03-03-2025
Social Media Influencer Marketing: Managing Risks
Advertisers are allocating increasing amounts of their budget to influencer marketing given its cost-effective digital content and high engagement and conversion rates. Influencer marketing, however, is not without risks. Influencer activities can expose advertisers to false and deceptive advertising claims and lead to reputational damage. The FTC actively enforces its guidance that influencers must disclose their connections to advertisers clearly and conspicuously in their posts.
(For more on social media advertising, including influencer endorsements, see Advertising and Promotions on Social Media in the April 2024 issue of Practical Law The Journal.)
Legal Framework
Influencer marketing in the US is governed and guided primarily by:
Section 5 of the Federal Trade Commission Act (FTC Act), which prohibits misleading, deceptive, and unfair advertising (15 U.S.C. § 45).
The FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides) (16 C.F.R. §§ 255.0 to 255.6), which provide guidance on how to avoid misleading and deceptive advertising when using endorsements (with special attention to endorsements posted on social media). The FTC released an updated version of the Endorsement Guides on June 29, 2023.
The FTC's Endorsement Guides: What People Are Asking (Endorsement Guides FAQs), a set of frequently asked questions that provides detailed examples on how the FTC applies the Endorsement Guides to social media influencer endorsements. The FTC released an updated version of the Endorsement Guides FAQs on June 29, 2023.
The FTC's guidance, Disclosures 101 for Social Media Influencers, directed specifically to influencers to help them comply with the Endorsement Guides.
Other relevant FTC guidance, such as:
The FTC's enforcement activities also provide guidance on keeping influencer marketing legally compliant. To date, the FTC's enforcement activities have primarily focused on the companies that engage influencers. FTC settlements have mapped out the FTC's expectations for companies using influencer marketing. When the FTC updated the Endorsement Guides in 2023, it clarified that not only can advertisers and influencers be held liable for deceptive endorsements, but also intermediaries, like advertising agencies and public relations firms, can be held liable for their role in creating deceptive endorsements.
