FTC to Crack Down on Sponsored Internet Posts

The Federal Trade Commission will be tougher on paid endorsements and how they are disclosed, according to one recent report.

Brecken Branstrator brecken.branstrator@nationaljeweler.com

New York--Paid content is hardly something new, yet with the increasing influence of the digital world, a different set of issues has come to light.

As celebrities and “influencers” take to social media channels and Internet platforms in larger and larger numbers to best reach their audiences and fans, the lines between getting paid to post content and giving proper disclosure are blurring.

But the Federal Trade Commission has noticed and now is trying to crack down on sponsored posts, according to a Bloomberg report.

The latest includes an FTC complaint filed against Warner Bros. Home Entertainment, which charges that the entertainment company deceived consumers during a marketing campaign for its video game Middle Earth: Shadow of Mordor by failing to adequately disclose that it had paid online influencers to post positive videos online and didn’t tell influencers to include sponsorship disclosures clearly and conspicuously on the videos.

In addition to prohibiting the company from misrepresenting the paid video reviews as coming from impartial players, the FTC also specified the minimum steps that Warner Bros. must take to ensure it’s complying with the final order, including educating influencers on sponsorship disclosures, monitoring videos for compliance, and terminating or withholding payment when they see non-compliance.

The FTC did not respond to a request for comment from National Jeweler by press time but the Bloomberg report indicates that social media in particular seems to be a bit of a gray area when it comes to paid content and disclosure.

The FTC says it’s OK if #ad is at the beginning of a post, but not #sp and #spon, hashtags indicating a “sponsored” post.

“If consumers don’t read the words, then there is no effective disclosure,” Michael Ostheimer, a deputy in the FTC’s ad practices division, is quoted as having told Bloomberg. “If you have seven other hashtags at the end of a tweet and it’s mixed up with all these other things, it’s easy for consumers to skip over that. The real test is, did consumers read it and comprehend it?”

Earlier this year, the commission also brought a complaint against Lord & Taylor, charging that it “deceived consumers by paying for native advertisements,” including a seemingly objective article in Nylon magazine and on its Instagram that weren’t disclosed as paid content.

Lord & Taylor also allegedly paid fashion influencers to post a dress on Instagram, without disclosing that it had paid

Banner will be right here …

them or given them the dress for free. Any compensation, including free products, must be disclosed, the FTC says.

Cecilia Gardner of the Jewelers Vigilance Committee said that though they don’t see too many paid sponsorships from jewelers that are not clearly labeled as ads online, any that did still would be subject to the same scrutiny as other advertisers.

“Jewelers should be aware of the rules governing online advertisements--it should be clear that ads are paid and not unsponsored testimonials,” she said.

In a 2014 column on National Jeweler addressing similar issues, the JVC’s Sara Yood said, “Consumers are savvy, so it is important to be transparent. This advertising should not be about tricking the consumer, but clearly providing the source of the content of the advertising.”

The JVC website also specifies that “a misrepresentation is material if it is likely to affect consumer’s choices or conduct regarding an advertised product or the advertising for the product.”

When it comes to social media, the FTC says if a post is “part of a sponsored campaign or you’re being compensated … then a disclosure is appropriate.”

While there is no special wording for how to do this, “the point is to give readers the essential information.” A simple disclosure, such as “Company X gave me this product to try …” would do. Or starting a Tweet with “Ad:” or “#ad” also would be effective.

Guidance on digital endorsements and testimonials as well as additional questions regarding social media and endorsements can be found on the FTC’s website.

Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.