FTC Approves Final Consent Order Against Social Media Influencers

The Federal Trade Commission has approved a final consent order settling its first-ever case against individual social media influencers, the owners of the CSGO Lotto website. The FTC’s September 2017 complaint charged Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, two online influencers who are widely followed in the gaming community, with deceptively endorsing the online gambling service CSGO Lotto, while failing to disclose they jointly owned the company.

According to the FTC, the defendants also paid other well-known influencers thousands of dollars to promote the site on YouTube, Twitch, Twitter, and Facebook, without requiring them to disclose the payments in their social media posts.

The Commission order settling the charges prohibits Martin, Cassell, and CSGOLotto, Inc. from misrepresenting that any endorser is an independent user or ordinary consumer of a product or service. The order also requires clear and conspicuous disclosures of any unexpected material connections with endorsers.

For those that look to consent orders to provide a regulatory compliance roadmap, particularly noteworthy are the provisions pertaining to “Monitoring of Endorsers,” which include:

  • Providing each such endorser with a clear statement of his or her responsibilities to disclose clearly and conspicuously, and in close proximity to the endorsement, in any online video, social media posting, or other communication endorsing the product or service, the endorser’s unexpected material connection to any Respondent, any other individual or entity affiliated with the product or service, or the product or service, and obtaining from each such endorser a signed and dated statement acknowledging receipt of that statement and expressly agreeing to comply with it;
  • Establishing, implementing, and thereafter maintaining a system to monitor and review the representations and disclosures of endorsers with material connections to any Respondent, any other individual or entity affiliated with the product or service, or the product or service, to ensure compliance with the Order. The system shall include, at a minimum, monitoring and reviewing the endorsers’ online videos and social media postings;
  • Immediately terminating and ceasing payment to any endorser with a material connection to any Respondent, any other individual or entity affiliated with the product or service, or the product or service, who Respondents reasonably conclude: has misrepresented, in any manner, his or her independence or impartiality; or has failed to disclose, clearly and conspicuously, and in close proximity to the endorsement, an unexpected material connection between such endorser and any Respondent, any other individual or entity affiliated with the product or service, or the product or service;
  • Respondents may provide an endorser with notice of failure to adequately disclose and an opportunity to cure the disclosure prior to terminating the endorser if Respondents reasonably conclude that the failure to adequately disclose was inadvertent. Respondents shall inform any endorser to whom they have provided a notice of a failure to adequately disclose an unexpected material connection that any subsequent failure to adequately disclose will result in immediate termination; and
  • Creating reports showing the results of the monitoring.

Contact the author at rnewman@hinchnewman.com if you are interested in learning more about compliant influencer campaign practices or are the subject of a regulatory investigation.

 

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777

 

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