Consumer groups are urging the Federal Trade Commission to review comments by social media influencers for possible violations of the agency's guidance regarding nondisclosed native advertising.
Public Citizen, the Center for Digital Democracy, and the Campaign for a Commercial-Free Childhood sent a letter to the FTC's Bureau of Consumer Protection expressing concern "that the agency is failing to keep pace with developments in the social media space." Companies are routinely paying "influencers"—or social media users with a large following—to post endorsements of their products without disclosure, particularly on Instagram.
"A long-standing, core principle of fair advertising law in the United States is that people have a right to know when they are being advertised to," the groups wrote. "[D]isguised advertisements are inherently deceptive, because consumers do not know to apply appropriate screens. The issue is acute with disguised ads featuring paid endorsements, where deceived consumers believe admired celebrities are making genuine, self-directed and enthusiastic endorsements of brands, not realizing that those celebrities are instead paid and may not even use the touted brand."
Public Citizen conducted an investigation of the disclosure practices among movie stars, reality TV personalities, famous athletes, fitness gurus, fashion icons, and pop musicians and quickly found 113 influencers "who endorsed a product without disclosure." These noncompliant posts, including those from Rihanna to Victoria Justice, are not outliers, the groups wrote, adding that the cosmetics and weight-loss industries are prominent users of influencers.
The FTC needs to take action, and fast, the letter said. It encouraged the agency to investigate the current practices and take "aggressive enforcement action" against those that continue to engage in the practice of nondisclosed influencer advertisements.
The letter also suggested that the agency begin its work by taking a closer look at products such as Flat Tummy Tea and companies such as L'Oreal USA. While the groups said the emphasis of enforcement activity should focus on advertisers, "the agency should also communicate with prominent influencers, especially the highest-compensated among them, and warn them that they too will be subject to enforcement action for future non-compliance with FTC rules."
"The very viability of FTC fair advertising rules is at stake," the letter stated. "Consumer deception through hidden advertisements is now pervasive in social media, particularly on Instagram. It's past time for the FTC to bring the industry into compliance with the law."
To read the letter from the consumer groups, click here.
Why it matters: The groups expressed concern that social media norms have already sufficiently evolved so that advertisers routinely contravene FTC policies as a non-objectionable matter of practice. "An important part of an FTC initiative must be to shift the center of gravity on social media so that advertisers take affirmative steps to ensure they comply with FTC rules designed to protect consumers from trickery and deception," according to the letter. "This problem has reached epidemic proportions. One agent who casts influencers estimates that there are 100,000 Instagram 'influencers' paid to endorse, a vast majority of whom do not disclose their advertisements."