Here’s the deal.
When you compensate a blogger or give them product in exchange for an endorsement, they need to disclose that to consumers and you, the merchant, needs to enforce that disclosure.
It’s not only the ethical thing to do, it’s also the legal thing to do. This point was driven home by a recent Federal Trade Commission complaint against Lord & Taylor*.
*The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.
The FTC charged that, as a part of their 2015 private-label Design Lab clothing collection rollout, Lord & Taylor:
- Paid for native advertisements, including a seemingly objective article in the online pop culture and fashion publication Nylon and a Nylon Instagram post, without disclosing that the posts actually were paid promotions or that Lord & Taylor edited the paid article.
- Paid 50 online fashion “influencers” to write branded blog posts, post Instagram pictures of themselves wearing the same paisley dress from the new collection, upload videos and give online endorsements, but failed to disclose they had pre-approved each proposed post and given each influencer the dress, as well as thousands of dollars, in exchange for their endorsement.
- Did not require their influencers to disclose that Lord & Taylor had compensated them to post the photo, and none of the posts included such a disclosure.
In total, the influencers’ posts reached 11.4 million individual Instagram users over just two days, led to 328,000 brand engagements with Lord & Taylor’s own Instagram handle, and the dress quickly sold out.
So what does the proposed consent order settling the FTC complaint mean for Lord & Taylor?
- They are prohibited from misrepresenting that paid commercial advertising is from an independent or objective source.
- They are prohibited from misrepresenting that any endorser is an independent or ordinary consumer.
- They must disclose any unexpected material connection between themselves and any influencer or endorser.
- All their endorsement campaigns will be monitored and reviewed for an extended period of time.
As an advertiser, what can you learn from Lord & Taylor’s mishap?
- Don’t misrepresent where your endorsements are coming from.
- Regularly check and monitor for FTC disclosures.
- Work with your bloggers, affiliates and/or influencers to disclose, disclose, disclose.
The FTC recently issued an enforcement policy statement that businesses can use to ensure they make required disclosures in native advertisements.
In addition, here are a few things that we do to protect our clients and their brand when managing their affiliate programs:
- We audit our programs quarterly. Each quarter we randomly select affiliates in each program, look for content on their site promoting that particular brand and check for proper disclosures.
- If an affiliate does not meet the criteria, we send them an email requesting compliance or else we will remove them from the program.
- We log all of the audits in a spreadsheet for record keeping.
- We also remind all affiliates in our clients’ programs to include disclosures in their blog posts, social posts, etc. via our newsletters, welcome emails and in our Terms and Conditions.
Work with influencers and/or affiliates? Learn best practices for how to protect your company and brand by contacting our affiliate team.