The FTC will crackdown on disguised influencer marketing on Instagram, TikTok, and YouTube

The US Federal Trade Commission (FTC) plans to impose stricter penalties on firms that use influencer inputs to disguise advertising on platforms like Instagram, YouTube, and TikTok as authentic content. The FTC Commissioner Rohit Chopra has required influencers to disclose sponsored posts, but the guidelines did not have a significant effect. Chopra is of the opinion that the FTC needs to develop and specify requirements that should be enforced in their contracts for acquiring content from influencers. This would, he feels, ensure that the responsibility of delivering authentic advertising content (and not disguised ads) will fall on advertisers and not small influencers.

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Facebook’s Instagram and Google’s YouTube are major vehicles for influencer marketing campaigns, with China-based TikTok also growing rapidly. Social media platforms promote and profit from influencer marketing in many ways. […]Fake accounts, fake likes, fake followers, and fake reviews are now polluting the digital economy, making it difficult for families and small businesses looking for truthful information”, he said in an official statement.

In earlier instances, brands have been using influencer content and sharing with unsuspecting consumers, disguising it as authentic advertisements. This is misleading and the act of concealing the truth from customers will now be attracting a penalty. Currently, the Enforcement Guide does state that any undisclosed connection between an endorser and a seller of the product being advertised is unacceptable. Any such relationship should be disclosed, maintain the authenticity of the product and ensure no misleading content is shared with the public. But the last update to the Guide was over a decade ago, and clearly, marketing strategies have changed over this period. So this is the time for a relook and upgrade of the Guide.

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The FTC will determine whether to create new requirements for social media platforms and advertisers and whether to activate civil penalty liability. Chopra’s statement follows the FTC’s 5-0 vote to seek public comments and a regulatory review of the Endorsement Guides. This requires influencers to disclose sponsored posts. The public comments needed will confirm the effectiveness of the guide, and if it has benefited the customer. More importantly, a public vote has been asked for confirming if the Guide has had any impact on ensuring that honest information is shared with customers by way of advertisements.  And above all, it will also ascertain if any technology developments need to be address with relevant changes, to meet the requirements of the Guide.

The FTC says it will need to “seek tougher remedies” for companies that are violating the rules around paid endorsements.