Do you know why websites have those fun disclaimers at the top saying that the businesses may receive commissions for products they sell? Or how so many social media posts have #ad or #sponsored on them? Or maybe #paidpartnership?
They do so because it’s the law. And so they can avoid lawsuits like what Revolve got hit with last week.
Disclosures in an Online World
In not the too distant past, everyone knew when an athlete or celebrity was promoting a product… they were on commercials, whether on TV or in print. It was obvious. But as the marketing game moved online, especially in the age of social media, the lines became more and more blurred between what was someone really giving an unbiased honest review and what someone was getting paid to say.
That’s where the world of disclosures comes in. If you are getting paid to promote a product, then you should disclose that.
First, it’s just good business to be transparent with your audience.
Second, because the Federal Trade Commission requires that disclosure in an effort to stop deceptive ads.
Disclosure Requirements
The FTC requires an influencer to disclose any material connections or relationships to the brand. This could mean a personal, family, or employment relationship. And obviously it includes a financial relationship. The financial relationship though isn’t just being paid for the posts. It could also include things like brand trips, free product, or discounted products.
Once you determine that you are required to disclose a material connection, the disclosure needs to be open and obvious. You can’t hide the disclose below the fold, at the very end of the blog post, or only on an about page or profile.
Where to Place the Disclosure
The disclosure needs to be on the picture if on a platform like Instagram. It needs to be on the video if on YouTube, TikTok, or Reels. You can’t just put it in the description of the post – it needs to be where the viewer is most likely to see or consumer the content.
You also can’t try to sneak the disclosure in on a long list of hashtags like #atlanta #georgia #fashion #clubwear #ad #letsgo #girlsnight #buckhead. That #ad is lost in all those other hashtags. It should be at the very beginning, even before the plain text caption.
Some social media platforms have tools built in so that you can disclose the relationship. But while you should take advantage of these, don’t assume that the platform’s tools will always work. It’s better to do both, assuming that at some point the platform’s tool won’t be available. So put the disclosure on the video/picture and in the caption and tag it as a paid collaboration.
What the Disclosure Should Say
Now there is no specific magic words for the disclosure. But it should be obvious to the average reader, using simple and clear language.
So an explanation like “Thanks to Revolve for providing me with these awesome free clothes for Girls’ Night” would be good. And terms like “sponsored post” or “advertisement” make it obvious to the user.
The FTC makes it clear though the vague and confusing terms are not going to work to be a proper disclosure. So “spon” or “collab” aren’t going to be enough.
The Revolve Influencer Marketing Lawsuit
The plaintiffs in a proposed class action lawsuit allege the Revolve and several influencers failed to disclose their financial connection, thus tricking them into buying and paying more for the products that they bought. By failing to disclose these relationships, Revolve benefited with more sales and higher revenue. This was in violation of the FTC Act and 27 various states’ laws and regulations.
Where the Influencers Went Wrong (Allegedly)
The plaintiffs allege that the Instagram and similar social media posts were deceptive because they did not properly disclose the relationship between the influencer and Revolve. Often, if there was any disclosure, it was buried in a lot of hashtags at the end of the post.
In other occasions, the influencer didn’t say anything about it being an advertisement or sponsored post. Instead, they just tagged Revolve, insinuating that they chose to purchase their clothes there of their own choice. The plaintiffs say that they thought it was the honest advice of the influencer, thus pushing the plaintiffs to purchase. And the plaintiffs say that they wouldn’t have purchased if they knew it was a paid collaboration, because they could have purchased the same products through other online retailers for a lower price.
Where the Brand Went Wrong (Allegedly)
The responsibility for proper disclosures isn’t just on the influencer. In fact, the brand has a very big part in the disclosures.
Brands, like Revolve, should be educating their influencers, ambassadors, and affiliates, to ensure that they are aware of the disclosure requirements. Further, they should be monitoring those posts to ensure that disclosure is proper.
While it is not required that they monitor 100% of the posts and catch every time that a disclosure isn’t made properly, every brand should have a habit of regularly reviewing and enforcing disclosure requirements.
You know who does this very well? Amazon, that’s who. They are known in the affiliate marketing world to regularly scan websites for affiliate disclosures (hence the disclosure in the footer of this very website as well as at the top of the post) and to monitor where you post. They have influencers tell them where they will be posting – websites, social media accounts, etc – and if clicks are coming from other sources will disallow the commissions.
In this case, the plaintiffs allege that not only did Revolve not do this, they actively tried to avoid disclosure and create a marketing campaign that didn’t comply with the law. That their actions were not just negligent but were intentionally deceptive to increase clicks and purchases.
The Parties to the Revolve Lawsuit
Typically, brands and influencers are most afraid of governmental enforcement actions for deceptive advertising claims. Like when Kim Kardashian settled with the SEC over not disclosing her relationship to the company. So what is interesting in this lawsuit is that this is a claim brought by an individual on behalf of a class. This is not being brought by any state or the federal government.
In addition, the defendants include not only Revolve, but also individual influencers. Both sides of the influencer marketing relationship are being targeted in this lawsuit. So while it is the influencers that have direct control over the social media posts, the brand is ultimately the one that has the potential to pay out the damages here. I doubt that any of the influencers being sued have the ability to fund not only a legal defense but also a potential settlement of at least $50 million. Thus the brand.
How Do I Avoid Getting Sued Next?
So you are reading about this lawsuit, but you want to make sure that you aren’t the next influencer or brand getting sued for not disclosing. So what should you be doing?
First, always disclose those relationships. If you aren’t sure if it is enough, disclose again. Really, consumers like to know this, that you are being transparent and it may backfire if there aren’t disclosures.
One recent example of this is where a once free, no relationship review of a product was done by Momma Cusses on Facebook (and maybe TikTok or elsewhere, but I saw it on Facebook). Then the brand reached out and made a deal with the creator and turned it into a paid ad. The Momma Cusses community was aghast that the brand had used the content without permission, until the original creator made additional videos explaining the new deal.
For the record, they were mad at the brand, not the creator here. They thought the brand had stolen the content. But the story does emphasize that the viewers had a great trust in the creator and her recommendations. It was valuable to the brand to pay for the content to be able to boost their reach that wouldn’t have been available without the creator’s audience.
And while I won’t name names, I’ve seen some online backlash for those that don’t disclose their relationships.
Brands Should Be Enforcing Disclosures in Brand Guidelines
It’s important that brands include disclosures in their brand guidelines for influencers and ambassadors. And then follow through with monitoring and enforcement.
Remember, the written guidelines are the first line of defense — if the influencers fail to disclose, but you told them to, you **may** not have the same liability as if you don’t have those guidelines. It’s great to be able to show this written materials to a judge or jury as part of your defense. Blame the other side, right?
But the written materials aren’t enough. You need to show a pattern of enforcing them. Because it’s not enough to have a wink and a nod to following the law with written stuff, you need to actually be following the law, out there in the real world.
Is This The First of Many Lawsuits?
At least one of the plaintiff attorneys law firms in this lawsuit has filed multiple class action lawsuits targeting companies on other issues before. Like against Dunkin Donuts and Starbucks both. And they had cases with a similarly named plaintiff, perhaps a family member?
If this case follows trends that we have seen with laws and issues such as the website chatbots, ADA accessibility claims, and other similar cases, then don’t be surprised to see similar lawsuits against other influencers and brands that are not properly disclosing material connections and relationships between them.
Worried About Your Online Marketing Programs?
Then we need to talk. Fortunately, you’ve got access to a business attorney that can help. As someone that is both a legal advisor and also a content creator, I know all about the ins and outs of proper disclosures, creating good brand guidelines and affiliate programs, and more.