• by Wendy Davis  @wendyndavis, February 12, 2020

The Federal Trade Commission is launching a review of its endorsement guides, which set out recommendations for online testimonials and influencer marketing.

As part of the review, the agency is soliciting feedback from the public on a broad variety of issues surrounding influencer marketing, including how well advertisers and endorsers currently disclose payment for promotional posts on social media.

Other questions posed by the FTC include whether children are able to understand disclosures, and whether the guides should address endorsers' use of affiliate links.

“The FTC's request for public comment suggest it is planning on doing a wide ranging review of the endorsement guides,” says Jeff Greenbaum, an advertising lawyer with Frankfurt Kurnit Klein & Selz. “People should expect to see substantial revisions come out of it.”

The FTC's last major overhaul of the endorsement guides took place in 2009 -- before Instagram, one of the largest platforms for influencer marketing, was founded.

At the time, the FTC said online endorsers must disclose material connections between themselves and advertisers. (The guides aren't in themselves enforceable, but indicate the type of activity the FTC considers deceptive.)

The FTC's subsequent recommendations -- which have come in the form of answers to frequently asked questions -- have made clear that the agency takes a broad view of the kinds of connections that require disclaimers.

For instance, the FTC said in 2017 that social media users who have any relationships with the businesses or people they endorse -- even friendships or family ties -- should disclose those connections when writing reviews, posting on Instagram and tweeting.

As recently as last November, the agency reminded online influencers to disclose whether they received free products or discounts. That notice was perceived as a sign that the agency continues to view current influencer practices as problematic.

The FTC's new review is coming several months after Sen. Richard Blumenthal (D-Connecticut) urged the agency to investigate the way influencers marketed products like “detox tea” -- which often contains an over-the-counter laxative with potentially damaging side effects -- to adolescents and young adults.

“Unfortunately, many manufacturers of these products are taking advantage of young people's insecurities and the power of celebrities on social media platforms to endorse their products,” Blumenthal wrote to the agency.

Josh Golin, executive director of the watchdog Campaign for a Commercial-Free Childhood, says he welcomes news of the review.

“They are asking the right questions,” he says. “We think the research shows very clearly that the disclosures don't work for children.”

The Campaign for a Commercial-Free Childhood, along with the Center for Digital Democracy and Public Citizen, urged the FTC in 2016 to ban influencer ban marketing aimed at children -- such as “unboxing” videos, which feature children opening and playing with toys.

Last year, the organization Truth in Advertising specifically urged the FTC to probe marketing on Ryan ToysReview’s YouTube channel, which often feature the child Ryan unboxing toys.

FTC Commissioner Rohit Chopra said in a statement issued Wednesday that he is concerned the agency's prior efforts haven't gone far enough.

“I am concerned that companies paying for undisclosed influencer endorsements and reviews are not held fully accountable for this illegal activity,” he stated. “While the FTC has pursued enforcement actions against popular brands for disguising their advertising, it is not clear whether our actions are deterring misconduct in the marketplace, due to the limited sanctions we have pursued.”

He mentions the FTC's settlement with Lord & Taylor, which gave a dress to 50 influential fashion bloggers, and paid them between $1,000 and $4,000 each to model it in photos posted to Instagram, according to the FTC's complaint.

While Lord & Taylor approved the posts before they went live and made some "stylistic edits," none of the posts included disclosed that the bloggers had been paid, the FTC said.

The clothing store settled the matter by promising to ensure that endorsers disclose when they have been paid to tout the company's merchandise, and promising to refrain from misrepresenting that paid ads are from an independent source.

Chopra suggested Wednesday that the terms were too favorable to the company.

“The FTC wisely pursued Lord & Taylor rather than spending time and resources targeting individual influencers, but the Commission settled the matter for no customer refunds, no forfeiture of ill-gotten gains, no notice to consumers, no deletion of wrongfully obtained personal data, and no findings or admission of liability,” he wrote.

“Going forward, we need to seek tougher remedies for companies that are illegally astroturfing or disguising their advertising as an authentic endorsement or review.”

Chopra added that he would like to see the FTC go beyond issuing guidance by developing requirements for platforms like Instagram, YouTube and TikTok that profit from influencer marketing, and issuing formal rules -- which would allow the FTC to seek civil penalties and damages against violators.

The FTC will accept comments for 60 days after its official notice of review is published in the Federal Register.