September 8, 2016 by Paul Dughi
The Federal Trade Commission (FTC) is starting to look more closely at what’s being advertised in social media and how. In December, the FTC put out a new policy statement for enforcement. It said, in part, that it needs to be obvious to consumers when social media posts, or ads are paid for. They suggest hashtags such as #ad or #sponsored.
Two groups, however, have found 100’s of examples of posts that violate the rules for deceptive advertising.
When consumers see or hear an advertisement, whether it’s on the Internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evidence. The Federal Trade Commission enforces these truth-in-advertising laws, and it applies the same standards no matter where an ad appears – in newspapers and magazines, online, in the mail, or on billboards or buses – FTC
The regulations apply to all media – including social media. Where the FTC is focusing their sights right now is on celebrities, bloggers, and the like. While industry insiders may know someone has been paid to endorse a product, the general public may not know. The people seeing a post may not realize the person has been paid to showcase or endorse a product.
Suppose you meet someone who tells you about a great new product. She tells you it performs wonderfully and offers fantastic new features that nobody else has. Would that recommendation factor into your decision to buy the product? Probably. Now suppose the person works for the company that sells the product – or has been paid by the company to tout the product. Would you want to know that when you’re evaluating the endorser’s glowing recommendation? You bet. – FTC
A post of Selena Gomez became the most popular photo ever posted to Instagram, exceeding 4.5 million likes and 100s of thousands of comments. Notice the hashtag #ad that’s at the bottom. That would meet the FTC’s standards… but not when it was first posted, according to the group Truth in Advertising.
“There’s restrictions on commercial speech. So if they’re getting things for free or are getting paid to post what they’re photographing … then there are rules and regulations,” Truth in Advertising executive director Bonnie Patten
The group focused on the Kardashian-Jenner sisters, accusing them of not disclosing relationships with companies they promote. Truth in Advertising said they found more than 100 Instagram posts that were paid endorsements or product placements that weren’t marked as advertising – violating FTC standards. “These are business women who are experts at marketing,” Patten told CBS News. “That was one of the reasons that we decided to focus on them.”
The group said they targeted them because of their 300+ million combined followers. Some of the posts have been updated to add the #ad hashtag, but only about 20% of them.
Another group, Public Citizen, has said the FTC isn’t doing enough, and filed an official complaint after they said they documented 113 examples where products violated FTC guidelines: celebrity, athlete, and personality posts that were most likely paid ads, but not disclosed.
Many of the celebrities cited in the investigation are role models for children and teens. From Rihanna (pop music star) advertising Puma to Kim Kardashian (famous for the teen reality show Keeping Up with the Kardashians) endorsing Express Smile (a teeth-whitening company), these idols have a primarily young and impressionable audience. Other celebrities who have endorsed products without disclosure include musicians in the pop band One Direction and actresses from Nickelodeon shows (e.g. Victoria Justice) – Public Citizen letter to FTC
Public Citizen calls it “serial non-compliance.”
“The weight loss and cosmetics industries are using Instagram influencers to sneakily market products ranging from teas promising weight loss to glittery eyeshadow. Only a tiny fraction of these ads are disclosed to users.” – Kristen Strader, Public Citizen
But isn’t there freedom of speech?
Yes, but commercial speech is regulated differently. If someone is acting on behalf of an advertiser, that commercial speech violated the Federal Trade Commission Act if it’s deceptive. That includes endorsements that aren’t disclosed. It’s why you see that “paid endorsement” on the bottom of some TV commercials.