Keeping up with FTC in the Influencer Era: Insights from Frankfurt Kurnit
“If you see that there’s a real need, from a marketplace perspective, to have influencers drive people to make a connection and purchase, then that is something that the law considers important.” Hannah Taylor, Partner, Frankfurt Kurnit
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Influencer marketing is evolving. As it dominates the advertising industry, it faces a dirty name proposed by some on occasion whereas others see it as a democratized creation opportunity. Consumers look for somebody to inspire them and influencers do just that.
Because of its rapid growth, the industry appears to grapple nowadays with the notion of inauthenticity and therefore not abiding full disclosure guidelines and more seriously, the Federal Trade Commission.
“If you see that there’s a real need, from a marketplace perspective, to have influencers drive people to make a connection and purchase, then that is something that the law considers important,” Hannah Taylor, Partner, Frankfurt Kurnit, explained during a #SMWNYC panel.
This isn’t a new law, it’s been in effect since the 1920s and Section 5 of the FTC act basically says you can’t lie and you can’t be unfair,” she continued.
In the influencer community, the FTC has interpreted what is to lie in this area is a piece of content that looks organic but there’s actually something going on behind the scenes.
Influencers and transparency
Influencers with an affiliation or any degree of partnership with a brand or product must be completely transparent with the terms of their relationship to said brand in the content they create and post.
“The FTC believes that if there is a relationship, not just financial but any type of connection like brother, wife and a free product exchange – between a person and a brand then it has to be disclosed,” said Taylor. This is where tools such as #ad have come in to play, as well as Paid Partnership. “In the influencer space so far, we haven’t seen monetary penalties at the outset as much as we’ve seen very long audits for a brand.”
Africa feels this can be disconcerting to personalities such as herself, but Taylor reassures that there is a 2017 updated guideline by The FTC online. “It’s written for the average consumer and talks about what to do if you get a free product.”
It’s essential for influencers to actually be bonafide users of what they’re advertising, too. From a legal perspective, it’s the law that you have to use it and not be partaking in the advertisement on the basis of authenticity.
Reesa Lake, Partner, Executive Vice President, Digital Brand Architects, noted, “there’s a huge amount of trust between influencers and their audiences, so why would you tarnish it?”
Mutual non-disparagement agreements in contracts are important, however, Taylor says that brands can have problems with these when they invest heavily in a campaign and the influencer leaves.
“Termination clauses are a hard no for us,” Lake explained. “Brands sometimes want to terminate for convenience and we never want to do that.”
Finding a balance
There’s a balance to master between being authentic and abiding regulations. The format of people’s phones can alter perceptions in regards to disclosure – some people’s devices and versions of apps only allow them to see the first three lines of a caption, whereas others can see it’s entirety. This blurs the lines as to where the disclosure needs to be stated and should be specified within contracts.
The FTC is cracking down on regulatory law. It recently sent 90 letters to brands and influencers saying that for a variety of reasons their disclosure was insufficient. Whilst it’s becoming even more clear how to post correctly, it’s simultaneously becoming more complex.
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