Today there are so many ways to reach consumers through digital content, but a recent Federal Trade Commission settlement with Lord & Taylor provides an important reminder that the rules of the road for traditional advertising apply to advertising in any medium. The FTC is looking for opportunities to ensure that paid endorsements are properly disclosed in social and other digital media and native advertising contains appropriate disclosures to avoid deception.

Facts

Lord & Taylor launched an advertising campaign for a line of clothing featuring an asymmetrical paisley dress. The marketing plan included social media with Lord & Taylor–branded blog posts, photos, video uploads, native advertising editorials in online fashion magazines, and the use of “fashion influencers” recruited for their style and base of followers on social media platforms.  

Lord & Taylor gave the dress to 50 fashion influencers who were paid, in amounts ranging from $1,000 - $4,000, to post photos of themselves during a specific weekend wearing the dress. Lord & Taylor contractually obligated the influencers to mention the company using the “@lordandtaylor” designation and to include the campaign hashtag “#DesignLab” in the photo caption. Lord & Taylor representatives preapproved each of the Instagram posts to ensure that the required hashtag and appropriate designation was used.

Lord & Taylor also paid for an article about the new collection that appeared on the Nylon Magazine website and for a posting on Nylon’s Instagram account. 

The FTC Action

Lord & Taylor should have clearly disclosed that the 50 Instagram images and captions were part of a paid-for advertising campaign to promote the new collection, and not the independent statements of impartial fashion influencers. Further, the Nylonmagazine article should have been identified as a paid advertisement, and included a disclosure of the commercial arrangement with Lord & Taylor.  

Under the terms of the order, Lord & Taylor is:

• Prohibited from misrepresenting that an endorser of a product is independent,

• Required to clearly disclose when there is a material connection between Lord & Taylor and the endorser, and

• Prohibited from misrepresenting that paid commercial advertising is a statement or opinion from an independent or objective publisher or source. 

Takeaways

1. The FTC’s Endorsement Guidelines apply to social media. An endorsement must reflect the honest opinion of the endorser and if there is a material connection between the marketer and the endorser, that connection must be clearly disclosed. Here is a link to the FTC’s Endorsement Guidelines.

2. Be transparent. Paid advertising that does not look like a traditional advertisement because it blends in with the surrounding media may require a disclosure. Simply put, advertisements should not suggest or imply that it is anything other than an ad. Clear and conspicuous disclosures may be necessary to ensure that consumers understand that certain content is advertising. Special care should be taken when using digital media because the format of advertising can be easily manipulated to resemble other content. The FTC has provided guidance to help advertisers identify when disclosures are needed.

3. Keep an eye on your affiliates and those you hire to ensure that they are aware of your expectations. Contractual requirements are a first step, but it is also important to monitor for compliance and take appropriate actions when expectations are not met.