NEW YORK (Legal Newsline) - Companies using social media influencers or native advertising to promote their products should pay attention to the settlement between Lord & Taylor and the Federal Trade Commission, New York attorney Adam Z. Solomon says.
“In bringing the action against a large and recognizable company such as Lord & Taylor, the FTC sent a strong message to other advertisers,” said Solomon, a partner at Michelman & Robinson.
“This case should not just be a wakeup call to the fashion industry.”
Lord & Taylor recently settled with the FTC over charges that the national retailer didn’t properly disclose that several ads for its Design Lab clothing campaign were paid promotions.
According to the claims, Lord & Taylor paid for a native ad in Nylon, a pop culture and fashion publication, which is meant to look like editorial content and is supposed to note that it’s an advertisement. The retailer also paid 50 social media users, called fashion influencers, to upload photos on Instagram promoting a dress they received for free.
The influencers allegedly weren’t told to inform their followers that they were paid for the post.
In the settlement, Lord & Taylor agreed to disclose paid promotions in the future and ensure its influencers note that they were paid to promote Lord & Taylor products.
Solomon said it’s possible Lord & Taylor thought it was providing adequate disclosure by requiring its fashion influencers to tag @lordandtaylor and include #DesignLab in their posts. But FTC actions and rules show that’s not enough.
“The FTC has made the position clear. If there is a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement, such connection must be clearly disclosed,” he said.
“Based on the FTC’s enforcement policy on these issues, the FTC wants the word ‘Advertisement’ to be used.”
Solomon said he expects the FTC to proceed with more investigations, cases and settlements to enforce its policies.