Since 2017, the Federal Trade Commission (FTC), the government agency tasked with enforcing federal legislations on promotions and advertising, showed awareness over the rise of influencers being used as tools by product advertisers.
The FTC took notice that advertising departments and agencies of brand advertisers named these social media bloggers as influencers. Mainly because as their audience engaged and grew in considerable numbers, they also demonstrated the ability to convert follower engagements into actual sales.
The next step of action was for the FTC to issue a directive instructing influencers and advertisers alike, to apply the same set of rules governing all other types of advertisinge, — including incorporating statements that disclose whether a blogger is being compensated for promoting a brand.
According to Michael Atleson, a staff attorney of the FTC Bureau of Consumer Protection,
“Many consumers now make buying decisions based on influencer recommendations, and they should know when a product brand, paid an influencer for an endorsement, as it affects the credibility and weight given by consumers on those endorsements”
What Must be Included in the Influencer Disclosure Statement as Required by the FTC?
The FTC asserts that if an influencer receives payment for endorsing a product on social media, such endorsement will be considered as misleading if the influencer will not disclose that he or she receives compensation for doing so. The rationale behind the disclosure is that the audience puts more weight on recommendations that were given voluntarily, with no material connection whatsoever, between blogger and the brand being advertised.
What is “Material Connection?”
“Material Connection” is legally defined as any binding relationship materially affecting the credibility or weight of any kind of endorsement, and not reasonably expected by consumers.
Under the FTC guidelines, “Material Connection” includes compensation by way of free products, paid-for trip, free service, special discounts, free upgrade, special invitation to any event, and/or stock ownership. In addition, employment and/or being related to an employee, as well as an outright business relationship also comprise “Material Connection”.
What is the FTC’s Take on Paid Followers of Influencers?
Inasmuch as Influencer Marketing schemes require a social media blogger to meet a certain number of followers before they can qualify as influencer, it has become a common practice for start-up bloggers to “buy” followers or subscribers.
Buying followers in the social media marketing world – SMM World – is recommended only as a means of boosting appearances and not as part of the brand endorsement scheme. In fact, social media marketers offering this type of service, do not warrant its efficiency or will not take liability for any negative outcome.
FTC Bureau of Consumer Protection lawyer, Michael Atleson explained that the FTC Influencer Marketing guidelines concern advertisements and promotions using the services of social media bloggers as product influencers. Any issue related to the practice of buying followers is between the brand advertiser and the influencer.
It is the responsibility of brand advertisers therefore to inform, impose and ensure that the guidelines governing influencer contracts are being followed or observed.
