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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What are “Natural” Products Anyway?

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Personal care products that claim to be “natural”, “all natural” or “100% natural” continue to draw scrutiny from consumer advocates and regulatory agencies such as the FTC. Perhaps surprisingly, there still is no clear definition of the word “natural” for personal care products.  It’s no small concern, as consumers and manufacturers can have different expectations of what “natural” means, which can lead to confusion and accusations of false or misleading advertising.

Despite the uncertainty, “natural” product claims matter to consumers. According to a 2015 Nielsen report, 53% of consumers surveyed said that an “all-natural” description was moderately or very important to their purchasing decision. The worldwide natural products industry is estimated at $33 billion – and it’s growing.  “Naturally,” companies want to capitalize on this trend.

But what exactly is a “natural” product? Is it plant-derived? Is it made from ingredients found in nature?  Is it free of preservatives? Is it made without synthetic ingredients?  There are no FDA regulations regarding use of the word natural. However, the FDA has issued non-binding guidance that states it will not contest food products labeled as “natural” if the product does not contain added color, artificial flavors or synthetic substances. Though this provides a limited understanding of the term “natural”, the guidance is as to food, pertains only to FDA enforcement and is not a legal requirement.

In a recent complaint filed with FTC, California Naturel’s sunscreen was alleged to be not “all natural”, as it claimed, because 8% of it was Dimethicone, a synthetic ingredient. Following the FTC complaint, California Naturel put a disclaimer on its website, which was later ruled as ineffective in a 2016 FTC decision.

Starting in 2015, the Honest Company also found itself in court for false advertising in regard to their “natural” products.  Though the Honest Company markets its products as “natural”, the products contain a number of synthetic ingredients. Consumers argued that their understanding of “natural” was a product free of synthetic or artificial ingredients, and the court held that the Honest Company’s  “natural” claims for its products is misleading.

The current trend is that the surest way to avoid complaints when products are advertised as “natural” or “100% natural” is to make certain they are free of synthetic ingredients.  Next to that, disclosure of what you mean by “natural” as used on your product can be an important measure to avoid consumer confusion.

Conkle, Kremer & Engel attorneys help their clients navigate these tricky currents by staying up to date on developments affecting the personal care products industry.

 

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