Common Legal Mistakes Made in Social Media Influencer/Brand Relationships

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With over 2.5 billion social media users worldwide, it is no surprise that social media marketing is booming and partnerships between brands and social media influencers (i.e. individuals with large followings on social media platforms) are becoming increasingly popular.  These partnerships can be great opportunities for both parties – on the one hand, the brand gets promoted to the influencer’s thousands or millions of followers by a person they admire and trust, while the influencer gets compensated for this promotion.  However, these brand/influencer relationships can also expose both parties to lawsuits and fines from the Federal Trade Commission (FTC).  Although social media may seem like an informal marketing platform, the FTC has determined that its Guides Concerning the Use of Endorsements and Testimonials in Advertising apply to social media marketing, just as they apply to other forms of marketing.  This article outlines how to avoid a few of the common legal issues that arise in the course of a brand/influencer relationship.

Disclose the relationship between the influencer and brand. Part of the appeal of hiring an influencer for a marketing campaign is the authentic feel of the endorsement.  However, the FTC’s the Guides Concerning the Use of Endorsements and Testimonials in Advertising require influencers to disclose “material connections” that they have with the brand they are endorsing.  A connection is deemed “material” when the relationship between the influencer and brand may materially affect the weight or credibility of the endorsement from the influencer. 16 C.F.R. § 255.5 (2009).  An obvious example of a material connection is one where the brand is paying the influencer to endorse or review a product, but even friendships or familial relationships between the influencer and brand are material, as the influencer may be more likely to give a product a positive review because of this relationship.  

The disclosure of the material connection must be clear and conspicuous.  For example, a disclosure that consumers can only see if they click to see more of a post, or ambiguous hashtags such as “#ambassador” or “#collab,” are insufficient to meet the FTC’s disclosure requirement.  On the other hand, the FTC has stated that “#ad” close to the beginning of a post is a sufficient disclosure.  Both the influencer and the brand may be liable for the influencer’s failure to disclose a material connection, so brands must be sure to inform influencers of the duty to disclose and monitor the influencers’ posts to ensure compliance with the FTC Guides.

The claims in the endorsement must be truthful.  Claims made by a social media influencer in an endorsement must be truthful and substantiated.  This means that advertising claims cannot be misleading to the average reasonable consumer, and any statements made about a product or service must be supported by evidence.  Even if the influencer makes a misleading or unsubstantiated claim about a product without consulting the brand, the brand will still be liable the influencer’s statements. Again, this highlights the importance of monitoring the influencer’s posts and providing the influencer with guidelines about what claims he or she can legally make about the product or service being advertised.

Determine who owns the intellectual property rights in the content.  In a typical company/influencer relationship, the influencer will post a photograph and accompanying text exhibiting the brand’s products or services on the influencer’s social media account.  If the influencer created this content, the influencer owns the copyrights to it, and the brand could be liable for copyright infringement if it reuses this content without the influencer’s permission.  To avoid this issue, the brand should ensure that there is an agreement in place between with the influencer assigning the copyright to the brand.

Obey the reposting rules from each social media platform.  It’s a common misconception that all of the social media platforms have the same rules regarding reposting content from another user.  The reality is that reposting user content on some platforms is perfectly acceptable, while on others it constitutes infringement.  For example, on Twitter you may freely repost Tweets from other Twitter users.  By becoming a Twitter user, you agree to Twitter’s Terms of Service, which permit you to “Retweet” the content of other Twitter users and allows other Twitter users to Retweet your content.  Instagram, on the other hand, does not include any such provision in its terms of service, and even requires users to “agree to pay for all royalties, fees, and any other monies owing any person by reason of Content you post on or through the Instagram Services.”

Make sure the content does not infringe a third party’s rights.  Even if the brand and influencer have reached an agreement regarding the ownership of the content in a social media endorsement post, the post may infringe the rights of a third party if it includes a third party’s image or artwork.  If someone’s image is used in the endorsement, this person may claim a violation of his or her publicity rights.  Similarly, the use of another’s artwork in the content of the endorsement may constitute copyright or trademark infringement, subject to the fair use defense (which is less likely to apply to a social media post that is clearly an advertisement).

To learn more about the formation of and legal pitfalls to be avoided during the course brand/influencer relationships, contact Heather Laird-Vanderpool or Aleen Tomassian.

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UK Bans Sale of Products with Plastic Microbeads

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Beginning on June 30, 2018, the United Kingdom’s ban on the sale of “rinse-off” cosmetic and personal care products containing plastic microbeads in their formulas will take effect as part of the Department for Environment, Food and Rural Affairs’ (“Defra”) efforts to reduce the harmful, pollutive impact that plastic microbeads have on the marine environment.  The sales ban follows the ban on the manufacture of such products in the UK that went into effect on January 9, 2018.  Defra described the prohibition as “one of the world’s toughest bans on these harmful pieces of plastic.”  Notably, the UK ban applies to both biodegradable and non-biodegradable plastic microbeads.

While the Institute for European Environmental Policy (IEEP) and organizations such as Beat the Microbead and Plastic Soup Foundation have pushed for an EU-wide ban on the sale of plastic microbeads, it does not appear that such a ban is being developed at the moment.  However, European countries are trending toward microbead bans: Sweden’s ban on the sale of rinse-off cosmetics with microbeads takes effect on July 1, 2018 (although sellers who obtain such products before that date may continue to sell them until January 1, 2019); Ireland plans to introduce a microbead ban by the end of 2018; and several other countries in the European Union are reportedly in the process of developing their own microbead bans.

Plastic Microbeads in Cosmetics

For decades, plastic microbeads have been used in facial cleansers, soaps and toothpastes for their exfoliating properties.  However, in response to growing concerns about the environmental impact of plastic microbeads in recent years, many companies have reformulated their products to use other non-plastic exfoliants, such as walnut shells, salt, seeds and jojoba beads, among others.

Plastic microbeads make their way from our sinks and showers, to the sewage systems, and into the marine environment.  One scientific study found that in the United States alone as many as eight trillion microbeads end up in our lakes, rivers and oceans every day.  The microbeads absorb toxins and are ingested by marine animals who transport them to other creatures up the food-chain.

UK Follows Example Set by US Ban

The “tough” UK ban follows in the footsteps of the Microbead-Free Waters Act of 2015 in the United States banning both non-biodegradable and biodegradable plastic microbeads, which was signed into law by President Obama on December 28, 2015.  Prior to the federal ban, however, eight of the nine states to pass legislation banning plastic microbeads in personal care products exempted biodegradable plastic beads from the ban.  California was the only state with a plastic microbead ban that included both biodegradable and non-biodegradable plastics within its scope, as studies showed that even the biodegradable microbeads disintegrate quite slowly and create a negative environmental impact.  For more history about the introduction of state-level microbead legislation, see CK&E’s earlier post regarding New York’s Microbead-Free Waters Act and the proposed laws in other states.

While the scopes of the UK and US bans are substantially similar, a violation of the UK ban could come with a much steeper monetary penalty.  While the fine for violating the US ban generally does not exceed $1,000 (assuming that there was no intent to defraud or mislead), a violation of the UK ban could cost the violator up to 10% of its annual revenue in England.

If you are a manufacturer, it is important that you stay up to date with the industry regulations in every territory where you manufacture or distribute your products.  CK&E has decades of experience helping clients adapt their businesses and products to comply with changing regulations all over the world, in a cost-effective and efficient manner.

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The Conkle Firm Attends Cosmoprof North America’s Exhibition in Las Vegas

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On July 9, 2017, the attorneys of Conkle, Kremer & Engel attended Cosmoprof North America’s annual exhibition in Las Vegas, both to assist clients and to observe first-hand the latest trends in the beauty and personal care industry.  Tens of thousands of professionals attended the three-day exhibition, which featured over 1,150 exhibitors from 38 countries. CK&E attorneys attend to connect with clients and others in the cosmetics, personal care, packaging, labeling and professional beauty markets, to help clients secure distribution agreements, and to learn about the newest industry innovations.

This year, brands dedicated to “green” products were showcased as consumers continue to be interested in eco-friendly beauty and technology.  Skincare brands also made a strong showing as consumers have been increasingly interested in anti-aging and other preventative products and technologies.  Facial mask and dedicated ethnic products made a particularly strong showing this year.  Globalization of the beauty market is readily apparent – Euromonitor International has an excellent detailed analysis of recent international growth in the beauty and personal care industry on a global scale:  http://blog.euromonitor.com/2017/05/reimagining-growth-in-the-global-beauty-industry.html

CK&E’s attorneys pride themselves on effectively and efficiently assisting clients of all sizes with brand protection and growth and regulatory compliance, both domestically and internationally.  CK&E is an active member of the Professional Beauty Association, and other important industry trade organizations.

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