The One Key to Smart Influencer Disclosure and Compliance

Back in the summer of 2015, the US Federal Trade Commission (or FTC, the regulatory body which has authority over influencer-brand partnership disclosure) wrote a very interesting letter to Microsoft’s lawyers.

In that letter they explained that they would not pursue enforcement action against Microsoft, despite acknowledging that Microsoft and its ad agency had failed, under section 5 of the FTC Act, to disclose a material connection in videos posted by paid influencers.

Why would the FTC not take enforcement action against Microsoft or its advertising agency when the facts show clearly that the ad campaign involved payments to Youtube influencers that were never disclosed?

The FTC acknowledged both that the failures to disclose were isolated incidents and that Microsoft had followed a “robust” influencer compliance and disclosure program.

What were the keys to their success? The program included:

Pre-campaign

  • Specific legal and marketing guidelines on the FTC’s Endorsement Guides and training for employees, vendors and ad agency personnel.

Post-campaign

  • Employees to monitor influencer campaigns conducted by subcontractors and swift action to insert disclosures into the campaign videos.

So, not only did Microsoft have “robust” compliance measures in place to prevent this type of non-compliance but it also acted swiftly to rectify the errors.

Interested in learning more about how to build your own robust compliance program into your influencer marketing team? Join the author, Rupa Shah, for a free webinar on October 18, 2018, called “Getting Disclosure Right”.

InfluencerDB

What are “robust compliance measures” for influencer marketing?

Simply put, it’s education. If you play a significant role in producing an ad, here are some basic rules of the road.

Know the rules that apply

You should:

  • have a fair idea of the range of scenarios that require disclosure
  • understand what clear and conspicuous disclosure actually looks like in the platforms that you are using

Stay up-to-date

You should stay up-to-date with regulatory developments and be aware of significant FTC rulings in the US, Advertising Standards Authority (or ASA, the self-regulatory organization of the advertising industry) decisions in the United Kingdom, or equivalent regional rulings because, although the basic rules and regulations on disclosure are unlikely to change, there may be subtle but important developments that affect e.g. which hashtags are acceptable, where they need to be placed, etc.

Educate your content collaborators

You should ensure your influencers are aware of their responsibilities and set out those requirements in a context and in language that they will understand (i.e. not buried in obscure legal jargon in clause 796 of their contract). For instance, (below) Adam Gallagher of @iamgalla uses the “Paid partnership” tag for his partnership with Armani Beauty.

Practice Ongoing Oversight

There should be ongoing monitoring for compliance and, in the event that a breach is spotted (or an enforcement body notifies you of one) swift action should be taken to rectify the error. Conduct an audit if you suspect similar breaches have occurred previously and consult your lawyers or a specialist regulatory firm like Hashtag Ad Consulting to ensure your compliance training and guidance is relevant, current and, importantly, simple and easy to digest.

Will rectifying errors swiftly help in an influencer disclosure ruling?

It certainly seemed to in the Microsoft investigation, or at least it is cited as a mitigating factor. In the UK, the ASA could potentially close an investigation informally on this basis (so no published ruling) but, equally, if it considered that the breach was serious enough to require a full formal investigation, it would merely note that action in the “response” section of the ruling and uphold the complaint regardless, as happened in this recent case. So, no guarantees that the regulators will forgive and forget, but at the very least it should soften any negative press generated by a ruling or enforcement action.

Who should pay attention to influencer marketing compliance?

The obvious answer is brands and influencers but in the US and UK (and many other jurisdictions) responsibility also rests with intermediaries such as social media agencies, tech platforms, talent management companies; they should all have reasonable programs in place to train and monitor the influencers they pay and direct. In the UK, the Competition and Markets Authority has taken action against social media agencies and the FTC Endorsement Guides equally make clear that intermediaries also hold responsibility for ensuring compliance with disclosure rules.

About the author:

Rupa Shah, founder and director of Hashtag Ad Consulting Ltd, a London firm that specializes in providing legal and regulatory guidance to influencer marketers. With 13 years experience at the Advertising Standards Authority (UK), Rupa uses her wealth of regulatory knowledge to provide bespoke in-house training to brands, agencies and tech platforms on advertising compliance and the rules of influencer marketing.

This blog post was originally published on Hashtag Ad Consulting’s blog and is republished here by permission of the author.

Show CommentsClose Comments

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.