The FTC Cracks Down on Social Media Influencers

Posted by on Nov 13, 2019 in People and Culture

Social media: it’s not just for sharing cute photos of your cat anymore. As a matter of fact, it has become a multi-billion-dollar-a-year advertising industry. The problem is, though, that the industry is largely unregulated. Now, the Federal Trade Commission, or FTC–the agency whose job it is to look out for consumers–has attempted to tighten up controls on social media advertising. But will they work?

#ad

In 2020, Instagram’s advertising market expected to reach over $2.5 billion. That’s a pretty staggering amount. But the trouble is that the platform isn’t always completely transparent about what is and is not an advertisement. That’s because Instagram and other social media platforms use what are called “influencers” to promote products. Influencers are people with tons of followers. And often, when they post about loving a new product or restaurant, you won’t realize that you’re reading a paid advertisement until you get to the very end of the post and see that it says “ #ad.”

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The federal government is trying to influence some of the sponsored content found on social media. Credit: Shutterstock/guukaa

Not Enough

But the FTC has now decided that social media platforms need to go further and be clearer to users about what is and is not a paid advertisement. But whose responsibility is it to police ads posted by influencers? According to the FTC, the responsibility lies with influencers themselves. To that end, last Tuesday the FTC released an eight-page document and video called “Disclosures 101 for Social Media Influencers.” The document and video explain to influencers how to clearly mark that their post is a paid advertisement.

For example, they can place a disclosure such as #ad, #advertisement, or #sponsored at the beginning of the post instead of at the end. It also offers examples of effective and ineffective disclosures and gives pointers on when a disclosure is necessary and when it isn’t. Basically, people are expected to disclose a sponsored endorsement any time they promote a product or place in exchange for money, free products, or any other benefit.

Though the bulk of the responsibility for identifying sponsored content falls on the influencers, the FTC also expects the companies who are paying the influencers to make sure that the influencers are aware of and familiar with, the new rules. And to be clear: the document itself isn’t a law. It’s just a guideline to help users follow the law.

Why Now?

As the power of influencers continues to grow, and the budget of social media advertising along with it, the FTC has had to assume a greater role in order to protect consumers. Their first charge against social media influencers came in 2017 when two YouTubers promoted an online gambling service without disclosing that they were the owners of it. More recently, last month, the FTC accused a company of selling more than 58,000 fake Twitter followers to people to make it seem like they had more influence than they really did.

Dig Deeper The FTC has also released a Web site for social media influencers. Besides when and how to disclose an advertisement, what else does the site say you need to know?