The FTC is going after influencer marketing disclosure violations

Brands beware: the Federal Trade Commission (FTC) takes its rules around disclosure in influencer marketing campaigns seriously and will target companies that don’t adhere to them.

Earlier this year, it reached a settlement with retailer Lord & Taylor over charges that it did not adequately disclose that native ads and content posted by influencers as part of its 2015 Design Lab clothing collection launch were indeed paid for by the company.

In announcing the settlement, Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, stated, “Consumers have the right to know when they’re looking at paid advertising.”

This week, the FTC announced another settlement, this time with Warner Bros. Home Entertainment, over similar disclosure issues.

In late 2014, Warner Bros. launched a new video game called Middle Earth: Shadow of Mordor. As part of its online launch campaign, its ad agency, Plaid Social Labs, recruited a number of online influencers to promote content on Twitter and Facebook. Those influencers included PewDiePie, one of the most popular YouTube .

According to the FTC, the Warner Bros. gave the influencers advance copies of the game and paid them anywhere from hundreds to tens of thousands of dollars each to promote the game to their followers with specific instructions, including “not to disclose any bugs or glitches they found.”

The videos published by these influencers, some of which were apparently reviewed by Warner Bros. before they were published, generated “millions of views.”

But there was a problem: the influencers didn’t adequately disclose that their content was paid for by Warner Bros. While the company did instruct influencers to include disclosures, these were requested to be placed in locations “below the fold” along with other text where it was less likely to be seen. Furthermore, the FTC noted that these disclosures would not be apparent when the video content was embedded in external services, such as Twitter.

As the FTC saw it, Warner Bros. misled consumers “by suggesting that the gameplay videos of Shadow of Mordor reflected the independent or objective views of the influencers.”

The settlement with Warner Bros. will require the company to refrain from making the same mistake again and ensure that future influencer campaigns contain adequate disclosures. As part of that, Warner Bros. will be required to educate influencers it works with in the future and monitor their campaigns for compliance.

In addition, Warner Bros. may be required to withhold payment from influencers or its agencies if there are instances of non-compliance.

In pursuing Warner Bros., the FTC has demonstrated that it is willing to question influencer campaigns, even those that have disclosures of some kind. All brands engaged in influencer marketing should take note.