections between endorsers and the brands they endorse is a decades-old concern, an FTC spokeswoman told Nextgov. While the agency places most of the onus for enforcing truth-in-advertising principles on the companies that hire the influencers, she said it’s still important for the promoters to be made aware of their responsibilities.

“Influencer marketing is growing tremendously, and nowadays many influencers have enormous followings and work with numerous brands,” she said. “Reaching out to the influencers themselves helps get the word out to the rest of this ecosystem.”

In April, the agency sent more than 90 letters reminding Instagram influencers and marketers to disclose relationships to brands when promoting products—though it didn't reveal the recipients. According to a Freedom of Information Act request submitted by the National Law Journal, they included pop star Jennifer Lopez (68 million Instagram followers), actress Lindsay Lohan and former NBA player Allen Iverson.

The 21 people who received follow-up letters on Thursday continued to violate the rule after the agency's original warning. 

The agency noted in the letters that all disclosures must be “clearly and conspicuously” displayed. On Instagram, paid relationships should be explicitly stated in the opening lines of the post above the ‘more’ button. Hashtags or links at the end of the post don’t count.

“You should use unambiguous language and make the disclosure stand out,” FTC Associate Director for Advertising Practices Mary Engle wrote. “Consumers should be able to notice the disclosure easily, and not have to look for it.”

Each of the 21 warnings cited specific Instagram posts that failed to highlight material connections between the influencer and the brand. The FTC also published a list of “Dos and Don’ts” for social media influencers highlighting best practices when endorsing products online.