The FTC also alleged that, as part of the Design Lab rollout, Lord & Taylor paid 50 online fashion “influencers” to post Instagram photos of themselves wearing a particular dress from the new collection, but failed to disclose that Lord & Taylor had given each “Influencer” the dress and paid them between $1,000 and $4,000 each for their endorsements. While the influencers could style the dress any way they chose, Lord & Taylor contractually obligated them to use the @lordandtaylor Instagram user designation and the hashtag #DesignLab in the photo caption.
In total the influencers’ posts reached 11.4 million individual Instagram users over 2 days, led to 328,000 brand engagements with Lord & Taylor’s Instagram handle, and the dress quickly sold out.
In the proposed consent order settling the FTC’s complaint, Lord & Taylor is prohibited from misrepresenting that a paid advertisement is from an independent or objective source, and it is prohibited from misrepresenting that any endorser is an independent or ordinary consumer, and requires that the company disclose any unexpected material connection between itself and any influencer or endorser. It also establishes a monitoring and review program for the company’s endorsement campaigns.
The FTC has an Enforcement Policy Statement that businesses can use to ensure they make the required disclosures in native advertisements. In addition, the FTC also has a Guide to Native Advertising for Businesses
Take-away: As brands continue to adapt to these new types of advertising, they need to ensure that any seemingly objective content fully discloses if and when the author of the content is paid for the content so that consumers are not misled.