Brands, marketers, and influencers: pay attention. The FTC is cracking down on pseudo-organic influencer marketing posts. So don’t be like a Kardashian and pretend that something is organic when it’s actually sponsored.
Digiday, in a recent Facebook live session, shared the positive side of this growing marketing category. It’s a sign of the times – influencer marketing is legit. But, seriously, the FTC is like the IRS for marketing. It pays to be compliant. Here’s a wrap-up of the most epic brand and influencer marketing fails and, as you’ll see, it’s no joke. Fines are expensive. What’s even more expensive is the tarnish on a brand’s or influencer’s reputation.
Lifelock fined $100 million
Way back in 2010, Lifelock should have learned their lesson over FTC violations that cost them $11 million for consumer refunds. They were also told to stop making deceptive claims, strengthen measures to safeguard the personal information it collects from customers, and keep better records.
In a December 2015 blog post from the FTC website, it explained that at the end of 2015, not only did LifeLock not abide by the initial orders of the FTC, they continued to falsely advertise that it protected consumers’ data–like Social Security, bank account, and credit card numbers–with the same “high-level safeguards as financial institutions.”
LifeLock not only took a serious hit with $100 million in fines, its reputation was (and is) severely damaged. FTC Consumer Education Specialist Colleen Tressler explained, “If you’re concerned about protecting your personal information, you may consider paying for identity theft protection services. But before you pay any fees, evaluate the company and its track record. Type the name of the company or product into a search engine along with words like ‘review,’ ‘complaint,’ or ‘scam.’ Be sure to read a few reviews — don’t rely on just one source.”
Ouch! What can we learn from this? If you aren’t complying with FTC guidelines, the FTC will offer advertising advice to consumers on why they shouldn’t trust you.
Warner Bros. in the fires of Mordor
The FTC charged Warner Bros. with deceiving consumers during a marketing campaign for the video game “Middle Earth: Shadow of Mordor.” Apparently, they failed to adequately disclose that it paid online influencers, including the popular “PewDiePie,” thousands of dollars to post gameplay videos on YouTube and social media with positive reviews. Over the course of the campaign, the sponsored videos were viewed more than 5.5 million times.
Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said, “Consumers have the right to know if reviewers are providing their own opinions or paid sales pitches. Companies like Warner Brothers need to be straight with consumers in their online ad campaigns.”
The FTC order also specified that Warner Bros., or any external group it hires to conduct an influencer campaign, must educate influencers regarding sponsorship disclosures, monitor sponsored influencer videos for compliance, and terminate or withhold payment from influencers or ad agencies for non-compliance.
The bottom line? Influencers must be up front with their followers about whether their endorsements are paid, and the company or product they are endorsing must keep track of them or they can be slapped with some serious fines.
Gamer culture and Machinima
Much like with the Warner Bros. case, the FTC accused the California-based online entertainment network Machinima with engaging in deceptive advertising by paying influencers to post YouTube videos endorsing Microsoft’s Xbox One system and several games.
The FTC explained that the influencers paid by Machinima failed to properly disclose that they were being paid for their seemingly objective opinions. Again, the FTC ordered the very same directions to Machinima as they did Warner Bros.: Stop it.
FTC pounces on fashion and alcohol
Maybe the most epic fails came in droves in the fashion and alcohol industries with such influencers as Snapchat star DJ Khaled and his raves about Ciroc vodka, fashion lifestyle blogger Cara Loren Van Brocklin posted a selfie with PCA Skin sunscreen, or internet personality iJustine posted Instagrams from an Intel event. The FTC took issue with each of these influencers because they didn’t notify followers that it was paid advertising.
Advertising Age recently reported that hashtags are not enough to be FTC compliant, especially if those hashtags end up at the bottom of a social media post surrounded by a variety of other hashtags. If it’s not being read, it’s not full disclosure.
And let’s not forget Lord and Taylor and their epic regulation fails with over 50 fashion influencers over Design Lab’s Paisley Asymmetrical Dress. It didn’t take long before the FTC recognized plenty of issues with compliance with most of the influencers’ promotions. What Lord and Taylor taught us is that the future of native advertising is now under sharp scrutiny, so being honest is the best policy.
What many of these issues address is when and where influencers introduce their full disclosure. The best advice: any disclosure would be better at the beginning, whether it takes the form of hashtags or said out loud, or shown on the screen, at the beginning of a video.
Unfortunately, social media platforms are growing faster than the FTC (or influencers) can keep up with, so it can get even more complicated on platforms like Snapchat, where there’s not an obvious place to put a hashtag, and the videos are only a few seconds. All the same, if you are going to use a new medium, be very careful how you proceed.
We didn’t forget Kimmie…
The most recent FTC non-compliance issue was with Kim Kardashian and her influencer marketing stint. Not only did she not offer full disclosure, she was also promoting a drug that was once considered dangerous and pulled from the market. Hello FDA! If you want to avoid running into one (or more) government entities, then don’t do this.
Again, the FTC made it clear with Kimmie’s case: If one receives payments or free products to promote something, they must offer full disclosure. Bloggers and social media influencers of any status of celebrity must be fully transparent in their product endorsements. The thought behind this regulation is that consumers should know when endorsements are paid so they can accurately decide how much weight to give the endorser’s opinions about the product.
Influencers, marketers, and brands don’t worry, we’ve got your back. Check out our FOFU Guide: How not to get sued by the FTC when doing Influencer Marketing. Motto: don’t do what Kim Kardashian did.
Joseph Cole @joefcole
Head of Growth Marketing, TapInfluence