New FTC Endorsement Guide Lawsuit
A class-action lawsuit has been filed against seven Israeli brands that are alleged to have compensated social media influencers without taking reasonable measures to ensure the disclosure of material connections.
The Federal Trade Commission’s Endorsement Guides provide that 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, unless it is already clear from the context of the communication. A material connection could be a business or family relationship, monetary payment, or the gift of a free product.
Although the Guides apply to both marketers and endorsers, the influencers have not been named in the lawsuit.
Computer Generated Influencers
Increasingly, computer generated social media influencers are being used by brands to gather millions of followers. One issue is whether users are aware that they are not, in fact, real people. Lil Miquela was roundly believed to be a real person until “her” account was hacked.
The Guides apply equally to computer generated influencers. Posts should clearly and conspicuously disclose that they are advertisements and material relationships with promoted brands. Query whether a CGI influencer can satisfy the “bona fide experience” of the testimonialist requirement.
Marketers would be wise to clearly and conspicuously disclose that the influencer is, in fact, computer generated.
Richard B. Newman is an FTC advertising compliance attorney at Hinch Newman LLP.
Informational purposes only. Not legal advice. Previous case results do not guarantee similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.