FTC Issues Warnings to Influencers for Allegedly Failing to Sufficiently Disclose Sponsorships with the American Beverage Association and the Canadian Sugar Institute
Strict marketing compliance is nothing new to brands; however, the emerging area of influencer marketing has been the wild west of the marketing world. For the past few years, the Federal Trade Commission (“FTC”) has initiated and continued to monitor influencer marketing on social media platforms such as Instagram and Tiktok.
Back in 2020, the FTC issued a cease and desist letter to Teami, a wellness tea product, requesting that several actions be taken to remediate allegedly deceptive influencer practices. Specifically, the cease and desist letter requested that all disclosures on Instagram be viewable without consumers having to click a “more” link. The days of including a simple #sponsored are over. A cease and desist letter is a formal warning that basically says they believe the other party is committing an unlawful act, and that they will pursue legal action if the alleged unlawful activity continues.
The sugar and diet soda beverage community is one of the FTC’s most recent recipients of a warning letter from the FTC for alleged disclosure issues. On November 13, 2023, the FTC issued fourteen cease and desist letters to the American Beverage Association and the Canadian Sugar Institute, 12 registered dieticians, and several online health influencers. The cease and desist letters highlight concerns with several posts on the social media platforms Instagram and Tiktok.
According to the FTC, the organizations may have violated the FTC Act by failing to adequately disclose that the influencers were apparently hired to promote the safety of aspartame or the consumption of sugar-containing products. It’s important to note that some of these individuals’ posts were flagged even where they included captions with #ad and the paid partnership disclosure tool were utilized. One letter states:
“[A]lthough you disclose “#ad” in the text description, on Instagram Reels, the description is in small print, at the bottom of the screen, sometimes poorly contrasting, and doesn’t stand out. Videos have many competing elements. We therefore do not think that a disclosure in a Reels post’s text description is clear and conspicuous.”
Additionally, the FTC noted that the sponsor of the post was not disclosed. The letter additionally stated that not disclosing the sponsor of an advertisement deprives the consumer of the ability to adequately evaluate the weight and credibility of the endorsement. The fourteen warning letters can be found at the FTC’s Legal Library online.
So when and how must an endorsement be disclosed? The FTC’s Endorsement Guides state that if there is a “material connection” between an endorser and the marketer of a product, in such a one that may affect the weight or credibility that a consumer gives the endorsement, that connection should be disclosed in a clear and conspicuous manner. For example, if the endorsement is made through both visual and audible methods, the disclosure needs to also be made in both visual and audible methods.
It is important to note that the intention of the poster is not considered when determining proper disclosures were made. In all, the main concern of the FTC is ensuring the consumers know and understand the endorsement is paid so they can weigh the validity of the endorsement for themselves. Compliance with these guidelines will be determined on a case by case basis with the perspective always on the consumer.
The key takeaway? Knowing how to properly disclose your partnerships online will continue to be important for brands and influencers alike. The best practices for proper disclosures can be a little confusing as social media platforms continue to evolve. However, the FTC has resources online to provide guidance. Stay tuned for some key ways to ensure compliance with the FTC’s rules for social media advertising.
Xoxo, Tessquire.
Tessquire 