FTC cracks down on social media influencers with settlement

It’s a case that could portend danger for social media influencers—and the marketers who work with them.

Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell have recently reached a settlement with the Federal Trade Commission for failure to disclose their affiliation with an organization they endorsed online.

Martin and Cassell endorsed the online gambling service CSGO Lotto through their social media accounts without letting followers know that they were actually the company’s owners. They were also accused of paying thousands of other gamers to promote CSGO Lotto on platforms including YouTube, Twitch, Twitter and Facebook without requiring them disclose the fact that they were being compensated for their promotions.

Rolling Stone reported:

While the deal doesn't require the two to admit any culpability nor does it include a fine, future infractions could cost more than $40,000 per violation, according to an FTC spokesperson who spoke with Glixel about the case.

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The practice of not disclosing business relationships is more common than you might think. For reasons that include ignorance of the law, many social media influencers don’t want to sacrifice their credibility with the hashtags #ad or #sponsored.

Despite its prevalence, not disclosing online promotions are hard to police. The FTC has followed up on only a few cases. However, this might change more quickly than many influencers would like.

This week, the FTC sent warning letters to 21 influential Instagram users, reminding them that if they’ve been paid for particular posts, they must disclose it.

The FTC issued a statement that read in part:

The letters ask that the recipients advise FTC staff as to whether they have material connections to the brands in the identified posts, and if so, what actions they will be taking to ensure that all of their social media posts endorsing brands and businesses with which they have material connections clearly and conspicuously disclose their relationships. The FTC is not disclosing the names of the 21 influencers who received the warning letters.

In April, the FTC issued letters to 90 influencers. The 21 individuals who received letters this week were reportedly among that initial batch, and presumably still have not complied.

The FTC offers endorsement guidelines for anyone wondering how they should approach disclosing influencer partnerships. It’s must-read material for both social media influencers and brand managers who are looking to work with them in an upcoming campaign.

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