What influencers can learn about how to properly disclose sponsored posts from the FTC’s $1 million settlement with an advertiser

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  • The Federal Trade Commission reached a $1 million settlement with the diet tea brand, Teami, last week after regulators accused the company of making deceptive health claims and improper ad disclosures in its influencer marketing.
  • The agency sent warning letters to 10 influencers involved with the campaign, providing specific information on the ways it felt they inadequately disclosed that their content was sponsored.
  • The FTC’s initial complaint, warning letters to influencers, and proposed settlement with Teami offer insights into how the agency is thinking about disclosures in influencer marketing in 2020. 
  • Below are some key takeaways for influencers looking to avoid the ire of the FTC based on the agency’s case against Teami.
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The Federal Trade Commission recently reached a $1 million settlement with the diet tea brand, Teami, after alleging improper influencer marketing practices. 

In its initial complaint, warning letters to influencers, and proposed settlement with the brand, the regulator laid out its current standards for how influencer marketers should disclose sponsored content in their posts. The agency takes into account a variety of factors in its disclosure guidelines, including the type of media that information is presented in, the device sponsored content is viewed on, and the language that influencers use to inform followers of their paid relationship with a brand.

Why the FTC came after Teami for its influencer marketing practices

In the FTC’s complaint, it said Teami paid Instagram influencers “more than $500” for posts that weren’t “adequately” disclosed as sponsored. The agency also alleged that its influencer clients made unsubstantiated claims about the products’ health effects, including that “Teami Profit Tea treats cancer” and “Teami Alive Tea significantly decreases migraines.”

The regulator had sent a warning letter to Teami in April 2018 reminding the company to make sure its influencers were disclosing their “material connections” to its brand. A month later, Teami instructed its influencer clients to make sure to “[u]se hashtags or words that clearly let the public know of the connection between you and Teami” and to not “[m]ake the disclosure below the ‘more’ button – the disclosure needs to be seen in the first part of your post without clicking anything else.”

The FTC said that Teami’s influencer clients didn’t end up complying with its stated social-media policies around disclosures, and that the company didn’t take enough actions to enforce its own policies.

As part of the proposed settlement, Teami doesn’t have to admit or deny any of the allegations in the agency’s complaint, but it must admit to the facts needed to establish jurisdiction.

So what can creators learn from the Teami situation?

Here’s a full breakdown of what creators and influencer marketers should pay attention to from the FTC’s complaint, warning letters, and proposed settlement:

“Clear and conspicuous” is the well-established standard for sponsored content in influencer marketing. In its proposed settlement with Teami, the FTC reiterated what “clear and conspicuous” means for different types of media in which an influencer might be posting sponsored content.

For a sponsored photograph on Instagram or any visual-only media: 

The FTC said a disclosure must be presented visually in a manner that is “easily noticed, read, and understood” and that stands out from accompanying text or visuals by its “size, contrast, location, the length of time it appears, and other characteristics.”

For sponsorships on a podcast or any other audio content:

An audible disclosure must be delivered in a “volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it.”

For sponsored content that contains both audio and visual elements (like a YouTube video):

The FTC said a disclosure for something that contains both audio and visual components must be presented “simultaneously in both the visual and audible portions of the communication.” In simpler terms, the agency appears to be recommending that a YouTuber include both visual and audible disclosures indicating that a video is sponsored to their viewers. 

YouTube offers a feature that allows creators to add a “visible disclosure” that appears as a text overlay (“Includes Paid Promotion”) for the first few seconds of a video. The company doesn’t specify whether this feature would comply with FTC requirements, and instructs creators to refer to their “local legal resources.” 

In a blog post, influencer marketing agency Mediakix advised YouTube creators to include a verbal disclosure, YouTube’s “Includes Paid Promotion” overlay, and a written disclosure that appears above the “Show More” section of a video’s description. 

Influencers should consider how a disclosure appears on different devices, not just the device in which they originally uploaded their sponsored content

The FTC noted in its complaint exhibits that disclosures that appear front-and-center in an Instagram post when viewed on a desktop computer may not be clearly visible on a mobile phone where “the caption is truncated such that at most three lines of text are visible unless the follower clicks on a link labeled ‘more.'”

To illustrate how different devices impact disclosures, the agency included an example of a post from musical artist Cardi B as seen on a desktop computer and mobile phone in its complaint exhibits. In her November 23, 2018 Instagram post, Cardi B’s #teamipartner disclosure appears when a page is loaded on a desktop computer, but disappears beneath the “more” link when viewed on a mobile device.

Here are the behaviors the FTC specifically calls out in its complaint exhibits and 10 warning letters to influencers who made sponsored posts for Teami

In its complaint exhibits and warning letters sent to influencers who worked with Teami on its campaign, the FTC called out a variety of behaviors that it viewed as non-compliant with its policies for paid endorsements in influencer marketing.

  • A disclosure should not be “hidden among multiple tags, hashtags, or Instagram handles,” the FTC wrote in warning letters to influencers. Readers may just skip over them, especially where they appear at the end of a long post, it wrote in its complaint exhibits. 
  • Saying “thank you” to a brand in a post as a way of disclosing your paid relationship is “likely inadequate to inform consumers of a material connection because it does not sufficiently explain the nature of the relationship.”
  • As outlined in the FTC’s definition of “clear and conspicuous,” an Instagram video that contains both visual and audible elements should contain disclosures in both forms. In a warning letter, the FTC called out one of Teami’s paid influencers for including a visual hashtag but no audible disclosure, “such as by saying that, “{Brand} sponsored this post” or “I’m partnering with {Brand}.” 
  • “You should put a disclosure in each and every social media post and not assume that consumers will see and associate multiple posts,” the regulator noted in a warning letter to a Teami influencer.

As part of its proposed settlement, Teami has to get signed commitments from its influencer clients saying they would correctly disclose their monetary relationship

Going forward, the FTC set strict requirements for how Teami must monitor the disclosure behaviors of its influencer clients that it pays $20 or more each month to promote its brand.

Specifically, the regulator said Teami had to provide influencers with a “clear statement of his or her responsibilities to disclose” and obtain “from each such endorser a signed and dated statement acknowledging receipt of that statement and expressly agreeing to comply with it.” The company then needs to monitor and review influencers’ sponsored posts to ensure they’re compliant. 

Additional disclosure requirements may be coming for the whole influencer marketing industry

The FTC announced in February that it was considering new “requirements for technology platforms (e.g. Instagram, YouTube, and TikTok)” and focusing on reviewing the behavior of advertisers rather than targeting “small influencers.”

In a blog post around its proposed settlement with Teami, “FTC’s Teami case: Spilling the tea about influencers and advertisers,” the regulator called out people in the fashion, fitness, or entertainment world who “may think legal compliance isn’t their thing.”

“Influencers often pride themselves on keeping it real with their followers,” the FTC wrote. “Easy-to-find and easy-to-understand disclosures are part of that mindset.”

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