Tthe Federal Trade Commission announced that the organization is looking towards scrutinizing influencer marketing across social media sites like Instagram. In a document released on February 12, 2020, Rohit Chopra of the FTC wrote about how the development of online advertising has led to advertisers working around the guidelines the FTC put in place for them. Recent growth in influencer marking across Youtube, TikTok, and Instagram caused the FTC to reexamine their policies.

Influencer marketing describes a strategy where advertisers give high-profile individuals or organizations a product, with the goal of their promotion being more authentic than traditional advertising. FTC endorsement guidelines require that influencers openly announce any relationship they may have with the advertiser.

Chopra intends for the FTC to focus on the advertisers, rather than the influencers. In the statement, he writes, “When companies launder advertising by paying someone for a seemingly authentic endorsement or review, this is illegal payola. If these companies are also pressuring influencers to post in ways that disguise that their review or endorsement ads advertisers, those advertisers need to be held accountable.” Moving forward, the FTC will review its endorsement guides with the aid of public opinion.

FTC Endorsement Guide Could Scare Social Media Advertisers

The punishment for breaking the FTC’s current guidelines are weak. In the same document, Chopra notes a situation where Lord & Taylor paid influencers to wear their dresses on social media. The contracts required the posts to include a hashtag and the company’s name, but not the nature of the collaboration. The FTC charged Lord and Taylor with deceiving the public, but they suffered no financial harm. The FTC is looking to codify portions of their guide so that future breaches would be liable for civil penalties and thus would be fineable.

Holding advertisers more accountable could protect both customers and influencers. At the same time, it could cause corporations to be more reluctant to collaborate with smaller influencers. A harshly enforced code would still be a net benefit, as the organizations that wanted to use loopholes won’t have an alternative. An authentic endorsement is the goal of influencer marketing; any deceitful ads should be fined.  Customers will be more aware of advertisements with a stronger code in place. The influencers themselves shouldn’t see much change in the way they interact with advertisers, as the proposed changes are aimed at the advertisers. But, they might see less income as advertisers wary of the fines rethink their methods. The FTC will soon allow the public to comment on possible revisions, following a notice that will appear in the Federal Register.

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Source: FTC