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!
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.