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Paid Endorsements and Social Media Posts: Social Media Disclosures for Influencers
By Justin M. Jacobson, Esq.

Today’s entertainment, sports, music, and gaming worlds are dominated by the rise of influential celebrities and personalities commonly referred to as “influencers.” Many of these influencers operate in the physical space as well as within the digital metaverse and social media worlds. In fact, due to the rise in popularity and influence upon their fans and communities, many top brands and companies have begun engaging these personalities, including for digital promotion, marketing, sponsorship, in addition to endorsement opportunities. Some of these people are earning substantial sums for posting about a product on their social media, including on Instagram, Twitter, or Tik Tok; or, for utilizing a brand partner on a social streaming platform, such as on Twitch, YouTube, or Facebook Gaming. These types of influencer marketing initiatives are generally operated by a brand in an effort to engage with the celebrity’s followers in an attempt to have their fans become aware of or customers of the sponsoring product. However, as a result of their public nature and the existence of a business relationship (whether in kind or paid), the public statements made by influencers fall under the regulatory authority of the Federal Trade Commission (FTC) in the U.S.

Why A Celebrity, Streamer or Content Creator Must Disclose Paid Endorsement or Advertisement

In particular, the FTC is the American regulatory agency responsible for establishing policies to govern these types of individual’s actions. Specifically, Section 5 of the FTC Act titled the “Use of Endorsements and Testimonials in Advertising” governs and is applicable to an influencer’s social media statements, including those made in a posted video or while on stream. (15 U.S.C. § 45 (1914)) This regulatory section outlines the “general principles” used for “evaluating endorsements and testimonials” as well as those analyzed when determining whether or not a specific public “endorsement or testimonial” made by a party is “deceptive.”

Disclosure Language for Twitter, Instagram, Tik Tok, YouTube Sponsored Posts and Streams

As a result of the growing usage of influencers in public marketing campaigns, the FTC released guidelines that are applicable to social media and streaming influencers, “Disclosure 101 for Social Media Influencers.” This document lists “the various ways that an influencer’s relationship with a brand would make [a] disclosure necessary.” For instance, the statute requires that any post or other public statement made by an influencer is true and that the comment “reflect[s] the honest opinions, findings, beliefs, […] of the endorser.” This means that the party cannot make a “false or unsubstantiated” claim about the product or service that they post or otherwise endorse. Additionally, if an influencer “endorse[s] a product through social media,” they must “make it obvious” to the consuming public that a “relationship with the brand” exists. This means that the personality must publicly disclose the existence of a sponsorship relationship in cases where the influencer has a “material connection” to the brand.  A “material connection” may be found when a “personal, family, employment or financial relationship” exists between the influencer and the posted product. This means that the FTC requires a public disclosure, even if the influencer only receives “free or discounted products or services” from the company. Furthermore, when a material connection exists, a disclosure is also required by an influencer even if they are just “tagging” a company in social media because the individual’s actions could be seen as a public endorsement of the product.

While there is no bright-line rule for how and what a social media or streaming “disclosure” must contain, the FTC has articulated some guiding principles within the “Disclosure 101 for Social Media Influencers” document. For instance, an influencer’s disclosure must be in a position that it is not “hard to miss.” This could include incorporating the required language within the “endorsement message itself,” such as the influencer placing it in the body of the social media post, listing it (“#ad,” #partner, #paid, #paidad, or “#sponsored”) in the video content or in the livestream’s title. Additionally, if the influencer’s endorsement is included in a “picture on a platform like Snapchat” or is inserted in a non-static social media medium, such as “Instagram story” or other short-lived format; then, the relevant disclosure must be “superimpose[d …] over the picture” to ensure that “viewers have enough time to notice and read it.” Similarly, if an endorsement is made in an audio-visual work such as a video posted on YouTube, then the required disclosure must be inserted in the actual video content and “not” just included in the video’s description. Furthermore, if a product testimonial is made on or during a live stream, such as during a Twitch broadcast, any required disclosure statement must be repeated “periodically so [that any] viewers who only see part of the stream” and tune in later will hear and receive notice of it. Another FTC suggestion is for an influencer to make any required disclaimer in both audio and written form in case some viewers “watch [the content] without sound.”

Since there is no specific language requirement for an influencer’s disclosure statement, the FTC states that it must contain “simple and clear language.” It also must be made “in the same language as the endorsement itself.” For example, when an influencer creates a social post, they may use and include terms such as “advertisement,” “ad,” “sponsored,” “ambassador,” “paid,” or “partner,” as well as use hashtags such as “#ad,” “#paidad” or “#sponsored.” In addition, some products may also require another disclaimer in addition to this required disclosure. For instance, if a person is promoting a product that contains nicotine, such as tobacco or e-cigarettes; then, an additional disclosure stating that the product contains nicotine is needed. This means that an influencer who works with a sponsoring e-cigarette company may be required to disclose the existence of the sponsorship in a social media post as well as include a disclaimer regarding the product’s actual contents (that it contains nicotine).

In conclusion, since the FTC governs public testimonials and endorsements made by an individual, it is essential that an influencer only endorses products that they have actual “experience” with. This means the individual should not fabricate claims about a product that “require proof the advertiser doesn’t have.” Therefore, it is prudent that the personality does not say something is great when it is not or make other unsubstantiated claims about a sponsor’s item or service. As is evident from the above, it is imperative that an influencer discloses any existing business relationship with a sponsor that they post or otherwise promote on their social media or during their live stream, even if they receive the item for free. The failure to include the legally required disclosure could subject the influencer as well as potentially the sponsoring brand to potential liability.

This article is not intended as legal advice, as an attorney specializing in the field should be consulted.

© 2022 Justin Jacobson Law, P.C.