Attention Creators: Are Your Brand Collabs and Endorsements In Line With FTC Guidelines?

By Vidhi Narula
Published on June 30, 2023

The Federal Trade Commission is responsible for upholding public trust and well-being when it comes to trade practices in the USA.

With the onset of massive social media marketing and advertising, FTC had to expand its jurisdiction and incorporate social media practices under its purview as well.

The FTC is regularly updating and evolving to add definitions and statements that can help creators and influencers in interpreting the laws as well with the help of easy guides.

FTC Defines Endorsements

The most recent update in the guide by FTC makes changes to a lot of factors, including definitions of endorsements, endorsers, and brand.

This is done to enable creators in having a cohesive view of the policies and adopt best practices while accepting and executing endorsements on behalf of brands.

Disclosing Endorser-Brand Relationship

FTC asks creators and influencers to disclose their relationship with the brand while endorsing a product.

For example, if an influencer received a product for free, or a marketer reached out to an influencer and asked them to post about their products in exchange for money, then such relationships much be disclosed to the public.

However, an issue arises when some information that can help the users make an informed decision is kept from them, like when an influencer is only posting glowing reviews because they are getting paid and not because the products are actually good.

Another case is when the review posted is legally incorrect or not in line with how the brand portrays itself to be.

Any information or detail that is kept from the users can hinder their ability to see the full truth behind the post calls for action by the FTC.

For example, if a celebrity owns a brand and posts about it frequently while everyone knows the brand is owned by them, disclosing the relationship might not be necessary.

Nonetheless, when the relationship between the endorser and the brand is not apparent (paid, on friendly terms, or contractual), then it is necessary for the endorser to disclose the connection to the users.

This connection helps users understand the honesty and authenticity of the endorsement while also assessing the weight they should give to the same.

The guides also address advertisements that utilize endorsements from individuals who have achieved extraordinary or above-average outcomes.

Endorsements on Social Media

Social media comes under the advertising purview, and posts on social media by influencers are considered endorsements.

While many of us already know that influencers monetize their followership by making branded posts, it might be a different situation with every partnership, which makes it eventually essential for them to disclose their relationship with the brand.

Furthermore, while certain individuals may be aware of the financial agreements between content creators and advertisers, this may not be the case for everyone.

Avoiding Deceptive Posts as Endorsements

According to the law, an act or practice is considered deceptive if it deceives a “significant minority” of consumers. This is why disclosure plays a crucial role in ensuring transparency and preventing misleading practices.

Possible violations and concerns, when reported, bring the brand or the influencer under the FTC’s radar.

Every case is different and requires separate attention, so the resulting action is different for most cases.

In situations where legal intervention becomes necessary, the primary emphasis is typically placed on advertisers, ad agencies, and public relations firms.

However, there may be instances where taking action against an individual endorser is deemed appropriate, especially if the endorser has failed to make mandatory disclosures despite prior warnings.

Legal Intricacies with FTC

The Federal Trade Commission (FTC) is responsible for conducting investigations and initiating legal actions related to endorsements made on behalf of advertisers, in accordance with Section 5 of the FTC Act, which generally prohibits deceptive advertising.

While the Guides themselves do not possess the legal authority, engaging in practices that contradict the principles outlined in the Guides can lead to law enforcement actions, alleging violations of Section 5.

These law enforcement actions may result in court orders that require the defendants to provide monetary compensation to consumers who have been harmed by the violations, as well as adhere to various obligations in the future.

Bottom Line

Brands and marketers are free to solicit endorsements and spread the word about their products on social media considering how far-reaching the platforms have become.

However, the onus lies on the influencers and creators to disclose their motivation behind posting about the products and their relationship with the brand so that the reviews are not deceptive or misleading for users.

Moreover, not every incentive has to be monetary. For example, if a brand offers an influencer a chance to be in a television advertisement in exchange for a good review on Instagram, that also has to be disclosed to the public while making the post.

As an influencer, it is crucial for you to fulfill your responsibility by making appropriate disclosures, familiarizing yourself with the Endorsement Guides, and ensuring compliance with laws that prohibit deceptive advertising.

By doing so, you contribute to maintaining transparency and trust between yourself and your audience, as well as adhering to legal obligations related to endorsements and advertising practices.

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