Avoiding Legal Pitfalls in Social Media Marketing & Advertising

Professor Thaddeus Hoffmeister

thoffmeister1@udayton.edu

What would it take to get you in this dress?

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The Paisley Dress

• FTC has initiated a formal cause of action against only one Instagram advertising campaign.

• In 2015 Lord & Taylor paid 50 fashion influencers $1,000 to $4,000 to post a photo of themselves wearing a paisley dress with the hashtag #DesignLab.

• The Instagram selfies did not include any type of disclosure language showing a connection between the influencers and Lord & Taylor, which owned the DesignLab label.

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Paisley Dress

• Ultimately, the FTC settled with Lord & Taylor.

• The settlement agreement did not impose any monetary penalties but did establish a monitoring and review program for the company’s future endorsement campaigns and prohibited it from misrepresenting any future endorser as an independent or ordinary consumer.

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Who is an Influencer?

• “A Social Media Influencer is a user on social media who has established credibility in a specific industry. A social media influencer has access to a large audience and can persuade others by virtue of their authenticity and reach.” Pixlee.com

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FTC (Federal Trade Commission)

• The FTC is responsible for preventing false or misleading advertising

• Brands and influencers must disclose any “material connection” between them in a “clear and conspicuous” manner

• Material connections include business or family relationships, monetary payments, and even gifts of free products.

• The FTC, unlike its European Union counterpart, doesn’t prescribe what words or terms will provide consumers sufficient notice of a material connection. Instead, the commission recommends using unambiguous language and making sure the disclosures stand out.

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What is an Endorsement?

• Advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.

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Is the FTC Cracking Down?

• Last April, it appeared that the FTC was taking a tougher stand on this issue when it sent 91 letters to brands and influencers on Instagram for failing to make adequate disclosures.

• Of these letters, 45 went to brands and 46 to influencers, including Kourtney Kardashian.

• The FTC included a form letter that it will use for future violations signaling this issue will likely come up again for brands and organizations who aren’t following the Endorsement Guides.

• The commission followed the April barrage with 21 additional letters to influencers, requiring them to reveal their financial arrangements with brands.

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Is the FTC Cracking Down?

• Influencers• Diddy, Shay Mitchell, Ashley Benson, Lucy Hale; the brands of influencers; models

Behati Prinsloo, Naomi Campbell, Nina Adgal, Emily Ratajkowski, Heidi Klum; Ciara, Kristin Cavallari, Sofia Vergara, Victoria Beckham, Scott Disick, Lindsey Lohan, Bella Thorne, Zendaya, and Jennifer Lopez

• Brands• Chiara Ferragni and Rach Parnell such as Chanel, Yves Saint Laurent, and Puma

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Who is an Influencer?

• “An influencer is an individual who has the power to affect purchase decisions of others because of his/her authority, knowledge, position or relationship with his/her audience.

• An individual who has a following in a particular niche, which they actively engage with. The size of the following depends on the size of the niche.” influencemarketinghub.com

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Is the FTC Cracking Down?

heidiklum ashleybenson

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Did the FTC Letters Work?

This is NOT a sponsored Dunkin Donuts post ....and I did NOT get payed for that !!! Scott Disick

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#YeezySeason6

image: @sophiemudd image: @amina.blue

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#YeezySeason6

@jordynwoods @parishilton

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#YeezySeason6

• Social network feeds were flooded with photos of various models posing as Kim Kardashian lookalikes, platinum wigs and all, wearing the Yeezy label.• Paris Hilton

• Jordyn Woods

• Amina Blue

• Sophie Mudd

• New York Times called it “the most successful thing Mr. West has ever done in fashion.”

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#YeezySeason6

• But was marketing campaign legal?

• Did the influencers receive a benefit?

• If influencers received a benefit, did they disclose it?16

Endorsement Guidelines

• Basic Rules have not changed• Endorsement must be truthful

• Results from a consumer that are not typical must be called out as such

• If a connection between the endorser and a brand or organization would affect how people evaluate the endorsement then it must be revealed

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.com Disclosures

• Clear and Conspicuous• Place disclosure as close to the claim as possible

• Consider different platforms

• Incorporate the disclosure into the ad whenever possible

• Make hyperlink disclosures obvious

• Try to avoid disclosures that require scrolling to view

• Stay up to date on research about how consumers view advertisements

• Display disclosures prior to consumers purchasing the product

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.com Disclosures

• For products purchased in stores, online ads should still have all relevant disclosures

• Prominently display the disclosures and do not place within T & C or other contracts

• Use plain language

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.com Disclosures

• FTC refused to adopt the growing European standard of using

•#spon•#paid•#ad

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Quiz Time: #YeezySeason6

• How would you fix #YeezySeason6?• #adYeezySeason6• Brands and influencers fear turning so-called organic

social media moments into traditional advertising campaigns, which might then decrease consumer engagement

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Quiz Time: Video Game Blogger

• A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review.

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Quiz Time: Video Game Blogger

• The blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.

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Quiz Time: Online Message Board

• An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product.

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Quiz Time: Online Message Board

•The poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

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Quiz Time: Skin Care

• A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser’s products on their personal blogs. The advertiser requests that a blogger try a new body lotion and write a review of the product on her blog. Although the advertiser does not make any specific claims about the lotion’s ability to cure skin conditions and the blogger does not ask the advertiser whether there is substantiation for the claim, in her review the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition.

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Quiz Time: Skin Care

• The advertiser is subject to liability for misleading or unsubstantiated representations made through the blogger’s endorsement. The blogger also is subject to liability for misleading or unsubstantiated representations made in the course of her endorsement. The blogger is also liable if she fails to disclose clearly and conspicuously that she is being paid for her services.

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Quiz Time: Skin Care

• In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated. The advertiser should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered.

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Astroturfing

• “Astroturf ” was the term used to describe fake comments since the reviews were creating the illusion of a grassroots movement of positive reviews

• Fake reviews are in the words of the FTC “deceptive”

• Both the FTC and state attorneys-general have brought claims against companies for astroturfing

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Sweepstakes, Contest, Lotteries

• Sweepstakes are promotions with 2 elements• Winner determined by random• Winner receives something of value

• A Contest is a promotion with slightly different elements• Winner determined by skill or criteria beyond mere luck• Winner receives something of value

• A Lottery is a special form of sweepstakes with 3 elements• Same elements as sweepstakes plus consideration for entry

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Questionsthoffmeister1@udayton.edu

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