INSIGHT: Retailers Should Check Their Social Media Practices Before the FTC Makes Its Next Move
Meegan Brooks, Steptoe & Johnson LLP, and Nilda Nejah, Corporate Counsel, ThredUp Inc.
As customers learn to jump, swipe, and pay their way past traditional advertisements, retailers are becoming more reliant on more subtle forms of endorsement. Indeed, Business Insider and Mediakix report that the number of sponsored Instagram posts nearly doubled in 2017 and that Instagram influencer marketing could reach $2 billion by next year. By 2022, influencer marketing could become a $5 to $10 billion industry.
Over the last three years, the Federal Trade Commission (FTC) has repeatedly identified sponsored social media endorsements as a high-priority issue. It has issued and updated detailed guidance for how to disclose sponsored content. And, if that were not a clear enough signal, last year the FTC sent letters to 91 brands and influencers (people paid to endorse products on their social media profiles and elsewhere), educating them on their need to disclose sponsored content.
Although the FTC has not taken any public action in this area in a year or so, retailers should not assume the Commission has moved on to other issues. Rather, businesses should make sure that their sponsored social media practices comply with the FTC’s guidance—or risk becoming its next target.