Creators and Brands Navigate Murky FTC Guidelines

For Gigi Robinson, a health and wellness creator who works with brands such as Adobe and Shopify and has 178,000 followers on Snapchat, the lack of clarity around what to disclose for paid-for partnerships is adding more confusion to the marketplace. In early April, Robinson checked into a luxurious D.C. hotel. As part of a collaboration, she was asked to create content for the hotel—which she declined to name, to maintain her business relationship—in exchange for the property comping her stay. When she posted the content on Instagram, where she has nearly 40,000 followers, Robinson didn't include the disclosure that it was a #sponsored or #ad post—a requirement that is usually mentioned by brands in their contracts. “The lines are murky with that because technically it's a media stay,” said Robinson. “How do you navigate that as a creator? … I'm confused about what the standard practices are.” She’s far from the only one. Many look to brands, agencies or the Federal Trade Commission for guidance, but it's been four years since the FTC last updated its influencer marketing guidelines, requiring business relationship disclosures in influencer content. Now the global influencer marketing industry is pegged to be worth $21.1 billion in 2023, according to Influencer Marketing Hub. Given the increase in scrutiny, the risk is increasing for brands and creators. In March, for example, celebrities including Lindsay Lohan and Jake Paul paid more than $400,000 combined to settle claims from the U.S. Securities and Exchange Commission that they promoted crypto assets on social media without disclosing they had been paid to do so. Influencer marketing agency Whalar’s chief creator officer, Ashley Rudder, points out that any time a product appears in a photo due to a business relationship, as in Robinson’s case, creators should assume it's an ad. 'More cautious' brands According to the FTC’s initial guidelines, brands are required to disclose any collaboration when they pay someone to promote their products or services. This includes hashtags such as #sponsored or #paidpartnership visibly, not below the “more” button. But in 2022, the agency proposed making endorsement ads more transparent, including adding more definitions of who would be considered an endorser, additional scrutiny over social media posts and improvements in disclosure transparency on the targeted audience. The Interactive Advertising Bureau (IAB) said the FTC’s proposal is unclear and unnecessary; the ad trade body points to the suggestion of implementing "notice gates" (similar to pop-up messages) prior to people seeing sponsored content as "intrusive." “Brands are going to be more cautious,” said Lartease Tiffith, evp for public policy at the IAB, “because no one wants to be the first one outside of the crypto world to have a bad lawsuit settlement because of the people they work with.” Many believe that the brands must enforce guidelines, said Krishna Subramanian, co-founder and CEO of influencer marketing platform Captiv8. In creative concept documents shared with creators, brands often include campaign hashtag requirements and how they perceive the FTC guidelines. “Now social platforms are allowing all the tagging to happen, such as paid promotion, and we're seeing a lot of brands lean into that," said Subramanian. Whalar conducts training sessions to educate creators on the FTC guidelines and the importance of disclosure, as well as monitoring the content creators produce, Rudder said. Lawyering up In some cases, smaller direct-to-consumer and Web3 brands have been more clandestine about labeling paid collaborations, said Avi Gandhi, founder of the advisory firm Partner With Creators. Instead of written contracts, these brands—which Gandhi did not name—have agreed to terms over the phone with creators. “A lot of small creators, who don’t have a lawyer, do it for such small dollars,” Gandhi said. “They don't believe anyone's actually going to come after them.” The FTC is considering civil penalties against brands that encourage influencers not to disclose paid relationships, according to Tiffith, but these penalties are still on a case-by-case basis. As the ecosystem gets more complex, creators are also protecting themselves. Increasingly, more are hiring their own lawyers, including Robinson, who does so for any contracts of at least six figures. It may be expensive, but the legal perspective “ensures that I'm not getting screwed over,” she said. This story is part of Adweek’s The Creatorverse digital features package, which spotlights the creator economy: the people who make up the industry’s new content royalty, and the marketers and agencies that collaborate with them to drive next-level engagement for their brands. Are Lavish Influencer Trips Still Valuable for Brands?