Only a few days ago, on February 12, 2020, the Office of Commissioner Rohit Chopra from the United States of America Federal Trade Commission, Washington, D.C. 20580, has released the latest Statement Regarding the Endorsement Guides Review – Commission File No. P204500. Inside of the statement, the FTC has voted 5-0 to approve a Federal Register notice calling for public comments on questions related to whether The Endorsement Guides for advertising need to be updated – and according to the latest change, marketing posts on social media should from now on trigger financial penalties for influencers.
Even though at the moment every creator and/or influencer needs to note his post is part of an advertisement, is sponsored or is being a part of a paid partnership, according to Chopra the governing rules are not official sufficiently to make the entire social media marketing system fair and transparent enough – which, according to him, is as manipulative and persuasive as traditional advertising.
Although social media advertising appears to be more authentic – thanks to the discernible connection between a consumer and influencer achieved in social media services like Facebook’s Instagram, Google’s YouTube or China-based TikTok – if not controlled and overseen in an adequate way, Commissioner believes it could be just as much used against American families and small business that should be rightfully skeptical about both of these modern and traditional media.
Commissioner Chopra wants the FCT to consider making these rules completely official by “Codifying elements of the existing endorsement guides into formal rules so that violators can be liable for civil penalties under Section 5(m)(1)(A) and liable for damages under Section 19.” As well as “Specifying the requirements that companies must adhere to in their contractual arrangements with influencers, including through sample terms that companies can include in contracts.”
He believes that FCT needs to take bold steps to safeguard the digital economy from lies, distortions, and disinformation – as for now he thinks that some of the influencers and social marketers could deliberately hide the connection between the advertiser and the client – which should be “as clearly and conspicuously disclosed as possible.”
“When companies launder advertising by paying an influencer to pretend that their endorsement or review is untainted by a financial relationship, this is illegal payola,” says Commissioner Rohit Chopra from Federal Trade Commission. “Misinformation is plaguing the digital economy, and recent no-money, no-fault FTC settlements with well-known retailers and brands to address fake reviews and undisclosed influencer endorsements may be doing little to deter deception. The FTC will need to determine whether to create new requirements for social media platforms and advertisers and whether to activate civil penalty liability.”
Chopra is concerned about organic influencer posts on Instagram or Facebook for example, as he believes these paid promotions amplify the reach of an astroturf marketing campaign to a broader audience who may be unfamiliar with the influencer – which, according to him, could be a disguising social media marketing activity as predictive algorithms that fuel the surveillance-based advertising business knows exactly how to target specific ads to specific people.
Fortunately, Commissioner suggests the FTC focus on the platform and advertisers that are earning millions of dollars on these potentially festering frauds, rather than smaller influencers themselves – so even though the upcoming law is most likely to be more demanding about rules governing your social media marketing campaigns and the obviousness of the promotion included, these changes are about to hit the biggest players and the advertisers themselves instead of regular social media influencers.
With the codified incentivized endorsement, formally demanding social media platforms to implement policies and even features to disclose the state of marketing contract participation inside of the social media channel or a single sponsored post, self-policies of social media platforms would have been unified and strengthen – and, above all, they would eventually get rid of the “gray areas” around incentives like free clothes or discount rates. Ultimately, it’s up to all the parties involved to do their due diligence and to remain legally compliant.