Influencer Marketing Expansion Attracts Federal Regulators

By Katherine Bishop Dunn

June 15, 2020

The “influencer” marketing industry, which is predicted to become a $15 billion industry by 2022, is rapidly expanding, and with COVID-19 ramping up e-commerce, brands are increasingly turning to this marketing strategy. Influencers are people with varying amounts of online followers who promote and advertise products and services on YouTube, Twitter, Facebook, Snap Chat, Instagram, TikTok and blogs. Influencers can be celebrities, industry experts, or everyday people who have built a reputation for being knowledgeable on a specific topic. A successful influencer generates a large following of engaged people who trust and pay close attention to the influencer’s views and recommendations.

Businesses that utilize influencer marketing should be cautious of the legal risks. Consumer protection regulators, including the Federal Trade Commission (the “FTC”) and more recently the Food and Drug Administration (the “FDA”), are targeting deceptive influencer practices that could mislead consumers. Brands, media outlets, and influencers are legally obligated to disclose any social media post that was created from “material connections” between a brand and an influencer, and can all be held liable if the law is not observed. The FTC has stated that “material connections” could include a paycheck or gift in exchange for an endorsement, a family connection to a company, or an ownership stake in the company. Despite the requirements for disclosures on social media posts, many posts and influencers continue to not properly disclose.

To decrease the legal risks of influencer marketing, a business should consider implementing these practices:

  • Develop an influencer contract or terms of service which address the contractual terms necessary to properly create an influencer marketing campaign;
  • Monitor the continuous regulatory developments to ensure your business and influencers are complying with applicable law;
  • Provide your influencers with a set of guidelines as to what they must disclose and how they should disclose “material connections”; and
  • Develop active monitoring programs that monitor your influencers and vendors.

If you have questions about your organization’s influencer marketing policy and related legal issues, call Attorney Katherine D. Bishop at 401-824-5100 or email kbishop@pldolaw.com.

Disclaimer: This blog post is for informational purposes only. This blog is not legal advice and you should not use or rely on it as such. By reading this blog or our website, no attorney-client relationship is created. We do not provide legal advice to anyone except clients of the firm who have formally engaged us in writing to do so. This blog post may be considered attorney advertising in certain jurisdictions. The jurisdictions in which we practice license lawyers in the general practice of law, but do not license or certify any lawyer as an expert or specialist in any field of practice.

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