Influencers under the Radar: DoJ Weighs In

*** The writing does not, and is not intended to, constitute legal advice by any means***
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While uploading a post on Instagram today, I learned that the app now added its "Tag Business Partner" feature for all users. Until now, the feature has been available to professional accounts only. Seeing this reminded me of a fashion law seminar I attended last fall. (The seminar was put together by attorneys from Foley & Lardner) One of the discussions centered around potential legal issues in influencer marketing on online platforms. So I thought it is timely to explore the topic, now that more users are expected to make use of this lucrative feature.

Almost every fashion brand now engages Instagram influencers to increase its online visibility with the hope of boosting sales as well as enhancing reputation. This exponential growth in influencer marketing over the years caught the attention of Federal Trade Commission (FTC), a regulatory agency in charge of consumer protection. It should serve as a wake-up call when FTC promulgates an official guideline. In the fall of 2019, FTC decided to get involved as consumers might be deceived and hurt by fake accounts posing as partnered "brand ambassadors". Or, even if they are official, their failure to clearly disclose their financial relationships can mislead the audience.

The guideline details how influencers can satisfy its disclosure requirement. For example, when uploading a promotional video, the disclosure should be made explicitly in the video itself, rather than in the text buried by multiple hashtags. Plus, hashtags should not be misleading and confusing. If a paid influencer uses #thanks as a stand-alone hashtag, viewers are likely to misinterpret the message. Finally, FTC strongly warns that using the "in paid partnership with" disclosure tool may not be "good enough".

Instagram influencers are commercially sophisticated and legally savvy. An attorney from the seminar mentioned that young influencers now bring their own legal advisors to negotiation tables. Fashion brands too are increasingly aware of how things can go terribly wrong in case of a social media mishap. Their legal teams monitor online platforms, including Instagram, to catch imposters and, sometimes, review posts before going online (of course, the review provision would be written down in a contract!).

So far, FTC has not brought any claim against influencers or fashion brands for allegedly deceptive influencer marketing practices. It remains to be seen how this legal landscape in constant flux will play out in near future. However, one thing is very clear: it never hurts to be transparent.