Why Those FTC Blogger Requirements Aren't Working

Photo: Courtesy of @Nanysklozet Instagram.
The Federal Trade Commission requires bloggers to disclose when they're writing about (or sharing photographs of) products they've been given for free, or items they've been paid to promote. What happens if they don't? Nothing.

Last week,
Lord & Taylor debuted one of its most successful advertising initiatives in recent history. The retailer recruited 50 popular style bloggers, gave them each a paisley printed dress from the 2015 Design Lab line, and paid them an undisclosed amount of money to post a photo of themselves wearing the dress to Instagram using the hashtag #DesignLab. The campaign was intended to raise awareness of Lord & Taylor’s new “fashion-forward” collection, and it worked. The dress sold out almost immediately. But, as Marketing Land pointed out, there’s a major problem: The bloggers all failed to mention that they were paid by Lord & Taylor to post the pictures.

This move violates U.S. Federal Trade Commission guidelines detailed in a 21-page document that goes into exhaustive detail about the proper ways to disclose advertisements online and via social media. The rules state that influencers must disclose when they are paid to post, in a “clear and conspicuous” way. For Instagram and Twitter, the FTC recommends using hashtags like “#ad” and “#sponsored” on every post that came with compensation. According to recent FTC guidelines (updated in 2013 to include mobile advertising in addition to blogging), “To ensure that products and services are described truthfully online and that consumers get what they pay for, the FTC will continue to enforce its consumer protection laws."

But, this is where things get murky, because the penalty for violating the rules remains unclear. Richard Cleland, then the assistant director of advertising practices at the FTC, explained the policy to Fast Company back in 2009, when the commission was first updating its disclosure guidelines to include bloggers. "There's no monetary penalty, in terms of the first violation, even in the worst case," he said. "Our approach is going to be educational, particularly with bloggers. We're focusing on the advertisers: What kind of education are you providing them, are you monitoring the bloggers and whether what they're saying is true?"

Judging from the lack of publicized enforcement (or significant changes in the law) Cleland's explanation likely still applies six years later. Save for a few cases (including a 2014 ruling against L.A. advertising firm Deutsch and an investigation into Cole Haan's Wandering Soles Pinterest campaign that same year), the relevant legal cases brought by the FTC have been few and far between. Although the FTC could penalize advertisers and bloggers alike, it often chooses not to — because not only is it difficult to troll the Internet for violators, it's expensive to take them to court.

As Cleland told Fast Company, "I don't think it's a matter of the enforcement side being weak but the most cost-effective tool in our arsenal. In this case, we're going to rely more on voluntary compliance than prosecution."

It's a system that depends more on the possibility of punishment than the punishment itself. Maybe this is why, after a week of Internet discussion surrounding Lord & Taylor's possible FTC violation, many of the featured bloggers have since added  #sponsored or #ad to their posts. Adding a retroactive hashtag probably won't help the bloggers in a court case if the FTC did decide to prosecute, but chances are, it won't come to that. 

Just don't expect Instagram advertising to slow down anytime soon. As a Lord & Taylor spokesperson told us, “We are proud of this campaign and our partnerships but want to reiterate that our influencers were compensated by Lord & Taylor, as is customary in these types of programs. We are always looking for ways to improve our process and communications with our customers. We look forward to continuing to build great marketing campaigns.”
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