What disclosures do social media influencers need to display?
To prevent fraud or deception in the marketplace and protect consumers the Federal Trade Commission requires businesses to provide certain information or disclosures when influencers help with marketing. The FTC can issue fines to businesses and individual influencers that provide misinformation or omit information in the marketplace.
The FTC Act requires that social media influencers provide several disclosures as part of their online profiles, sponsored posts, or on their websites. Specifically, all sponsored or paid endorsements must be labeled. If an influencer receives payment to talk or write about a brand, they must share that with their audience. Examples might include:
- Paid endorsements (paid partnerships with a company).
- Receipt of free products.
- Discounted products or services.
- Donations to charity in exchange for endorsements or reviews.
Typically, the influencer embeds the disclosure into a video or picture or places it in a hard-to-miss location. Family and other personal connections are disclosed as well. You do not, however, need to make any disclosures if the company did not pay you or give you anything for mentioning a product. If you have an Influencer Agreement with a company, you likely must disclose each time you post on their behalf.
Influencers should also keep in mind that all forms of media fall under the FTC, which includes videos, blogs, and social media posts. Do not assume that followers already know about your brand associations. Disclose, disclose, disclose!
Can Non-Disclosure Agreements circumvent disclosure requirements?
No. A company cannot legally ask an influencer to decline to disclose that they are being paid for their promotion. Some sponsors may ask an influencer to sign a Non-Disclosure Agreement about their affiliation with a company. This type of agreement may violate disclosure requirements depending on what it includes. An NDA, however, may still cover certain information that an influencer may learn while working with a company or client, but cannot circumvent disclosures required by law. For example, if an influencer will learn about a company’s secret ingredient as a result of their work, an NDA can prevent them from disclosing that information.
Can influencers call themselves experts?
The FTC limits who can call themselves an expert. An expert, or subject matter expert, is someone who has qualifications in a specific area. When an influencer or content creator claims subject matter expertise, they could be asked to prove those claims.
The FTC is strict about these expert claims. When a social media influencer endorses products or brands as an influencer with expertise, they should be prepared to show the FTC and potentially others their qualifications. This can include relevant education, certificates, licenses, and work experience.
Can a social media influencer legally obtain free products?
Yes, but the caveat is that the products are not really free. Products are often provided for free or at a discount for influencers to review or post about as part of a marketing strategy. Influencers, typically, must agree to do some work to receive these products. Additionally, influencers still must disclose the company sent a free or discounted product.
The company asking for the review is generally not permitted to demand a positive review. It is a different relationship than an Endorsement Agreement where money or products are exchanged for a favorable review. An influencer’s product review reflects their real opinion after actually using the product. Influencers cannot review products they have not tried themselves.
Can influencers be paid to endorse products?
Influencers, such as brand ambassadors, can be paid, and often are, to endorse products. The FTC permits a paid partnership for branded content provided both parties follow certain rules:
- The endorsement or review states that the influencer is paid for their statements.
- The influencer shares their real opinion about a product or service.
- The influencer used the product or service.
- Influencers (and companies) cannot make claims about a product that requires medical or scientific proof.
Claims that require medical or scientific proof might include treating an ailment or condition. In general, unless there are studies that support the claim, influencers may want to stay away from making these types of representations. Also, an Influencer Agreement cannot get around these requirements. That is, a company cannot force an influencer to violate disclaimer requirements.
What liability could a social media influencer face?
Influencers can get into legal trouble if they promote companies or products without the right disclosures, violate copyright laws, or make false claims or statements. Registering an LLC or corporation, however, can help to limit liability for all sorts of entrepreneurs, including influencers. With a Rocket Legal+ membership, your first business registration filing is free (excluding state fees).
Disclosure enforcement
The FTC can hold bloggers or social media influencers liable if they fail to disclose their promotion, review products they never tried, or claim something works when it did not.
In general, the FTC’s goal is to promote truth in advertising. It may hold an influencer liable if they are not honest with their audience. Violating disclosure requirements, or fake social media reviews or endorsements can cost social media influencers up to $43,792 per violation.
Copyright laws
It’s not just the FTC that can hold social media influencers liable. Intellectual property rights can trip up influencers as well. Copyright laws apply to images, videos, music, and graphics. Using another creator's work without the right permissions can lead to legal consequences.
Following copyright laws is critical to avoid this type of situation. Unfortunately, nano-influencers and micro-influencers are more likely to violate copyright laws. This might occur because they do not know or understand their obligations, or they could assume they are small enough that no one will notice. Neither of these justifications is valid. Influencers have an obligation to know and understand their legal rights and responsibilities.
The consequences for violation of copyright laws vary widely because the individual holding those rights must assert them. Damages could be substantial, however, depending on the situation. In addition, copyright litigation can be costly and generally involves hiring a lawyer.
Libel or defamation
Influencers could also find themselves subject to libel or defamation suits if they make untrue claims about a person or company. While the truth is a defense, and opinions are also exempt from these claims, the lines between opinion and truth and defamation can get murky.
Like copyright, claims for libel or defamation are civil actions. The amount of damages or risk of liability varies a great deal.
If you are facing legal trouble, speaking with a Legal Pro right away can help you understand your rights and options, and help to make sure you do not miss any important deadlines.
What do influencers need to know about contracts with marketing agencies or brands?
Some brands may ask an influencer to enter into an Influencer Agreement for paid services. In general, a written agreement is a good idea so everyone is on the same page when it comes to performance and payment expectations, and who owns the rights to any content that is made. It may outline the influencer’s rights and obligations to disclose and comply with applicable laws.
Negotiating an Influencer Agreement can be challenging, especially if you are working with a large company. If you have questions about your legal obligations and responsibilities as an influencer, reach out to a Rocket Lawyer network attorney for affordable legal advice. And if you need tax help, Rocket Lawyer can now match you with a Tax Pro for affordable and convenient tax filing services.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
