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Focus on Regulation

Moving Beyond #Ad: Instagram Unveils New Tool for Disclosing Endorsements

Instagram recently rolled out a new feature to a select group of its users who use the social media platform for promotional purposes. This tool allows influential users to add a new subheading to posts that reads “Paid partnership with…” It is designed to help users clearly and conspicuously tag the brand that sponsors a post. The announcement comes just two months after the Federal Trade Commission (FTC) focused its attention, for the first time, on influential Instagram users and raised concerns about whether certain users were violating FTC Endorsement Guidelines. Instagram claims its new feature will bring “more transparency to commercial relationships” between Instagram influencers and the brands they promote.

The world of sponsored social media posts has become so convoluted that Buzzfeed News now publishes a regular column titled “Is This an Ad?” The column investigates ambiguous social media posts to determine whether the poster has an undisclosed partnership with the brand they are promoting. For example, one celebrity posted an Instagram photo with the caption “Thanks for getting me to the Hamptons, @lyft!” While it is not clear from the description, a bit of investigation revealed that the celebrity has an ongoing partnership with Lyft and received a free ride immediately before touting the company on Instagram. The new Instagram tool aims to avoid ambiguous posts like this one by ensuring disclosure in compliance with FTC Endorsement Guidelines.

#Throwback: A Look Back at the Flurry of Letters that Got Us Here

In September 2016, Public Citizen, a consumer rights advocacy group, sent a letter to the FTC that identified 113 Instagram influencers and celebrities who appeared to have published sponsored posts without making appropriate disclosures. In its letter, Public Citizen claimed that Instagram had “become a platform for disguised advertising directed towards young consumers.”  The letter requested that the FTC act promptly and aggressively “to change the culture around paid endorsements on Instagram.” It did not take long for the FTC to take action.

In April 2017, the FTC announced it had sent out over 90 warning letters to social media influencers and marketers who used Instagram. Many of the letters cited specific Instagram posts that had originally been flagged by Public Citizen just months earlier. The warning letters, recently released after FOIA request, were the first examples of the FTC communicating directly with social media influencers. Historically, FTC enforcement initiatives have targeted brands, not the influencers themselves. Here though, most of the FTC letters were addressed to influential Instagram users, including Heidi Klum, Luke Bryan, Jennifer Lopez, and Allen Iverson.

The FTC letters did not allege that any violation had occurred; they instead sought to familiarize influential users with the FTC’s Endorsement Guides (published in 16 C.F.R. Part 255). Attached to each letter was also an informational FTC staff publication titled “The FTC Endorsement Guides: What People are Asking.” The letters explained that users must disclose any “material connection” to endorsements, including any business relationship, monetary payment, or gift of free products. Importantly, the FTC noted that the disclosure must be clear such that “consumers should be able to notice the disclosure easily, and not have to look for it.” The FTC specifically said that disclosure cannot be buried in the text that requires a viewer to click “more” in order to see it. Vague terms like #sp and #partner are not sufficient. #Ad might be sufficient, but not if it is buried in a string of hashtags that a viewer could easily skip over.

Instagram’s New Tool and the Ongoing Battle around #SponsoredPosts

Example of Instagram's new disclosure tool

Example of Instagram’s new disclosure tool

On June 14, 2017, just two months after the FTC letter campaign, Instagram unveiled its new disclosure tool. The tool is designed to streamline compliance with FTC disclosure requirements and bring more transparency to the platform. Without the tool, users must make a number of choices about where and how to disclose the sponsored nature of their posts. The new tool removes endorser discretion by providing one clear, conspicuous, and standardized form of disclosure. Instagram describes its new tool as a “first step” and promises to take additional actions in the area of sponsored posts.

But not everybody is happy with the new feature. On June 26, 2017, Public Citizen sent another letter to the FTC that argues the feature “needs to be refashioned” to better protect consumers. More specifically, they argue that Instagram should create an even more noticeable disclosure format by placing a red box labeled “advertisement” around every sponsored photo. The letter also urges the FTC to “work with Instagram to develop a system that makes it easy to denote paid posts consistent with FTC guidelines.”

Public Citizen also observed a limited immediate impact of the FTC’s 90 warning letters. Public Citizen claimed that, since receiving the FTC’s letters, only one of the influencers has consistently disclosed sponsorships in compliance with FTC guidelines. Consequently, Public Citizen requested that “the FTC bring enforcement actions and seek penalties for posting nondisclosed sponsored content, especially for influencers and brands that are repeat offenders.” While we are not aware of any public actions being brought against individual influencers, it is clear that all parties involved view this new tool as part of a larger, ongoing conversation about sponsored posts. Public advocacy groups want more disclosure, while brands and influencers may prefer less disclosure. Instagram designed its new tool as a “first step” towards finding a practical, middle-ground solution that satisfies FTC Endorsement Guidelines.

The bottom line: although the FTC’s requirements for advertising to be “truthful and non-deceptive” have not changed, the mechanisms available by which companies and marketers can meet these requirements are rapidly evolving in the context an active FTC and vocal public watchdogs. #StayTuned.

Many thanks to Washington, D.C. Summer Associate, Gil McDonald, for his assistance in crafting this blog post.