Responding to FTC Investigations of Influencers and Affiliates

Responding to FTC Investigations of Influencers and Affiliates

In recent years, the Federal Trade Commission (FTC) has been cracking down on influencers and affiliates who fail to properly disclose their relationships with brands when promoting or endorsing products. This increased scrutiny has resulted in warning letters, fines, and even lawsuits against influencers, brands, and affiliate networks.

If your business works with influencers or affiliates, it’s important to have a plan in place for responding to potential FTC investigations. Here are some tips on navigating FTC inquiries and building a compliant influencer marketing program:

Understand FTC Endorsement Guidelines

The FTC’s Endorsement Guides provide the framework for proper disclosure of influencer-brand relationships. Some key points:

• If there is a “material connection” between an influencer and a brand they are promoting, it must be clearly disclosed.
• Disclosures must be hard to miss – using terms like “ad,” “sponsored,” or “promotion.”
• Disclosures must be made on all platforms where the endorsement is visible.
• Both brands and influencers are responsible for ensuring proper disclosures are made.

Educate your team and influencers on FTC guidelines to avoid issues down the line. The FTC offers Disclosure 101 materials specifically for influencers.

Review Past Influencer Marketing Content

Conduct an audit of your past influencer campaigns and content. Were proper disclosures made on all posts? If not, ask influencers to go back and add disclosures where missing. This shows good faith effort to comply with regulations.

Update Influencer Agreements

Your contracts with influencers should include language about FTC disclosure compliance. Make sure influencers understand their obligation to disclose, and reserve your right to terminate agreements if they fail to do so properly.

Train Influencers on Compliance

Don’t just assume influencers understand how to make disclosures – train them! Develop educational materials or hold training sessions to walk influencers through proper disclosure methods. Provide examples of compliant and non-compliant posts.

Approve All Influencer Content

Before influencers publish sponsored content, have it reviewed and approved by your compliance team. This allows you to catch any disclosure issues ahead of time. Maintain documentation of your approval process.

Monitor Ongoing Compliance

Periodically monitor your influencers’ feeds to ensure they are properly disclosing. Follow up immediately if you catch any non-compliant posts. Also consider using third-party monitoring tools.

Respond Promptly to FTC Inquiries

If the FTC reaches out regarding an investigation, respond promptly and transparently. Provide all requested information in a timely manner. Delay or obstruction will only raise more red flags.

Be truthful and cooperative, but avoid oversharing or speculation. Consult legal counsel before responding if needed. Ask clarifying questions if any inquiry is unclear.

Take Corrective Action

If the FTC identifies disclosure violations, take corrective steps immediately. Have influencers add disclosures to non-compliant posts. Commit to enhanced compliance monitoring and training. A good faith effort goes a long way.

Consider Settlement Offers Carefully

The FTC may offer a settlement agreement to avoid litigation. These usually involve: 1) Disclosure compliance for a period of years 2) Record keeping and compliance reporting 3) Monitoring and audits. Consult legal counsel carefully before agreeing to settlement terms.

Self Report Violations

If you discover disclosure violations internally, consider self-reporting to the FTC. They look favorably on companies that voluntarily admit and correct problems. Self reporting can help avoid stricter penalties down the road.

Issue Public Corrections

For serious violations, the FTC may require you to issue public statements correcting inaccurate claims made by influencers. Work closely with legal counsel to ensure any public messaging is appropriate.

Understand Potential Penalties

Failing to properly disclose material connections with influencers can result in FTC fines of up to $43,280 per violation. In addition, state laws provide for private rights of action from consumers harmed by non-disclosure. This creates potential class action liability.

Learn from Each Incident

Treat each FTC inquiry as a learning experience. Analyze what went wrong and where your disclosure practices fell short. Continuously improve processes to achieve full compliance.

Staying on the right side of influencer marketing regulations protects your reputation with consumers and avoids costly penalties. With vigilance and commitment to compliance, your business can confidently tap into the power of influencers.

References

FTC’s Endorsement Guides: What People Are Asking. (2017, September 7). Federal Trade Commission. https://www.ftc.gov/business-guidance/resources/ftcs-endorsement-guides-what-people-are-asking

Three FTC actions of interest to influencers. (2017, September 7). Federal Trade Commission. https://www.ftc.gov/business-guidance/blog/2017/09/three-ftc-actions-interest-influencers

Endorsements, Influencers, and Reviews. (2023, June 14). Federal Trade Commission. https://www.ftc.gov/business-guidance/advertising-marketing/endorsements-influencers-reviews

FTC Staff Reminds Influencers and Brands to Clearly Disclose Relationship. (2017, April 19). Federal Trade Commission. https://www.ftc.gov/news-events/news/press-releases/2017/04/ftc-staff-reminds-influencers-brands-clearly-disclose-relationship

Disclosures 101 for Social Media Influencers. (2019, November 1). Federal Trade Commission. https://www.ftc.gov/business-guidance/resources/disclosures-101-social-media-influencers

FTC Releases Advertising Disclosures Guidance for Online Influencers. (2019, November 5). Federal Trade Commission. https://www.ftc.gov/news-events/news/press-releases/2019/11/ftc-releases-advertising-disclosures-guidance-online-influencers