Last March, we wondered why a group of widely recognized bloggers were all suddenly wearing the same exact dress over the span of a few days. It quickly came out that this was no coincidence. Rather, the bloggers were paid to post #OOTDs while donning a specific dress from Lord & Taylor's Design Lab. However, the 50 (!) bloggers that participated didn't (at the time) disclose the fact that these were sponsored posts — which is completely off-limits, according to the U.S. Federal Trade Commission's guidelines for digital advertising.
Today, Lord & Taylor settled with the FTC for an undisclosed sum over charges that the retailer misrepresented its campaign by failing to clearly indicate that these posts were sponsored. The settlement requires Lord & Taylor to clearly designate any native advertising as such (and ensure that any influencers do, too).
The FTC's complaint claims that the campaign's 50 influencers were not only gifted the Design Lab dress in question, but were also compensated "in amounts ranging from $1,000 to $4,000" by Lord & Taylor for a single Instagram post, which the retailer approved copy for. (According to the FTC, none of the original caption text supplied by these influencers made note of the sponsored nature of the posts — nor did Lord & Taylor add the disclosure when approving the copy.)
The agency was reportedly first alerted of a possible misstep when Nylon's website ran a story paid for and reviewed by Lord & Taylor without designating it as an ad (along with an Instagram post that had no indication of sponsorship), according to Reuters. Despite all of this, the #DesignLab campaign appears to have been successful in reaching a large audience: The dress not only sold out, but these sponsored posts reached 11.4 million Instagram users, says the FTC.
The retailer clarified that it obviously wasn't intentional: "Lord & Taylor is deeply committed to our customers and we never sought to deceive them in any way, nor would we ever. In the FTC's consent order announced today, there is no finding of wrongdoing whatsoever," read a statement Lord & Taylor provided to Refinery29. "We cooperated fully with the FTC's inquiry into the marketing of this dress and have of course agreed to uphold the current version of the guidelines. The FTC has changed its guidelines since last year and we applaud the new guidelines that clarify the rules."
Plus, when the retailer found out that its Design Lab campaign didn't abide by the FTC's rules at the time the campaign was released, it "took immediate action" and had the influencers featured in the campaign edit the captions to make clear that the posts were paid for (which you can see for yourself, if you go back a solid 50 weeks in their feeds).
This marks the first case under FTC investigation following its revised guide for native advertising, published in December 2015. It's a fascinating addition to the ongoing conversation about native advertising. After all, scads of media outlets, including our own, have been publishing clearly labeled sponsored content over the past few years. When it comes to influencers and bloggers, though, the situation is a little murkier (and is less-charted territory).
"We know, of course, that the use of social media influences has become really big business and is a very popular way to reach out to consumers...If they were paid or incentivized in some way, which was the case in Lord & Taylor, the ad needs to make it clear that there is a relationship and that these are not independent views being expressed," Mary Engle, associate director for advertising practices at the FTC, told WWD.
Don't expect bloggers to stop commanding figures as high as $15K to give some love to a particular item on their Insta feeds just because Lord & Taylor ultimately had to fork over for its vaguely sponsored (by all accounts, quite successful) campaign. But it will probably make all parties involved (the retailers as well as the "influencer" talent recruited and compensated) very cautious with future campaigns.