By: Holly Santapaga
Users of the popular social media app Instagram are likely familiar with the term “influencer.” Though it is difficult to define the term “influencer,” these individuals generally have a large social media following, and the ability to influence their following through “sales, attitudes, opinions, [or] time spent.”[1] Advertisers quickly caught on to this developing market and influencing has become big business.[2] Companies trying to improve their brand recognition can expect to spend at least $10,000 for a popular influencer’s post on Instagram, and over $50,000 for a YouTube video review.[3] Influencers also charge an additional $10,000 for a negative review of a competing product.[4]
With the creation of this new market came a wealth of legal troubles, as the now multibillion dollar market for influencers has little regulation.[5] One of the most publicized cases involved the doomed Fyre Festival, which paid top influencers, including models Kendall Jenner and Bella Hadid, up to $250,000 for a single promotional post.[6] Consumers who spent thousands to attend, after influencers promoted the festival’s promises of luxurious accommodations and gourmet food, were left sleeping in half built tents with little food or water.[7] These influencers are now facing possible subpoenas in relation to the festival’s bankruptcy case.[8] In another lawsuit, the photo sharing app Snapchat’s public relations firm is suing a popular influencer for failing to adequately promote its camera “Spectacles” sunglasses.[9] The influencer, actor Luka Sabbat, contracted with Snapchat to post himself wearing the sunglasses on his Instagram, and Snapchat stories with swipe to buy links in addition to other requirements.[10] Sabbat failed to fulfill the agreement when he did not post two of the stories and skipped other requirements.[11]
Concerns over the lack of regulation of these agreements between companies and influencers prompted the Federal Trade Commission (“FTC”) to create guidelines dictating how and when influencers should disclose a post’s advertisement status.[12] The guidelines, released in 2017, state that influencers must clearly disclose when there is a “’material connection’ between an endorser and an advertiser[.]”[13] A material connection exists when the connection “affect[s] the weight or credibility that consumers give [an] endorsement[.]”[14] According to the FTC, disclosures should be prominent and easily visible for consumers within all types of advertisements, including photographs and video reviews.[15] Influencers failing to comply with the guidelines since their instatement have been met with warning letters and complaints.[16]
Despite the FTC’s efforts, there have been calls for additional regulation of the lucrative influencer market.[17] For example, advertising firms are hoping there is a crackdown on influencers who fraudulently misrepresent the size of their following by buying “fake followers”.[18] With no sign that the market for influencers will be slowing down anytime soon, it will be interesting to see how the law develops around it. Stronger regulations would provide piece of mind for both influencers and advertisers.
[1] Tania Yuki, What Is an Influencer? Troubled Times Demand a Fresh Formula, Adweek (Aug. 20, 2018), https://www.adweek.com/digital/what-is-an-influencer-troubled-times-demand-a-fresh-formula/.
[2] Paris Martineu, Inside the Pricey War to Influence Your Instagram Feed, Wired (Nov. 17, 2018, 7:00 AM), https://www.wired.com/story/pricey-war-influence-your-instagram-feed/.
[3] Id.
[4] Id.
[5] Zoe Kleinman, Has Fyre Festival burned influencers?, BBC News (Jan. 22, 2019), https://www.bbc.com/news/46945662.
[6] Edward Helmore, Kendall Jenner and Bella Hadid facing possible subpoenas over Fyre Festival, The Guardian (Jan. 29, 2019 11:24 EST), https://www.theguardian.com/culture/2019/jan/29/kendall-jenner-bella-hadid-fyre-festival-subpoena-money.
[7] Mary Hanbury, These photos reveal why the 27-year-old organizer of the disastrous Fyre Festival has been sentenced to 6 years in prison, Business Insider (Jan. 19, 2019, 1:29 PM), https://www.businessinsider.com/fyre-festival-expectations-vs-reality-2017-4.
[8] Alyssa Hardy, The Fyre Festival Drama Continues for Kendall Jenner and Bella Hadid, Teen Vogue (Jan. 29, 2019), https://www.teenvogue.com/story/fyre-festival-drama-kendall-jenner-bella-hadid.
[9] Josh Constine, Snapchat’s PR firm sues influencer for not promoting Spectacles on Instagram, Tech Crunch, https://techcrunch.com/2018/10/31/influencer-marketing-lawsuit/ (last visited Feb. 18 2019).
[10] Id.
[11] Id.
[12] Maura Smith, What Agencies Need to Know About The FTC’s Influencer Guidelines, Forbes (Dec. 13, 2018, 6:00 AM), https://www.forbes.com/sites/forbesagencycouncil/2018/12/13/what-agencies-need-to-know-about-the-ftcs-influencer-guidelines/#25adc5303517.
[13] Federal Trade Commission, FTC Staff Reminds Influencers and Brands to Clearly Disclose Relationship, Federal Trade Commission (Apr. 19 2019) https://www.ftc.gov/news-events/press-releases/2017/04/ftc-staff-reminds-influencers-brands-clearly-disclose.
[14] Id.
[15] Smith, supra note 9.
[16] Lesley Fair, Three FTC actions of interest to influencers, Federal Trade Commission (Sep. 7, 2017, 11:11 AM), https://www.ftc.gov/news-events/blogs/business-blog/2017/09/three-ftc-actions-interest-influencers. See also Michael Quoc, 2018 Guide to FTC Disclosures on Facebook, Instagram, and YouTube, Beanstalk (Feb. 26, 2018), https://beanstalkim.com/learn/internet-law/2018-guide-ftc-disclosures-facebook-instagram-youtube/ (explaining that Instagram users must use the hashtags “#ad” or “#sponsored in the first three lines of the description” and “explain the material connection in the first three lines of the description.”).
[17] Courtney Goldsmith, The influencer marketing sector is booming – but regulatory problems abound, The New Economy (Dec. 14, 2018), https://www.theneweconomy.com/strategy/the-influencer-marketing-sector-is-booming-but-regulatory-problems-abound.
[18] Id.
