What Happens If You Don’t Disclose #sponsored Status In Your Influencer Marketing Campaigns?

In the early days of influencer marketing, Instagram and Snapchat users enjoyed freedom to promote products without disclosing that brands were compensating them for content.

For years now, the Federal Trade Commission (FTC) has required some type of online disclosure related to paid endorsements, and recently, the agency elevated its enforcement to crackdown on creators and companies that don’t follow these rules.

Deceptive Advertising and Influencer Marketing

Influencers and content creators have a simple way of disclosing sponsored posts, including #ad or #sponsored, but they don’t always follow it. Some recent examples include the settlement with Warner Bros. and Lord & Taylor over secret influencer marketing.[1][2]

In addition, the U.S. Securities and Exchange Commission pursued professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled, otherwise known as DJ Khaled, for failing to disclose payments for promoting investments in Initial Coin Offerings.[3]

Clearly, the agency has an increased interest in social media influencers and deceptive advertising. Influencer or creator marketing is an increasingly popular way for brands to reach target audiences and boost word-of-mouth marketing.

Failed Disclosures in Popular Influencer Posts

One of the most famous examples of a failure to adhere to the FTC guidelines came from Scott Disick of Keeping Up with the Kardashians. As a famous Instagram influencer, he’s had endorsements from major brands, which were sometimes done poorly.

He accidentally revealed his endorsement to his Instagram audience by copying and pasting the instructions from the brand, which read:

“Here you go, at 4pm est, write the below: ‘Keeping up the summer workout routine with my morning @booteauk protein shake!”

Source:US Weekly

Aside from the fact that this message was copy-and-paste, it also touted the morning shake with a post to schedule to run at 4 pm EST – clearly not morning.

Disick was careless in this instance, but the brand also expected a fully scripted post – not in the vein of authentic influencer marketing. And the media had fun with it:

Source:Huffington Post

Though Disick may have disclosed the brand sponsorship accidentally, he did not include a proper disclosure according to the FTC guidelines. He didn’t have #ad or #sponsored or any other clear indicator of an endorsement. In fact, it took some eagle-eyed viewers to catch the error.

But even without a faux pas like this, celebrities still have consumers feeling wary about sponsored posts.

When Margot Robbie attended the Glastonbury Festival in a stylish pair of Wellington boots, her posts were ambiguous in whether she was promoting the boots.[4] She originally included #ad in the post, but it was deleted after and replaced with #glasto. Based on similar posts about the festival and her boots, it was a paid promotion.

Source:Instagram

But that’s the problem. Consumers want to know if the content is paid promotion, and that’s where disclosure matters. The audience cares if it’s a product the influencer genuinely uses or one that they’re paid to pretend to, either of which have different effects on the audience.

And it’s not just A-listers. Prominent influencers like The Bucket List Family (@thebucketlistfamily), or Gee family, often ignore disclosures. The family became famous when the father, Garrett, sold an app to Snapchat for $54 million. Now, the family has been traveling all over the world and sharing exploits with followers, making it one of the most famous travel influencers.

There have been several incidents that violate the FTC guidelines for disclosures, including a sweepstakes it ran in December 2019. The family got in hot water when an intellectual property and contracts lawyer realized the family wasn’t properly disclosing the terms of the sweepstakes.

Source: Buzzfeed

Then on June 19, 2021, the family shared details of its flight to Kenya, which read:

“AND SO THE JOURNEY BEGINS!! 1st a 15hr flight on @qatarairways from Seattle to Qatar. Then a 5hr flight from Qatar to Kenya. This 1st photo was right before take-off. The 2nd photo is my prediction of how we’ll look after we land 22hrs+ later! Nah, WE GOT THIS! I keep reminding myself that these kids are seasoned pros! For years we accomplished these looong travel days on whatever the cheapest tickets we could find. I’m proud of how far we’ve come and sooo grateful to be working with #qatarairways and showing off their new FULL FAMILY seating!!?!! For reals?!! They call it the Qsuite and it’s my new favorite way to travel. Will show you more of it in our Instagram stories today and our YouTube video tomorrow!!”

Source: Instagram

Nowhere does this say that it’s a paid partnership, which is likely. Simply including “working with #qatarairways” isn’t sufficient for a proper disclosure.

These posts continued throughout the Kenya trip, including posts for the Giraffe Manor hotel, Safari Collection, Gray Label, African Bush Camps, and Mavros Safaris. These hashtags are included, but nothing indicating an ad or paid post.

Source: Instagram

Source: Instagram

Source: Instagram

Can Influencers Get in Legal Trouble for Not Disclosing Sponsored Posts?

As mentioned, the FTC is cracking down on inadequately disclosed influencer marketing on social media, especially Instagram. A recent study indicates that about 93% of sponsored content posted by A-list celebrities on Instagram didn’t adequately disclose the paid brand relationship.

While it makes sense that brands may want to gloss over the promotion and make it seem like an influencer genuinely uses the product, that’s neither legal nor ethical. Most people are aware of the truth in advertising for television commercials and other traditional ads, so it’s expected that influencer marketing would fall under that umbrella.

So far, the FTC has not acted directly against an influencer in enforcing policy around disclosure, but it has gone against brands. State Attorney Generals also have the authority to bring action against paid influencers for deceptive advertising, which may include hefty fines.

When Is Disclosure Required?

Influencers are legally obligated to disclose brand sponsorships or advertising when:

  • Any monetary compensation has been issued in exchange for published content on their channels.
  • Products are gifted, since free products qualify as material compensation, and the FTC requires these be disclosed as gifts – even if the post isn’t a sponsored ad.
  • A creator is hired to attend an in-person event. The influencer must disclose the partnership in any content published to their account. This applies even if the influencer is paid in material gifts.
  • Requesting negative content about other brands, but this isn’t a strong or ethical practice to begin with.

What Are the Guidelines for Disclosures?

If it’s clear a disclosure is necessary, here are the guidelines:

  • Disclosure language must be clearly visible to consumers, written in a standard font, and placed before any automatic cut-off.
  • Disclosures can’t be mixed with other hashtags, which could lead a viewer to skim over it.
  • Disclosures must be easy to understand and not shrouded in ambiguous tags, such as #partner or #ambassador. These are not crystal-clear tags. Instead, influencers should use #sponsored or #ad.
  • Disclosures should be written and voiced over in video content for accessibility.
  • Even with platform-native features for disclosure, such as “Paid Partnership on Instagram,” the disclosure must be in the caption. The tag is considered neither explicit nor prominent enough according to the FTC.

When in doubt, read the requirements on the FTC website.

Authenticity in Influencer Marketing

Authenticity is the appeal of influencer marketing, and with celebrity endorsements, it began long before the rise of social media. People gravitate toward famous people or successful people who have qualities and values they want to emulate, which is why sports fans wear the jersey of their favorite athlete.

This is a boon for brands, but it also has an undercurrent of distrust. While many follow and trust influencers, especially celebrities, they may begin to question whether any endorsement is the influencer’s true recommendation or the product of a paid endorsement.

Unfortunately, influencer marketing gained ground because of the distrust people have of brands and institutions – especially among younger generations – but mistakes like Disick’s could lead influencer marketing in the same direction. Brands are too scripted, rehearsed, and self-serving, which is exactly what came across in Disick’s accidental disclosure.

When George Clooney visits an exotic locale and opts for Nespresso pod coffee, consumers understand it’s an ad – and it’s no less effective for it. The same is true for athletes representing major athletic brands like Under Armour or Nike.

But when a celebrity shares products, services, or brands on their personal social media pages without a nod to an ad or sponsorship, it could be because they truly like and believe in the product. Or it could be because they neglected to include a disclosure. It’s the not knowing that sows distrust in the audience.

Disclosure statements make it clear that a post is a paid endorsement. This transparency maintains the authenticity of influencer marketing, even if there’s still advertising at its heart.

Influencer marketing is still growing and evolving, so it’s possible that the rules surrounding disclosures will change and evolve with them. The best way for brands and influencers to keep up with the changes is with the FTC website.

Always Disclose Brand Partnerships and Sponsored Posts!

Sponsored ads are for the benefit of the consumer and the integrity of the influencer and brand. For now, influencer marketing is an answer to the rampant mistrust and distrust in brand ads and content. But if brands and influencers continue to promote products without disclosures, social media could go the way of traditional advertising.

Sources:

[1] https://adage.com/article/digital/ftc-finalizes-influencer-settlement-warner-bros/306867

[2] https://www.ftc.gov/news-events/news/press-releases/2016/03/lord-taylor-settles-ftc-charges-it-deceived-consumers-through-paid-article-online-fashion-magazine

[3] https://www.sec.gov/news/press-release/2018-268

[4] https://www.dailymail.co.uk/tvshowbiz/article-4647844/Did-Margot-Robbie-advertise-Hunter-boots-Instagram.html