The FTC and Cardi B

A couple of weeks ago, BuzzFeed News reported on a very rare fine issued by the FTC. They began legal action to fine a company named Teami which sells "detox tea" and two of its Instagram spokespersons, Jordin Sparks and Cardi B. This move is somewhat unprecedented because, to be perfectly honest, the FTC very rarely takes legal action against a company or the actual influencers, opting instead to file against the brand or agency pushing out the ads. Even then, they don't often actually seek to enforce their guidelines Let's break this down.

Social media influencers have been a go to for marketing agencies and brands for several years now. Social media "influencers" have been around a long time, even though they may not have always had that title. But in recent years, many celebrities and internet famous celebrities have been using their vast social media follower reach to line their own pockets. A company or brand pays the influencer to tell their millions of followers all about some new tech gadget, or herbal supplement, or hair product, and in exchange the influencer gets paid. Under normal circumstances this is to be expected. After all, since the days of radio programming, celebrities have lent their voices, and images when television came along, to promote different brands. Celebrity likenesses have graced the pages of magazines and ads in newspapers for decades. So, what is so special about this situation involving Cardi B and Jordin Sparks, and potentially the many other social media influencers who hawk products for pay?

The FTC has guidelines regarding disclosures when it comes to paid marketing. The FTC, which stands for Federal Trade Commission, is a federal agency in charge of guessed it, trade! They make up the rules for what is fair in commerce. I'm over simplifying to make a point, but that's the basic idea you need to know for this blog post. Now, when it comes to regulations, the type that matter in this situation are related to disclosures regarding paid advertisements. You see, when you watch a television commercial, it's pretty obvious and clear from our long history with advertising that you know a celebrity is being paid to be in a tv commercial, or on the radio, or in a print ad. When it comes to social media marketing that involves paid endorsements, the FTC requires (among other things) that the account posting the endorsement indicates in a clear and conspicuous way that the posting is a paid endorsement. While there is some leeway in exactly what must be stated, it is very clear that the idea is if someone is scrolling their feed and sees a post from a celebrity, if that post is a paid endorsement, they should be able to tell on its face that this post is a paid endorsement and not the celebrity just deciding to praise some product on their own.

So what happened with Cardi and Jordin?

According to the FTC's complaint, the influencers failed to conspicuously display the fact that the endorsement was a paid endorsement. The complaint also alleges that the company that paid them failed to follow its own social media policy that required influencers to abide by FTC endorsement guidelines. Basically, the FTC alleges the company paid the endorsers and just ignored the fact that they weren't following disclosure guidelines. Why does this matter?

This case is demonstrating that the FTC is no longer allowing companies and influencers to get away with this behavior. In the past they've very rarely gone after a company for failing to adhere to guidelines. In this case they took the unprecedented move (for the FTC at least) of suing not only the company for grossly ignoring that the influencers were not following the rules, but also the actual influencers as well for failing to properly identify their posts as paid advertisements. How much are they seeking in fines?


Now that we've seen this happen, and can only assume the possibility that the FTC will continue cracking down on companies and social media influencers posting paid endorsement content without properly identifying it, what can we learn from it?

If you're a company:

* Be sure to have a social media policy in place for influencers

* Have a contract your social media influencers sign that lays out not only the terms of endorsement and payment, but also requires them to follow your policy


If you're an influencer:

* Be sure to have a copy of the company's social media policy, and make sure they send updates whenever it changes

* Familiarize yourself with FTC guidelines and rules around paid endorsements

* The most important step - MAKE SURE YOU ARE FOLLOWING THE RULES!

Taking these steps, along with consulting with legal counsel to confirm you're all good, can prevent a headache to the tune of $1,000,000.

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