Guest Post by Bobby Desmond, Esq.
Many adult entertainment companies hire models, performers, and other so-called “influencers” to review, advertise, market, or otherwise promote their goods and services to their followers on social media. These influencers provide companies with a valuable and often relatively inexpensive method of reaching new customers.
Since these sponsored posts often impact the purchasing decisions of social media users, the Federal Trade Commission (“FTC”) requires companies to ensure that influencers follow certain guidelines whenever the company provides something of value to the influencer with the expectation that the influencer will discuss the company’s products or services on their social media. “Something of value” can mean free samples, cash, prizes, and more. There are some exceptions to this rule.
First, companies need not make disclosures when offering free samples to its general customer base without expecting more from those recipients. Second, companies may interview customers about their experience with their products or services and then quote those customers in their advertisements. Companies may even pay those customers for the use of their endorsements. No disclosure is necessary so long as the customer provided the quote before expecting any compensation for doing so. For example, no disclosure is necessary if a company finds a positive vlog about their product, reaches out to obtain the customers consent to share the vlog on their twitter account, obtains that consent, and then provides the customer with a thank you gift after the fact.
Companies must make sure their influencers are honest and not misleading. Companies should not encourage influencers who have not actually used that product or service to make sponsored posts. Companies should instruct influencers to provide only their honest opinion and to avoid any claim that the company would not be able to legally make on its own.
The FTC suggests that companies provide influencers with a list of examples that they cannot say and a set of instructions to prevent claims from going too far. Additionally, the FTC expects companies to make a reasonable effort in periodically reviewing their influencers’ sponsored posts and following up on any questionable practices. The FTC has explicitly stated that it is unlikely to pursue a law enforcement action for a post by a rogue influencer if the company has a reasonable training, monitoring, and compliance program in place to prevent such problems. Ultimately though, the company is responsible for its advertisements, whether they are posted by the company, a public relations firm, or an influencer.
Companies should also inform influencers about properly fulfilling the disclosure requirements. Disclosures must be clear and conspicuous. This requirement is generally met when the disclosure is (1) close to the claims to which they relate, (2) if text, in an easy to read font and color that stands out from the background, (3) if video, on screen long enough to be noticed, read, and understood, and (4) if audio, read at an easily understandable cadence.
Additional disclosures are required in certain circumstances. For example, influencers that receive only samples can fulfill the requirement by stating “Company X gave me this product to try for free.” However, if the company pays the influencer or provides some compensation in addition to the free sample, the company should instruct the influencer to make further disclosures such as “Company X paid me to try this product.” Companies should also instruct influencers to disclose whether the influencer achieved above-average results or has some connection to the company that their followers would not expect, such as an employment or familial relationship.
While the FTC does not generally monitor paid social media posts, followers can and do report possible violations to the FTC. The FTC then evaluates those reports on a case by case basis before deciding whether to investigate or involve law enforcement. The FTC has enforced these rules in the past, so it is important that companies become familiar with the guidelines and instruct their influencers on how to follow them.