FTC Urged To Probe Word-Of-Mouth Over Instagram Marketing

The Federal Trade Commission should investigate word-of-mouth marketing companies BzzAgent and Influenster, which allegedly send consumers free products in exchange for reviews and posts on sites like Instagram, advocacy groups said Wednesday.

"Undisclosed paid endorsements from average consumers represents a dangerous trend that the FTC must address, since people generally place more trust in recommendations made by their peers and have no reason to believe that their friends, colleagues and family are engaging in paid product promotion," Public Citizen, the Center for Digital Democracy, Commercial Alert and the Campaign for a Commercial-Free Childhood wrote Wednesday in a letter to the FTC. "Thus, companies are preying off of the trust and relatability of smaller level influencers."

The groups suggest that Influenster and BzzAgent don't take sufficient steps to insure that consumers disclose they received products for free.

BzzAgent's Web site directs consumers who post on Twitter, Pinterest, Instagram or personal blogs to use a disclosure hashtag, like #GotItFree or #GotACoupon. But Public Citizen and the other organizations suggest those phrases aren't sufficient. "Bzzagent does not instruct influencers to use the proper #advertisement or #ad disclosure at all," the organizations write.

The advocacy groups also say that a survey they conducted shows that most consumers who receive free products through Influenster fail to follow the company's directive to make disclosures. Influenster's Web site tells users to include hashtags like #contest, #ad, #gotitfree and #sponsored, and to state that the product was free.

Public Citizen and the other organizations also are renewing their earlier request that the FTC crack down on companies that pay influencers to endorse products on Instagram, without disclosing that money was changing hands. That initial request, made in September, focused largely on undisclosed endorsements by celebrities including musician Rihanna and reality TV star Kim Kardashian. (Public Citizen also represents MediaPost in an unrelated effort to unseal court papers in a lawsuit brought by the Federal Trade Commission against Amazon.)

On Wednesday, the groups directed the FTC's attention to 50 recent examples of undisclosed ads they say appeared on Instagram between Sept. 1 and Nov. 14. Those included posts by "Teen Mom" star Chelsea Houska, Victoria's Secret model Irina Shayk, and "The Hills" cast member Stephanie Pratt.

"We suspect that there are thousands more not reflected in this document, especially among influencers with small followings," the organizations write. "Recent examples demonstrate that lesser known celebrities and influencers with smaller followings are dominating the influencer market on Instagram."

The FTC has said advertisers must disclose relationships between themselves and endorsers that could affect the way consumers view the endorsement. Last week, the agency said it finalized a settlement with Warner Bros. over allegations it failed to adequately disclose payments to online influencers who promoted a video game.

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