If you are a business owner, you certainly want consumers to trust your brand, like your brand and, ultimately, purchase your brand. Taking into account the fact that 88% of consumers trust online reviews as much as personal recommendations, you would certainly strive to have as much good positive feedback about you floating around the Internet as possible.

What if you have decided to make your life just a little bit easier? You want to launch a well-thought out marketing campaign where you let people try your products/services for free and ask them to write good reviews in response. Plus, you give these reviewers some extra money for that. And… You have just committed a crime. The Federal Trade Commission (FTC) has recently been scrutinizing marketing campaigns for evidence of deceptive practices. The charges of fraud, misrepresentation of facts, unfair business practices, etc. will come at you with guns blazing. And these are the allegations to not be taken lightly.

You think this has nothing to do with you, perhaps? Well, you have been misled. Just check out the mishaps below.

The FTC accused Lord & Taylor of deceptive advertising

In its complaint the FTC alleged that as part of the Design Lab roll-out the national retailer paid 50 online fashion “influencers” to post Instagram photos of themselves wearing a dress from that collection. Another one of the FTC’s allegations was that Lord & Taylor did not disclose that each of the posts had been pre-approved by them, and that each poster was given a dress AND an additional monetary reward in exchange for the endorsement.
The social media campaign was launched in March 2015 and essentially focused on one article of clothing – the Design Lab Paisley Asymmetrical Dress. The chosen fashion “influencers” were paid the sums ranging from $1,000 to $4,000. Hereby, it is worth noting that according to their contracts with Lord & Taylor they were obligated to use “@lordandtaylor” Instagram user designations and “#DesignLab” campaign hashtag in their posts.

The item in question quickly sold out. All the parties involved lived happily for the whole year until in 2016 the FTC decided to investigate the campaign and brought their charges against the company. In an attempt to defend themselves, Lord & Taylor stated that the influencers themselves should be held responsible for disclosing the fact the company paid them to promote the dress. The FTC, however, took a different route establishing that Lord & Taylor as an advertiser was supposed to ensure compliance and should not have delegated their responsibility to promoters, publishers or any other third parties.

Lord & Taylor did settle the charges with the FTC in 2016. However, in doing so, “…Lord & Taylor is prohibited from misrepresenting that paid ads are from an independent source, and is required to ensure that its influencers clearly disclose when they have been compensated in exchange for their endorsements…”

FTC accused Lord & Taylor of deceptive advertising

Warner Bros. got punished by the FTC for a misleading marketing campaign

According to the FTC’s allegations, Warner Bros. failed to properly disclose the fact that paid online “influencers” from tens of hundreds of thousands of dollars to promote their video game Middle Earth: Shadow of Mordor on YouTube and in social media.

As opposed to the above-mentioned Lord & Taylor case, Warner Bros.’s failure was not intentional. Moreover, the videos in question did include the disclosures. The problem that the FTC had was that those disclosures were not visible enough. Warner Bros. put the disclosures in the description box appearing below the video. Due to the fact that there was other information to be put in that box, the disclosure became visible only when consumer clicked on the “Show More” button in the description box. Besides that, when “influencers” posted those videos on social media websites, such as Facebook or Twitter, the posts did not include any “Show More” button. Thus, it was even less likely that consumers would see the sponsorship disclosures.

As a result of the FTC’s charges, Warner Bros. is barred from engaging in such deceptive marketing practices in the future. Otherwise, the company will risk civil penalties or even a contempt charge in federal court.

To avoid the above-mentioned disasters, it is best to follow the FTC social media guidelines. According to these guidelines, sponsored posts in social media must:

  1. Communicate sponsorship in clear, unambiguous language, and appear at the beginning of posts (or "above the fold") if possible.
  2. Be easy to read and in a shade that stands out from the background.
  3. Remain on the screen for long enough to be noticed and read, if sponsored content is a video.
  4. Be included even if the influencer is negatively reviewing a product or service.
  5. Be visible on all devices.

Examples of do’s and don’ts for sponsored posts in social networks

Social Network Do Don't
Instagram include the hashtag #ad and/or #sponsored forget to tag the sponsoring brand within the post description
YouTube ensure that disclosure appears clearly in the video description by using such phrases as “this video was sponsored by…”, for example place disclosure after the “Read More” drop-down section of the description
Twitter tag the sponsoring brand omit the hashtag #ad

Remember: simply including hashtags like #sp and #spon and/or using phrases like "thanks to..." is not always sufficient.

5 Tips for Proper Sponsored Posts

  • Sponsorship disclosures should be placed close to the content they are related to.Fashionmia online shopping
  • Disclosures should be easy to read.
    FTC Endorsement Guidelines
  • Disclosure should stand out against the body of the post.
    FTC Endorsement Guide
  • For sponsored videos, disclosures should stay on the screen long enough to be noticed, read and well understood. It is best to ensure that the sponsorship message is displayed closer to the beginning of the video. To be on a safe side, you may also want to include the word “sponsored” or similar wording in the title of the video.FTC guides for sponsored videos
  • Audio disclosure should be clear, precise and easy to understand.FTC Guides Audio disclosure

If you would like to find out more information about the FTC Endorsement Guidelines, we suggest checking out FTC’s answers to the questions most frequently asked about the guidelines.

Another technique that should be avoided in marketing is fake reviews. Suffice it to say that we at Pissed Consumer as well as other well-known review platforms and online businesses such as, for example, TripAdvisor.com, Yelp.com and Amazon.com, have undertaken various measures to prevent fake online reviews, either negative or positive. We will discuss this matter further in our “Operation Clean Turf” article. Stay tuned!

While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal, medical, accounting, investment, or any other professional advice as individual situations will differ and should be discussed with an expert and/or lawyer.

See Also