Lord & Taylor: Payments to Influencer to Promote Dress Without Disclosure Is Improper

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.”

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