Social Media Influencers have taken the internet by storm. They are in high demand as they have large audiences appear everywhere, whether they are on your computer screen while browsing your favorite social media sites, on your cell phones scrolling through your favorite apps, and even in retail stores making in-person appearances. Brands want them, and bloggers and others want to be them. But, the question still stands – what exactly is a social media influencer and what legal standards and considerations must they adhere to?
Social Media Influencers (also known as internet personalities or micro-celebrities) are well known publically, and have hundreds of thousands, if not millions, of followers across various social media platforms. In recent years, these individuals have found a way to monetize their online presence through partnerships and advertising deals with major companies and brands. Despite the relatively new development of the social media realm, when Influencers do partner with brands, and receive compensation in exchange for posting about a specific product, they are held to the rules and regulations established by the Federal Trade Commission (FTC). The FTC is an independent agency of the United States government dedicated to protecting the consumers of America. By law, the FTC requires an Influencer to clearly disclosure a “material connection,” should one exist, between an endorser and an advertiser. If an Influencer fails to disclose, they may face legal consequences. Failure to disclose, among a variety of other issues, are common pitfalls that aspiring and established Influencers may fall victim to without proper knowledge.
The FTC’s Endorsement Guide provides that if there is a “material connection” between an endorser and an advertiser, a connection that might affect the weight or credibility that consumers give the endorsement, the connection should be clearly and conspicuously disclosed. When posting sponsored or compensated content, both the company and Social Media Influencer must disclose whether the video is sponsored, or that the products being shown were sent to them for free. The only exception to not disclosing is if it is already clear from the context of the communication.
When it comes to social media influencer marketing, the FTC’s purpose is to ensure that when an influencer is marketing to its audience, their audience is informed as to whether or not the influencer has been compensated for that particular post or video. This protocol ensures the viewers do not purchase a product based off an influencers recommendation just to find out it is terrible, and the influencer was only paid to promote it. While the bulk of the work that the FTC does involves traditional methods of advertising, it has gotten more involved with social media marketing as online influencers play an increasingly larger role in promoting products and services. Therefore, the FTC regulates Social Media Influencers when they post sponsored content.
The FTC stresses the importance of disclosing to prevent potential fraudulent advertisements. In order to make the disclosure clear and conspicuous, the disclosure must be:
It is typically sufficient enough to include the hashtag #Ad in your caption. The FTC does not typically care for the use of other hashtags such as #sp, #sponsored, and #partner, although some influencers still use them. Instagram launched a feature that informs users when a post by an influencer is sponsored. Those who use the tag, which reads “Paid partnership with” are able to track the posts performance of branded content posts and stories to monitor and gage reach and engagement metrics. Its purpose was to ensure transparency of paid partnerships on Instagram.
In 2017, the FTC started cracking down on deceptive influencer marketing. In April 2017, the FTC sent more than 90 letters to Social Media Influencers and brands they observed that failed to disclose a material connection on sponsored posts. The letters contained a reminder that if influencers are endorsing a brand and have a “material connection” to the marketer, that relationship must be clearly disclosed, unless the connection is already clear form the context of the endorsement. Furthermore, in September 2017, the FTC settled its first lawsuit against social media influencers for failing to disclose material information in social media endorsements. In In re CSGOLotto, Inc., defendants Trevor Martin and Thomas Cassell were creators of a very popular gaming YouTube channel and part owners of an online gambling service. They promoted the online gambling service for several months while paying other influencers to do the same. However, there was no clear and conspicuous mention of sponsorship nor was compensation, Martin and Cassell’s interests in the company, or third party contractual obligations adequately disclosed. While no fines were immediately imposed, the Respondents agreed to ensure that they and those they sponsor will adhere to the Guides going forward, and further agreed to additional FTC oversight of their business operations for the next ten years. The settlement demanded clear and conspicuous disclosure of connections between endorsers and promoted products and services that would have a material impact on consumer choice.
The road to establishing a career as a Social Media Influencer is not easy, nor does it happen overnight. Although it may ultimately deliver highly beneficial results for those who are promoting themselves, their business, or product, it requires patience, determination, perseverance, and a significant time investment. Despite the challenges Social Media Influencers face, it is very possible to maintain a highly successful career. Many individuals have thriving careers as Social Media Influencers, full of brand partnerships, and sponsored content. I encourage aspiring Social Media Influencers to do their homework and utilize the guidelines provided by the FTC to understand the business and legal aspects of the social media industry, and consider the advice given by established Social Media Influencers. With hard work, consistency, and dedication, the potential outcome will indeed be fruitful.
By: Yasiman Montgomery
The fashion world is very interconnected with urban planning due to the fast evolving intersection between physical retailers, online retailers, tenants, landlords, other stakeholders, and the city. This relationship has been highlighted recently due to the dramatic growth of e-commerce channels, which grow at a rate of about 20% per year. The total e-commerce sales by 2016 were around $4.1 trillion worldwide and in 2019, it makes up about 12% of total retail sales. E-commerce’s growth is heavily correlated with physical retailers decline. While E-commerce is experiencing a dramatic growth, traditional retailers have experienced a steady decline. Shopping trips have reduced from 34 billion visits to US stores in 2010 to 7.6 by 2013. Additionally, there have been an accelerated number of store closings and even stores that are not closing are reducing their expansion plans. These dramatic changes have encouraged adaptations by all parties, from urban developers to physical retailers.
Physical retailers can adapt to e-commerce by adapting to omni-channeling, Omni-channeling is where either consumers first browse or research a product in a physical store, then purchase the product online or first research a product online or during a physical store experience to buy the product. Another adaptation is more physical retailers are entering shorter leases, creating “pop-up” shops, and placing limited quantities in physical stores to create exclusivity. Urban retail developers are adapting to less retailers leasing spaces by rethinking the original tenant and leasing to more experiential retail. Experiential retail spaces have been surviving e-commerce because they provide the consumer with an experience in addition to shopping, such as restaurants that feature bookstores or a restaurant that has a clothing shop in the front. Additionally, urban development has seen an increase in demand for industrial real estate. Another area of innovation between fashion and urban planning is the development of city centers.
Urban centers offer several benefits to constituents of a city, such as jobs creation, sales tax revenue and community vitality. Unfortunately, the convenience and intelligence of online retailers, including the collection of consumer data and marketing, has decreased sales of physical retailers in urban centers. Urban Planning as a collective with input from retailers, city developers and landlords is necessary to improve the physical retail experience and discourage the abandonment of physical retailers by consumers and stakeholders.
Innovators should not be too discouraged from creating physical retail spaces, but should also still tap into the online market to benefit from both areas of retail. There are tax incentives for physical retailers as the e-commerce retailers are subjected to taxing from 31 states in order to comply with more than 10,000 jurisdictions. Expenses for online retailers would include software and services to track sales tax rates, submit sales tax payments, and prepare paperwork. Additionally most cities have tax incentives based on zoning and small business grants that may make it worthwhile for you to open a physical shop. The decision is ultimately yours!
By Jamyia Sims
Admit it. We all love a good discount, but have you ever wondered how large retailers are able to provide five dollar t-shirts, fifteen dollar jeans and ten dollar sweaters? How is it financially feasible for large retailers to have sales promotions nearly every week? What about the production costs, shipping costs, advertising budgets and payroll? Short answer… sweatshop labor. Sweatshops are defined by the U.S. Department of Labor as a factory that violates 2 or more labor laws. Violations include poor working conditions, unfair wages, unreasonable hours, child labor, and lack of benefits for workers.
Historically Southeastern Asian Markets have dominated the garment industry by mass producing clothing at extremely affordable rates. They have been able to do so primarily by under-paying workers, reports reveal that in Bangladesh, garment industry workers paid are as little as $68 per month. For nearly one hundred years the United States has enacted legislation to combat sweatshops, both foreign and domestic. Section 301 of the Tariff Act of 1930 prohibits the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured labor including child labor. Such merchandise is subject to exclusion and/or seizure and may lead to criminal investigation. Although Asian Markets usually come to mind when we think of sweatshop labor, sweatshops are ever present in the United States.
The United States Department Labor reports that nearly fifty percent of all garment factories in the United States violate 2 more of more labor laws. Thus, qualifying them as sweatshops and placing them in violation of the FLSA. The Fair Labor Standards Act of 1938 (FLSA) was drafted to protect worker's rights and establish equal grounds for communication between laborers and management. The act created federal minimum wages, banned child labor and set guidelines for overtime pay. The Wage and Hour Division of the U.S. Department of Labor administers and enforces the Fair Labors Standards Act. In 2019, the FLSA continues to guarantee a minimum wage of 7.25 per hour and overtime after 40 hours per week, to everyone legally employed in the United States. The FLSA also recognizes that maintaining a decent lifestyle may require more depending on the region of the country. In turn the FLSA allows state and local governments to adopt higher minimum wages to ensure workers are able to afford life essentials.
Although California incrementally raises minimum wage requirements, the L.A. Fashion District has become notorious for its use of sweatshop labor and constant wage violations. From April to July of 2016, The U.S. Department of Labor investigated 77 L.A. garment factories and found that workers were paid as little as $4 and an average of $7 an hour for 10-hour workdays, spent sewing clothes for Forever 21, Ross Dress for Less and TJ Maxx. As a result, The Wage and Hour Division of DOL, collected 11.7 million dollars in back wages owed to garment industry workers pursuant to FLSA.
So how does an employee work 10 plus hours each day, yet fail to make a minimum wage? The video below explains the process, step by step, how garment workers are being overworked and underpaid.
BY: Natasha Jean-Pierre
In the world of Social Media Influencers, recycle fashion, and Fast Fashion, it cannot go without notice that consumers want their fashion fast! This puts a lot of pressure on emerging designers, retailers, brands, and boutique owners to efficiently acquire high quality products in the shortest amount of time. Before, you put in your next order with a foreign supplier for those Khaki pants, there are some U.S. Custom Issues that you should familiarize yourself with.
First, you must understand that if you hire a foreign supplier for your garments that means that you will be held responsible for customs-related issues that arise. To protect consumers, U.S. Customs and Border Patrol and the Federal Trade Commission wants to ensure that garments imported from other countries comply with US law. If you were ever wondering why clothing labels on your garments were as long as a CVS receipt, you have the Textile Act and the Wool Products Labeling Act of 1939 to thank. Under this act the Federal Trade Commission requires that most textiles and wool products have a label detailing:
Here is a helpful checklist for questions you may want to consider when hiring a foreign supplier:
By: Stephanie Mason
The year 2018 was a trying time for many Retail companies in America. In 2018, alone, 3,800 stores, including Walgreens, Gap, and Tevanna, closed its doors. In addition to retail companies doubling down on their brick and mortar stores, dozens of American retail staples have filed for Chapter 11 Bankruptcy, such as Mattress firm, Sears, Claire’s and Nine-west. This nationwide close-out emerged as a response to the growth of e-commerce and online shopping. Over the past five years, e-commerce sales have doubled, breaking a record of $123.7 billion. Luckily for certain businesses such as gas stations, restaurants, grocery stores, and luxury retails stores, such as Gucci and Louis Vuitton, the e-commerce industry has not yet affected them. In 2017, these “online-resistant” sectors combined sales were an estimated $610 billon.
As retail stores continue to close its door and move toward selling their products online, numerous Malls are left abandoned, espcially in smaller suburban communities. The owners of these dying U.S. Mall are having much difficulties selling them. “There are just a shallow pool of investors who are willing to take on a declining mall and even fewer who would pay what the landlords want. According to Real Capital Analytics Inc., only about $3 billion of retail real estate changed hands in April, the lowest monthly tally since February 2013.” In light of this reality, this Note peer behinds mall doors to evaluate how emerging designers can utilize these empty spaces to combat the emerging e-commerce fashion industry and to capitalize off of the declining fast-fashion market.
In 2016, FTC Settles with Lord & Taylor over an influencer advertising campaign initiated via an social media and online magazine. Specifically, in March 2016, Lord & Taylor settled charges by the FTC that alleged the company deceived customers by paying for advertisements on influencer Instagram accounts and Nylon online magazine without revealing the posts were paid promotions by the company.
According to the FTC, over a weekend in late March 2015, Lord & Taylor launched a comprehensive social media campaign to promote its new Design Lab collection, a private-label clothing line targeted to women between 18 and 35 years old. The marketing plan included branded blog posts, photos, video uploads, native advertising editorials in online fashion magazines, and online endorsements by a team of specially selected “fashion influencers.”
Over the same weekend in March 2015, Lord & Taylor gave 50 select fashion influencers a free Paisley Asymmetrical Dress and paid them between $1,000 and $4,000 each to post a photo of themselves wearing it on Instagram or another social media site. While the influencers could style the dress any way they chose, Lord & Taylor contractually obligated them to use the “@lordandtaylor” Instagram user designation and the hashtag “#DesignLab” in the caption of the photo they posted. The company also pre-approved each proposed post.
According to the FTC Complaint , the Lord & Taylor influencer “contracts detailed the manner in which Respondent was to be mentioned in each Instagram posting” but did not “did not require the influencers to disclose in their postings that Respondent had compensated them, nor did Respondent otherwise obligate the influencers to disclose that they had been compensated”
FTC maintains that Lord & Taylor’s campaign was deceptive because it represented that the influencers images reflected independent impartial statements instead of disclosing that the influencers were the company’s paid endorsers. The influencers were instructed how to reference the dress in their post, but according to the FTC, the contracts did not require the influencers to disclose in the posts that they received compensation from Lord & Taylor.
The FTC concluded that the fact that the influencers are paid endorsers for Lord & Taylor is “material to consumers in their decision to purchase the Paisley Asymmetrical Dress. The failure to disclose these facts, in light of the representation made, was and is, a deceptive practice.”
Fashion Law at Howard Law School
Fashion, a global $1 trillion industry, has been defined as the dialogue among the creative industries that propose innovations and consumers who decide what to adopt or reject.
But what happens when some creative innovators propose innovations that they are unable to protect?
Here at Howard Law School, our goal is to spread the message that IP protections are for EVERYONE by working to identify deficiencies in intellectual property law that make it difficult for some fashion innovators to retain their intellectual property rights.
In our class we explore the concept of inspired copying in the fashion industry and its effect on creatives of color.