Watchdogs Press FTC To Crack Down On Influencer Marketing

The Federal Trade Commission should step up efforts to discourage phony online endorsements, the watchdog Consumer Reports urges in new comments to the agency.

“While consumers are aware that much of the information available online may be biased or simply inaccurate, they still rely heavily upon online reviews and endorsements,” Consumer Reports writes. “Unfortunately, the FTC’s approach to date to address prejudiced and fraudulent reviews has not been sufficient to meaningfully root out online misinformation, especially as new forms of advertising -- like social media and influencer marketing -- have outpaced the FTC’s guidance.”

The organization's comments come as the FTC is preparing to revamp its endorsement guides, which were last overhauled in 2009.

Earlier this year, the agency announced the review and solicited public comment on a wide 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.

News of the review came 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.

Consumer Reports is encouraging the agency to issue sweeping guidance that could affect a broad array of current social media practices.

“The FTC needs to substantially expand the scope of the Endorsement Guides to clarify that companies cannot provide inducements to consumers or reviewers to engage in any type of social media engagement -- including likes, follows, reposts, hashtags -- unless that incentive can be disclosed to people who can view the engagement,” the organization writes. “In many cases, meaningful disclosure will be impossible, so the practice itself should be forbidden.”

The watchdog also is urging the FTC to beef up enforcement, suggesting that the agency's prior efforts haven't gone far enough.

“Because of sporadic and weak enforcement, marketers may find the benefits from false endorsements (which are substantial) may outweigh the relatively low risk and consequences of getting caught,” Consumer Reports writes.

When the FTC overhauled the endorsement guides in 2009, the agency 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.)

Subsequent FTC recommendations -- which have come in the form of answers to frequently asked questions -- have shown 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 Campaign for a Commercial Free-Childhood and Center for Digital Democracy are urging the FTC to ban the use of influencers to market to children ages 12 and younger, arguing that young children don't comprehend the nature of this form of advertising.

“Children ... lack the maturity to understand that influencer marketing is advertising and to evaluate it critically,” the groups argue. “They perceive it more like a recommendation from a friend. Thus, it is inherently deceptive to children.”

The Association of National Advertisers, which also weighed in, is asking the FTC to avoid “substantial changes” to the guides.

“They have served their purpose well and continue to provide a solid foundation for self-regulation and the development of the important and growing influencer industry,” the ANA's law firm writes.

The ad organization wants the FTC to offer guidance about disclosure tools to social media platforms like Instagram, Facebook and TikTok, and also create a “safe harbor” for advertisers that use those platforms' tools.

“Many social media platforms offer tools that allow users to disclose material connections in a way that is uniquely tailored and optimized for the specific platform and its features,” counsel for the ANA writes. “In general, such tools can provide an efficient way for endorsers to disclose material connections in a uniform manner.”

Next story loading loading..