Bad Influence: Don’t Ignore the FTC’s Rules About Transparency and Disclosures for Influencer Marketing

Like with intellectual property issues, the consequences of getting the legal details about transparency and disclosure wrong can be terrifying. In this case, they can include fines, class action lawsuits, and the destruction of consumer trust. The Federal Trade Commission, or FTC, enforces the law that prohibits unfair and deceptive acts or practices, which includes misleading advertising.

The rule is simple. If there is a material connection between the brand and the endorser or the influencer, that connection must be must be clearly and conspicuously shown. A material connection is anything that might affect the weight or credibility of the endorsement: cash, free product, loans, or family relationships.

By law, it is permissible to pay an influencer to endorse your product. However, It is legally required to show that paid relationship.

While some platforms have built-in disclosure tools, those aren’t always sufficient. The FTC’s focus is on whether the disclosure is clear and conspicuous. Hiding the disclosure behind a “see more” link, burying it in a block of 30 other hashtags, or using ambiguous terms like #collab or #partner, are legal mistakes that whether they were made on purpose or accidentally are considered a deceptive act under the law. The FTC doesn’t care if you didn’t know the law.

Here’s a case example. The FTC has taken law enforcement actions against brands like Lord & Taylor and the American Beverage Association and their influencers for non-disclosure. Class action lawsuits filed just this year against major brands such as Shein and Celsius and their influencers show that private plaintiffs are also targeting these issues, seeking massive damages if non-disclosure is proven to misled consumers.

Here’s a key takeaway for both brands and creators. Always make sure your disclosure is unambiguous and impossible to miss. Use clear terms like #ad or #sponsored at the very top of the caption or superimposed clearly on a video.