Spend enough time on Instagram and you're bound to come across a celebrity or social media star raving about some random product. Everything is covered, from waist trainers and fitness teas to vitamin gummies, weight loss wraps, or alcohol.
There's a good chance that the celebrity is being paid to rave about that product to their many followers, but it's often not very obvious that these posts are sponsored. The Federal Trade Commission wants that to change.
The consumer protection agency on Wednesday announced that it recently sent out more than 90 letters reminding Instagram stars and marketers that they need to "clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media." The FTC said this marks the first time it's reached out to social media influencers directly about their responsibility to be transparent when posting ads on Instagram.
"If there is a 'material connection' between an endorser and an advertiser — in other words, a connection that might affect the weight or credibility that consumers give the endorsement — that connection should be clearly and conspicuously disclosed," the FTC said. "A material connection could be a business or family relationship, monetary payment, or the gift of a free product."
Social media stars sometimes use hashtags like #sp or #partner to call out Instagram ads. Other times, they'll just say "Thanks [Brand]" somewhere in the caption. The FTC said these disclosures aren't sufficient.
The agency also advised Instagram stars to place their disclosures near the top of captions, so people viewing the post on a smartphone will see that it's an ad without having to press the "more" button. Finally, disclosures should be conspicuous, not crammed among multiple hashtags and links, where readers may easily skip over them.
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The action comes after Michael Ostheimer, of the FTC's Ad Practices division last August warned that the agency may start cracking down on celebrities for deceptive endorsements. Until now, the FTC has only gone after the brands involved.
"We hope by bringing these cases that we not only stop the marketer and influencer who didn't have adequate disclosures previously, but also get the message out that other companies should have clear and conspicuous disclosures," Ostheimer told Bloomberg.
Meanwhile, Warner Bros. recently settled with the FTC following allegations that the company was deceiving customers by not disclosing that it had paid social media influencers to promote the video game Middle Earth: Shadow of Mordor. According to the FTC, Warner Bros. paid these people for their promotions and basically told them what to say. However, Warner Bros. didn't force them to indicate that their endorsements were sponsored.
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