FTC seeks to crack down on influencers and platforms for ‘false and rigged reviews’

In 2019, the Federal Trade Commission issued a user-friendly and easy-to-understand digital booklet called 101 Disclosures for Social Media Influencers, designed to help streamers and influencers understand when and how to publicize their promotional relationships with companies. Now it appears the FTC is preparing to draw a tougher line against “stealth advertising” and endorsement disclosure, as it voted to consider updating its guidelines against “fake and manipulated reviews.”

The FTC has been fighting misleading online advertising for years. In 2015, for example, it settled a lawsuit against Machinima Inc. for not publicizing the fact that it is paying its influencers for promotional videos; a year later, the WBIE settled similar charges related to a Middle-earth: Shadows of Mordor promotional campaign. Ongoing issues helped create the Disclosures 101 primer, but the Endorsement Guides that underpin it were last updated in 2009, a geological time period in the digital world. Thus, the FTC proposed changes to its guidelines that “reflect the extent to which advertisers have increasingly turned to using social media and product reviews to market their products.”

The proposed changes aren’t just aimed at influencers. The Notice of Recommended Revisions also includes a notice to social media companies that their influencer tools may not be adequate to meet legal requirements, which exposes them to potential liability; also says that companies that use consumer reviews in promotional materials “must not distort or misrepresent” what people really think of their products. Specific “micro-segmentation” audiences will also be further scrutinized under the proposed new rules. An example cited in the update notice:

“A social media ad promoting a cholesterol-lowering product features a testimonial that tells how much they have reduced serum cholesterol. The claimed reduction far exceeds what is typically experienced by users of the product and disclosure of the results is required. From online data collection, the marketer was able to identify Spanish-speaking individuals with high cholesterol who do not understand English and targets a Spanish version of the ad to them, reporting typical results in English. The appropriateness of disclosure will be assessed from the perspective of the target individuals.”

“Advertising aimed at children” is also highlighted as “special concern” because children can (and let’s be honest, will) react to advertising and influencers differently than adults, regardless of disclosures made. “Practices that would not normally be questioned in advertising aimed at adults may be questioned in such cases,” the FTC said.

“Online reviews and influencer endorsements are ubiquitous on the internet and present real and new challenges,” said FTC Commissioner Rebecca Slaughter during a open commission meeting on the 19th of May. “Unlike the celebrity endorsers of yesterday, influencers are often seen as experts in their market, whether it’s fashion, healthcare or cutting-edge consumer technology.

“Influencers are constantly interacting with their followers in their market or social niche. They are often trusting relationships and without clear guidelines and responsibilities. They are ripe for commercial exploitation and deception. The new guides make it clear that we intend to investigate breaches of that trust, either by brands by manipulating reviews, influencers not disclosing material relationships with companies, or by micro-targeting designed to mislead specific groups of consumers.”

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The updated guidelines will also increase the focus on brands’ role in influencer promotions: There is real concern about brands using “unsophisticated influencers” and then trying to pawn responsibility for not disclosing about them, Slaughter said. “Brands have a real responsibility to make sure their influencers publicize that relationship.”

The proposed changes are aimed at all types of influencers, but the focus on promotional content targeted at kids could be especially problematic for platforms like Twitch and YouTube. A 2019 Statista report (via backlink) found that 41% of Twitch viewers were between 16 and 24 years old, and nearly three-quarters were between 16 and 34 years old. But younger viewers were not counted in the survey: 16 was the lowest age included. That makes it impossible to say definitively, but I would be willing to bet that there are a lot of under 16s watching streamers on a regular basis. In fact, I can think of two right off the bat: my nephews, who I’m pretty sure aren’t outliers in their specific demographics.

The FTC unanimously voted to submit the proposed changes to the Federal Register, the US government office that contains the agency’s rules, proposed rules, and public notices. Another public event focusing on children’s ability to distinguish and understand advertising content, “and the necessity and effectiveness of disclosures for children”, is scheduled to october 19.

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