The U.S. FTC has been actively considering the issues surrounding influencer marketing, which has continued to boom as an industry over the years and is now worth billions of dollars. Naturally, with a lot of money flowing in, the influencer marketing space needs regulatory oversight to ensure transparency and user protection.
Earlier, we reported on how the FTC Commissioner, Rohit Chopra, published a statement outlining issues involving companies paying influencers to endorse products without revealing the nature of their relationship.
“When companies launder advertising by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola…The FTC will need to determine whether to create new requirements for social media platforms and advertisers and whether to activate civil penalty liability,” wrote Commissioner Chopra.
A press release from the FTC, published along with Commissioner Chopra’s statement, announced that the FTC is seeking public comments on whether it should change the Endorsement Guides (Guides Concerning the Use of Endorsements and Testimonials in Advertising) in light of new developments.
These guides are from 1980 and were last amended in 2009, and are intended to provide advertising guidelines, which require brands and endorsers to disclose their relationships in the interest of transparency.
This is a matter of huge concern right now, given how influencers stand to make a lot of money by endorsing products (often without even trying them). According to the FTC, in such cases, the influencers need to disclose sponsorships.
In terms of public comments, the FTC put forth the following questions:
the FTC is seeking comment on a wide range of questions, including:
- whether the practices addressed by the Guides are prevalent in the marketplace and whether the Guides are effective at addressing those practices;
- whether consumers have benefitted from the Guides and what impact, if any, they have had on the flow of truthful information to consumers;
- whether changes in technology or the economy require changes to the Guides;
- whether guidance in the FTC’s guidance document “The FTC’s Enforcement Guides: What People Are Asking” should be incorporated into the Guides;
- how well advertisers and endorsers are disclosing unexpected material connections in social media;
- whether children are capable of understanding disclosures of material connections and how those disclosures might affect children;
- whether incentives like free or discounted products bias consumer reviews even when a favorable review is not required to receive the incentive, and whether or how those incentives should be disclosed;
- whether composite ratings that include reviews based on incentives are misleading even when reviewers disclose incentives in the underlying reviews;
- whether the Guides should address the use of affiliate links by endorsers; and
- what, if any, disclosures advertisers or operators of review sites need to make about the collection and processing of publication of reviews to prevent them from being deceptive or unfair.
The press release also provides contact information and those who want to comment on the questions above have until April 21, 2020, to do so.