Commissioner Rohit Chopra called for tougher penalties for companies who disguise advertisements on platforms such as Instagram, YouTube and TikTok as authentic reviews in a statement sent Wednesday. The statement came after the FTC voted 5-0 to approve a Federal Register notification public response on or Approval guides for ads (that have not been updated since 2009) should be reviewed, according to TechCrunch.
For years, the Federal Trade Commission has demanded that influencers publish sponsored messages, but the guidelines seem to have had little effect. In a recent case mentioned in the letter, a Lord & Taylor campaign paid 50 social media influencers to post about a dress on Instagram, but did not have to disclose that the messages were being sponsored. The FTC accused Lord & Taylor of misleading the public by settling the case by forbidding the company to “misrepresent that paid advertisements come from an independent source”, but did not impose a fine.
Influencers and online personalities often receive free products from companies that want to get some publicity. Although some reviewers will reveal that detail, it is often difficult to say when an approval is genuine, or that an assessment comes from an undisclosed partnership. Now the FTC is working hard, but the focus is on keeping advertisers and companies responsible, not on small influencers. “When individual influencers can post about their interests to earn extra money, this is not a cause for great concern. But when companies launder advertisements by paying an influencer to pretend that their approval or assessment has not been compromised by a financial relationship, this is illegal payola, “Chopra said.
The FTC is particularly critical of companies that have put pressure on influencers to hide the fact that their endorsements are paid advertisements. In 2016, video network Machinima arranged a misleading complaint at the FTC for not disclosing that YouTubers had paid to approve the Xbox One and told them to post their opinions as independent reviews. The settlement, which did not entail a fine, did little to today to scare off native ads on platforms. The FTC now calls for “coding elements of existing approval guides into formal rules so that offenders can be held liable for civil sanctions.”
The statement specifically points to the rise of influencer marketing on Instagram, YouTube and TikTok, and the difficulties in finding truthful information when “fake accounts, fake likes, fake followers, and fake reviews are now polluting the digital economy.” In other words, the FTC is sick of fake friends and is looking for real consequences for companies that violate its policies.