FTC Targets Social Media Influencers
The Federal Trade Commission (FTC) is going after social media influencers for failing to disclose that they've been paid for their endorsements.
The FTC recently settled its first complaint against individual influencers.
As Rolling Stone reported, Trevor "TmarTn" Martin and Thomas "Syndicate" Cassel started a company and website called "CSGOLotto."
As the magazine noted,
Counter-Strike: Global Offensive, is a free-to-play, first-person shooter created and run by Valve. The game occasionally gives away random chests to players at the end of a round of play. These chests, which need to be opened with a key purchased from Valve, contain a collectable virtual item called a skin, which can change the look of different weapons. Skins can be traded on Valve's Steam online game service or bought and sold for real money. CSGOLotto allowed players to gamble with those skins, which could later be sold on Valve, essentially making the skins a sort of casino chip.
Martin and Cassell posted photos of themselves winning skins on their website. They encouraged others to gamble using their site, and their videos were viewed almost six million times.
According to the FTC, Martin and Cassell failed to disclose their connection to their website.
The men also ran an influencer program that paid others $2,500 to $55,000 to promote their site, without requiring them to disclose the payments.
Martin and Cassell agreed to a settlement with the FTC in which they promised to report all of their activities and disclose connections with endorsers.
Future violations could result in penalties of $40,000 each.
The FTC has also sent out warning letters to 21 other social media influencers.
According to the FTC,
Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts.
FTC Guide to Endorsements
Social media influencers must:
- clearly disclose when they have a financial or family relationship with a brand
- ensure that the disclosure is hard to miss
- superimpose disclosures on images
- avoid ambiguous disclosures like "thanks" or "spon"
As the FTC notes,
If you write about how much you like something you bought on your own and you’re not being rewarded, you don’t have to worry. However, if you’re doing it as part of a sponsored campaign or you’re being compensated — for example, getting a discount on a future purchase or being entered into a sweepstakes for a significant prize — then a disclosure is appropriate.
It's not enough to post a general disclosure that the influencer may have been given products for free. Each individual post requires a disclosure.
It's also not enough to post a hyperlink labeled "disclosure" or "legal."
As this settlement shows, it's important for both social media influencers, and those who pay them, to be aware of the FTC's rules and to make sure they comply.