FTC Fires Warning Shot On Influencers

A close-up of the Instagram app on a cellphone

The Federal Trade Commission (FTC) has announced that it has sent out 90 letters to celebrities, athletes, and other social media stars warning them that they need to clearly show when an Instagram post was sponsored by a brand.

The posts risk breaching consumer rights rules by not revealing when they are promoting products on the social media site.

Instagram is one of the most powerful places to reach consumers, and celebrities often carefully curate their posts to portray a particular lifestyle.

This the first time the regulator has intervened on the issue, which comes after an advocacy group named Public Citizen petitioned for more transparency on the social media platform.

The FTC also said use of the hashtags '#sp' - short for sponsored - or '#partner' were insufficient ways of alerting users to endorsement posts.

This is the first time the Commission has intervened on the issue on social media, but a year ago did reach a settlement with Warner Bros over claims the firm did not disclose it had paid high-profile YouTubers to promote one of its video games. "Particularly, tagging a post with simply "#sp", "Thanks, [Brand]", or "#partner" isn't easy enough for consumers to understand, and putting a tag beyond the third line of text (where it would be hidden unless someone clicks the More button), just doesn't cut it. Kim Kardashian nets around $500,000 for a "campaign" worth of endorsements, according to US Weekly, and a user with between 3 and 7 million followers can expect a cool $75,000 per Instagram post, reported Esquire.

Strict FTC rules mandate that social media users must make plain any financial or other relationships with advertisers, usually by prefacing posts with a #ad or #sponsored hashtag.

The action comes after Michael Ostheimer, of the FTC's Ad Practices division last August warned that the agency may start cracking down on celebrities for deceptive endorsements.



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