FTC puts limits around influencer economy with rules guidance

11-Nov-2019 - Last updated on 11-Nov-2019 at 17:48 GMT

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As online influencers continue to wield more and more financial power, the FTC is laying down the rules on how brands and influencers must be transparent about their working relationship.

The Federal Trade Commission recently released a guidance called “Disclosures 101 for Social Media Influencers.” The new document explains best practices on how to ensure consumers are aware of advertising relationships.

The FTC's actions comes just a few days after the NCAA ruled that student athletes are allowed to profit off their image. The decision could be a gamechanger for dietary supplement brands. Student athletes steeped in social media will have tools at their disposal to monetize their personal brands quickly and we could see them hawking a variety of products.

The power of influence

So how important is it for athletes and influencers to be transparent when promoting sports nutrition and supplement products?

“It is very important,” said Michael Ostheimer, a staff attorney in the FTC’s division of advertising practices. “Many consumers rely upon incentivized endorsements by athletes and influencers.”

Ostheimer told NutraIngredients-USA that it’s not just up to the influencers to be transparent. Brands also have a program in place to make it obvious when they have hired influencers directly or otherwise provided incentives to them. “We have brought enforcement actions against brands for their influencers not being transparent. Advertisers need to have reasonable programs in place to train and monitor their influencers.”

Rules to post by

Ostheimer offered a few elements that he said every program should have:

1. Given an advertiser’s responsibility for substantiating objective product claims, it should explain to its influencers what they can (and can’t) say about its products – for example, providing a list of the health claims they can make for its products, along with instructions not to go beyond those claims;
2. It should instruct influencers on their responsibilities for disclosing their connections and how to do so;
3. To the extent that the advertiser reviews or pre-approves posts, it should not approve posts without proper disclosures;
4. The advertiser should periodically search for what its incentivized influencers are saying, and follow up on questionable practices.

The guide also mentions several steps that influencers must take, such as placing a disclosure in a place that is hard to miss and not mixing it in with a bunch of hashtags. If making an endorsement in a video, the disclosure should be mentioned in the video, not just in the description. After all, many viewers (especially when at work) watch without sound.

The guide also points out that financial relationships aren’t limited to money. Influencers must also disclose if they received free or discounted products or other perks.

In addition to the guide, the FTC also posted a YouTube video.

While not a new problem, the need for transparency is only becoming more pronounced as social media sites like Instagram grow.

In 2017, the FTC sent 90 letters to brand holders and endorsers emphasizing the requirement to be forthright about business relationships on social media.

Glanbia Performance Nutrition (Nutramino) was one of those companies warned. The FTC raised concerns about GPN’s relationship with Swedish fitness model Denice Moberg. Nutramino said that fitness model was part of a group of Swedish influencers who received free supplements from the company to test and review, and was not paid beyond that. Moberg did put "Nutramino athlete" in her bio to show her affiliation with the brand, but that was not considered proper disclosure.

Nutramino said, "Since receipt of the FTC letter, Glanbia Performance Nutrition (Nutramino) conducted a review of its athlete communications guidelines. We remain committed to complying with applicable regulations and guidance in this area."

Influencer marketing has become a key strategy for many brands because it’s considered more appealing to digital audiences than traditional advertising. According to Edelman's 2019 Trust Barometer, 63% of consumers trust influencers more than a brands' own advertising.

With 1 billion users accessing the platform every month, 50% of those are scrolling through their feed on a daily basis.

All eyes on your gram

In 2020, the online advertising market on Instagram is expected to reach more than $2.5 billion. With so many users, influencers and money, how difficult is it to keep up with marketing that takes place in ‘real time’?
“If you mean how hard is it for the government, influencer marketing is too widespread for us to monitor every influencer post, but we do engage in monitoring,” Ostheimer told NutraIngredients-USA.

And it’s not just Uncle Sam keeping tabs.

“Many individuals and entities bring problematic posts to our attention too,” he said.