FTC Brings First Ever Enforcement Action against Individual Social Media Influencers; Updates Warning Letters and Guidance for Influencers and Marketers

By Allison Fitzpatrick and Paavana L. Kumar

With the FTC’s recent announcement regarding its actions against social media influencers, the FTC is re-emphasizing its concerns about influencer campaigns that violate the law by failing to clearly and conspicuously disclose paid sponsorships or other material connections.

The FTC’s Complaint

Last month, the FTC announced its first law enforcement action against individual influencers for their misleading endorsements on social media.  According to the FTC’s complaint against Trevor “TmarTn” Martin (Martin) and Tom “Syndicate” Cassell (Cassell), Martin and Cassell owned and operated the CSGOLotto.com website (CSGO Lotto), which capitalized on certain features of the first-person shooter video game “Counter-Strike Global Offensive” (CS:GO) and allowed  players to collect virtual items that could be bought, sold and traded for real money.  The FTC alleged that since 2015 both Martin and Cassell have posted YouTube and social media videos stating that they had discovered the site, describing their experiences and touting their purported winnings.  However, in none of these posts or videos (some of which were viewed more than five million times) did Martin or Cassell disclose their “material connection” to the company – in this case, the fact that they co-owned and co-operated the site.

Further, Martin and Cassell paid other online gamer influencers to post about the site – and required that they only post positive reviews, in contravention of the FTC Endorsement Guides. According to the FTC, none of CSGO Lotto’s paid influencers included any disclosures of their material connection to the company. The proposed settlement prohibits Cassell, Martin and their company from misrepresenting that any endorser is an independent user or ordinary consumer of a product or service, and requires clear and conspicuous disclosure of any material connections going forward.

New Influencer Warning Letters

The FTC also sent follow-up warning letters to 21 of the influencers who received warning letters in April 2017, citing additional specific social media posts that the FTC suspects may not be in compliance with the Endorsement Guides. The FTC explicitly asked influencers to provide a written response to the FTC by September 30, 2017, advising on whether they have material connections to the brands in the identified social media posts.

Updates to Endorsement Guides Questions

To help provide guidance on how to appropriately conduct influencer campaigns, the FTC recently released an updated version of its publication “Endorsement Guides: What People Are Asking” (“FAQ”), addressing more than 20 new questions about the Endorsement Guides relevant to influencers and marketers on topics such as disclosures on Snapchat and Instagram Stories, photo “tags,” obligations of foreign influencers and built-in disclosure tools on popular social media platforms.  In particular, the FTC has taken the position, both in the FAQ and in a follow-up live chat on September 20, that built-in disclosure tools on platforms such as Instagram and YouTube are not sufficiently clear and conspicuous. Influencers should also avoid ambiguous disclosures such as “#thanks,” “#collab,” “#sp,” “#spon” or “#ambassador.”

In light of the FTC’s emphasis on clear and conspicuous disclosures in influencer marketing, all members of the influencer ecosystem should ensure that they have documented procedures and steps in place to ensure compliance with the Endorsement Guides, including the FTC’s most recent guidance.

Fitzpatrick, Allison Kumar, Paavana 300

Allison Fitzpatrick is a partner in the Advertising, Marketing & Promotions Practice Group at Davis & Gilbert LLP. She may be reached at 212.468.4866 or afitzpatrick@dglaw.com. Paavana L. Kumar is an associate in the Advertising, Marketing & Promotions Practice Group at Davis & Gilbert LLP. She may be reached at 212.468.4988 or pkumar@dglaw.com.