The Law of Influencer Endorsements on Social Media
By
Aron Solomon
A recent piece by Business Insider looked into the life of social media influencer Vi Luong. While the theme of the article followed the standard “hey look at how much money these influencers can make,” it omitted what these types of pieces always do – the law around what influencers can and can’t do as online promoters.
The danger with social media advertising is that the public does not always know when they are seeing something that’s an ad. The nature of social media itself blurs the line between reality and fiction, between genuine talk about products/service and compensated endorsements.
In late 2019, the Federal Trade Commission put out a brochure for social media influencers that The truly hideous design is emblematic of the huge disconnect between the FTC and the influencers they are regulating; thinking of two groups with less clarity on what the other does is an intellectual challenge.
The problem is that unlike in other countries, it’s not always clear in the United States what is and isn’t paid content. In Germany, for example, social media influencers need to use the term “Werbung” to indicate that what the influxes may want to appear as heartfelt post is actually an ad. The laws around this in the US are far less sharply defined.
The FTC guidelines suggest that influencers disclose when they have:
“any financial, employment, personal, or family relationship with a brand.”
These relationships aren’t limited to those that provide the influencer with money. The FTC wants influencers to disclose any benefit they received from creating that social media post for the brand or product.
But how much of this is actually required? Less than one would expect. The rules that apply to other forms of advertising apply to what social media influencers do online as well. But social media influencers are, in practice, far more subtle than other types of advertising.
Why does this matter? Because some of these influencers are making a LOT of money. To earn money on YouTube, for example, users must generally be 18 (there are accounts that have been in a parent’s name), have a certain number of subscribers and a certain number of codes. Every creator knows their social metrics inside out with all of these social media companies.
With so much money on the line, when social media influencers operate in grey areas, it’s often their followers who lose.
Scott Kessler, a lawyer at Team Law, explains why clarity here is so important to us as consumers:
“With so much content today on social media, the line can be really blurred between reality, fiction, and paid endorsements that try to make one look like the other. It’s important that consumers of social media and of the products their favorite influencers sell understand when something is essentially an ad.”
Back to Vi Luong, the very nature of her business as an influencer is, well, to influence. So when she justifiably claims that the foundation of her business is about how to pose, edit, and be photogenic, the natural extension of that is recommending products to make her fans more like her.
What this all boils down to is that while advertising must tell the truth, not mislead consumers, and substantiate all claims, according to the FTC, the gulf between social media advertising theory and practice continue to grow at pace with the potential rewards to social media influencers who excel at selling products online.
Aron Solomon, JD, is the Head of Strategy and Chief Legal Analyst for Esquire Digital. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world. Aron has been featured in CBS News, TechCrunch, The Hill, BuzzFeed, Fortune, Venture Beat, The Independent, Yahoo!, ABA Journal, Law.com, The Boston Globe, and many other leading publications.
