Episode 5: Influencers, Endorsements & the FTC: What You Must Disclose

In Episode 5, the team shifts from what companies claim to how those claims are advertised, diving into the FTC’s endorsement and testimonial rules. They break down how influencer marketing, gifted products, paid partnerships, employee reviews, and even free trips trigger disclosure obligations, and why the FTC views transparency as essential to preventing deception.

The hosts explain the FTC’s updated 2023 Endorsement Guides, which outline how brands and influencers must disclose “material connections,” including payment, free products, travel, or any benefit that might influence a review. They also walk through real enforcement actions against brands like Sunday Riley, Fashion Nova, and Teami to illustrate how the FTC polices both deceptive claims and deceptive advertising practices.

Disclaimer:

The content of this podcast is for informational purposes only. It is not intended to, and does not constitute, legal advice or a solicitation for the formation of an attorney-client relationship. The information in the podcast is not a substitute for obtaining legal advice from an attorney licensed in the appropriate jurisdiction. Podcast listeners should not act upon any information in the podcast without first consulting legal counsel of their own directly.

 This podcast does not constitute the practice of medicine, nursing or other professional health care services, including the giving of medical advice. The use of information on this podcast or materials mentioned in this podcast is at the user’s own risk. 

Transcript

SPEAKER_00 0:01

Welcome to Regulated Beauty, a podcast that brings clarity to the complex legal landscape of beauty and wellness.

SPEAKER_02 0:08

As attorneys in Leech Tishman's Beauty and Wellness Industry Group, we are here to demystify regulations affecting your favorite brands, friends, and influencers.

SPEAKER_01 0:17

If you've ever wondered about the rules and regulations and why they matter, welcome. You're in the right place. Let's get started. So in the last episode, we focused on the FTC's kind of flagging of companies' deceptive claims and what they were advertising. Now we kind of want to move on to how uh these companies are advertising their their claims. Right. And so the FTC has these really great resources in the form of guides that are online and available. Um so maybe we can talk a little bit about what that landscape looks like as to how endorsement should be conducted, what an endorsement is period, uh, just to clarify. Um and then we can kind of move on a little bit to more specific questions and maybe examples, um, and even do maybe a segment of uh certain claims and if they're kosher or not.

SPEAKER_02 1:19

Sure. So I think it's important to take a teeny step back. So as we were talking about in the last episode and even in the one before that, the Federal Trade Commission, the FTC, is really focused on consumer unfairness and deception in general, but also specifically in advertising, right? The FTC not only is focused on, but even has a section of its website that anybody can find, right? And it's intended for regular people, by the way, not just not just attorneys, not just companies, but it's actually intended for even like social media influencers, like we'll get into in a second, even consumers, like why not, right? To review what the FTC is saying, what it's focusing on, but it's really focused on getting to the truth in advertising to make sure that what companies are putting out there into the ether for consumers is not deceptive, right? It's not unfair to consumers, it's not trying to like induce them to buy certain products, to overpay for certain products, right? So what the FTC did is codify, actually in law, um these endorsement guides where it lays out um basically what companies are uh how companies are allowed to market, right? Like what are they prohibited from doing? Um, what sort of uh nefarious nefarious practices are they supposed to stay away from? Um and also in addition to the actual codified law, what they did was they posted back in the early 20 or mid-2010s, and they've updated in 2023, actual like uh endorsement guidance uh principles for actual companies, but also for social media influencers and um other people, even companies' own employees that might be marketing or advertising products on behalf of those companies. Right. I think we've seen a million times over that companies um either send free products or like pay either individuals, private individuals or individuals that market themselves as public figures, right? Like social media influencers on different platforms like whatever. TikTok, TikTok, Instagram, Facebook, right? That market Snapchat products, Snapchat, sure. Um and so these endorsement guidelines that we'll go through in a bit, what they're really geared towards is ensuring that if a company ever utilizes another individual, like an influencer, for example, to market their products, that both the company knows what they're prohibited from doing or prohibited from imposing on that influencer so that they don't market the product in the wrong way to deceive consumers, but they also inform the influencer themselves about what they should be doing, what they should include in their posts, even. It gets even that granular, which we'll go through in a second. But um, what's important, what they're focusing on again is again is the truth in advertising. So they're thinking from the consumer's perspective, if a regular average person is like looking at a social media post, um, let's say a TikTok. A TikTok by Cardi B, for example. Um, and Cardi B in her little video on TikTok is holding up a product for uh a detox tea, for example. We want to know if that company, that detox tea company, sent her that free product, gave it to her, asked her to advertise it, or exchange something in the way of remuneration, right? Either uh direct or indirect. Sure. Um, in order for her to actually post that product. Um so they want to see the core of the material connection between the company itself and the person who's advertising it. Like that's what they're primarily focused on because they the FTC believes that a consumer would want to know if the influencer they're looking at like got something in the way that would influence them to more positively um advertise the product. Oh, that makes complete sense. Yeah, that that's what they're focused on.

SPEAKER_00 5:20

And you hit on the material connection. I mean, the FTC specifically identifies it as that if you have any sort of association or relation with that brand, with that company, that needs to be disclosed, especially in the rise of social media over the last few years. I mean, TikTok in particular, I think is the place where most influencers are getting these paid partnerships or even free PR boxes, things that they didn't even necessarily ask for, but they're still getting them. And when they post about them, they have these specific guidelines that they need to follow in accordance with the FTC. And again, in particular, if you even remotely receive something, whether it's free, whether it's a free product, whether they're a company is paying for you to travel somewhere to a conference or something, you see all the time there are these influencer conferences like Tarte Beauty does them, even like Amazon does them. If they're paying for your travel, your hotel, that all and then you post about being there, that all needs to be disclosed in the post-sure.

SPEAKER_02 6:39

Okay. Yeah, and I I I want to go into a few examples in a moment, Carol Stewart, but I think it's important to also mention that the FTC is continuously over time updating these guidelines. So it's important for companies, but also individual influencers who are getting on social media, who are receiving these products, or who want a brand deal in general, right? Who are like seeking these opportunities to remember to check the FTC's website because again, it's it's not geared towards lawyers, truly. Like it's geared towards regular people who are actually participating in these activities.

SPEAKER_01 7:17

Wait, so let's say it louder for the people in the back. Check the FTC guidance.

SPEAKER_02 7:21

Check the FTC guidance.

SPEAKER_01 7:23

That's just a practical application. It will help.

SPEAKER_02 7:25

It's even it's even titled What People Are Talking About. Yeah. It's that's what people that's literally the title. Or yeah, what people are asking. Right. It's literally what it's titled because they're writing this in a way and answering really specific scenario questions. Yeah. As they arise. As they arise that they've seen over time, what's constantly being updated.

SPEAKER_01 7:43

Yeah.

SPEAKER_02 7:44

Last time we saw a really big update, they actually added 40 specific scenario questions. Wow. For anybody who wants to look at them, and we'll go through a few in a second. Perfect. Um to really get to the heart of, again, the truth in advertising, right? They're going through very specific scenarios that can sort of define and redefine that material connection we were talking about.

SPEAKER_00 8:09

Yeah, and I think it's important to identify why they're concerned with that when an outside party essentially is associating themselves with a brand and it's not the brand itself posting about it. The minute someone, I mean, social media, it's to influence each other. That's it's to connect each other. That's the the beauty and maybe the downfall of it. But the minute someone posts about something that they were paid to do or just not doing on their own accord with their own money, that starts a disconnect between the audience and the influencer or the person actually doing the posting, because everyone is going to be influenced by that person's review. So you need to be able to clearly identify if they're truly doing it because they love the product, and they may very well love the product if they received it and were paid to do that. But if they were paid to do that, that has to be disclosed.

SPEAKER_01 9:19

I mean, I think a lot of the times you see like on TikTok or even Instagram, people talking about the product as an honest review in the hopes that they become some sort of ambassador or influencer for the product. So a lot of the times if they are being paid for, it's because they actually do like the product. Right.

SPEAKER_00 9:33

Yeah, I've seen so many videos where people are like, this is not even an endorsement. I just really love this product.

SPEAKER_01 9:39

And then they'll like at the company be like, if you're watching, I'm I'm here. So yeah. But if we want to talk about Yeah, let's read through some examples. I think that would be helpful. So one of them is I'm a blogger and the company wants me to attend the launch of its new product, kind of like what you were talking about, but these trips. They will fly me to the launch and put me up in a hotel for a couple of nights. They aren't paying me or giving me anything else. If I write a blog sharing my thoughts about the product, should I disclose anything? Yes. So immediately the FTC. The F per the FTC's response, the answer is yes, you should disclose that you received free travel and accommodations because it could affect how much weight your readers give to your thoughts about the product. It's exactly what we're talking about, right? Right.

SPEAKER_02 10:20

So again, it's not, it's not just the actual uh a company sends you a free product or a company pays you to endorse their product, like it's anything that creates that connection between the company and the influencer.

SPEAKER_01 10:33

Right. Okay, so another one of these is I've been paid by a manufacturer to post a video reviewing of one of its products. My review recognizes the product's good points as well as its negative ones. Because my review discusses the negative, is it really an endorsement? Or do I really have to disclose anything? Good question. So, Pearl F2C, even if your review mentions one or more negative points, it's still an endorsement. Readers of the review would likely think differently about it if they knew you were paid. So you should disclose the payment. I mean, I think that's an extra objectivity. Yeah, absolutely.

SPEAKER_00 11:04

And all of this really ties back into what we talked about the last episode is it's about the average consumer's understanding of all of this. That's like at the heart, I think, of all of our discussions with the FTC is that we care about how a regular consumer is going to interpret the plethora of information that is out there. So it's so important to protect each other by disclosing that type of information.

SPEAKER_01 11:32

Absolutely. Okay, so another one of these studies. I'm a skincare influencer and I have an endorsement deal with the brand. If I post negative comments about a competing brand, do I have to disclose my endorsement deal?

unknown 11:44

Yes.

SPEAKER_01 11:44

Any guesses?

SPEAKER_02 11:46

Yes.

SPEAKER_01 11:46

Yes, per the FTC. If you criticize a competitor of a brand that you are paid to endorse, you should disclose your paid relationship. It would likely affect the weight and credibility that your audience gives to your negative comments. I mean, this makes sense. Yeah. Same thing that we're kind of talking about. Um, another one that we have here is if I was paid by a company or I was paid by a company to endorse its products on Facebook and Instagram, if I throw in a free endorsement on Snapchat, does my Snap need a disclosure? Snapchat's so fleeting, you know? So it's I mean, you can still post a story, but yes, even if you weren't specifically paid to make the Snapchat endorsement, you still have a paid relationship with the company that could affect the weight or credibility given to that endorsement. So interesting. So even if you're like, yeah, endorsing something on a different platform and you do it on a separate platform, you have to make sure that you know that you're still doing an endorsement, regardless of the platform you're doing it on. Interesting.

SPEAKER_02 12:36

So in addition to the FTC sort of guiding influencers that are somehow connected to companies to do advertising on their behalf, the FTC also requires um or rather prohibits companies themselves from doing certain things. Um we'll go through a case. I think Michaela will go through a case in a second, but um these uh endorsement guidelines also really want to make sure that if companies are utilizing outside parties or actually inside internal parties, right? Like their own employees to engage in marketing, that they're not doing anything deceptive or shady, right? What what we've seen, what we've seen and what the guidance actually expressly states is that companies are prohibited from um posting fake reviews um or taking down negative reviews to boost their ratings. I think that's been happening quite a bit, and we've seen um in the media in the last few years actually sort of big companies being faced with complaints from the FTC for doing just that.

SPEAKER_00 13:47

Yeah, that's a that's a big one. Um we were talking earlier about off-camera about the Sunday Riley case, which happened in 2019, and Sunday Riley was a brand that was selling products at Sephora, and they had the the heads of the company had essentially, through email correspondence, communicated to all of their employees that they wanted them to post fake glowing reviews for the products and then also delete any negative reviews that were happening with the product. And there was, again, because it was through email correspondence, there was such clear evidence that this was happening. And the FTC, they didn't impose any monetary fine, but they did have injunctive relief of putting an immediate stop to it and then prohibiting any employees from posting reviews unless they specifically disclose I am an employee for Sunday Riley. And so I feel like that was kind of the start of this happening and snowballing. And then through the years, it's gotten even the FTC has gotten even stricter in imposing this. Specifically, Fashion Nova in 2022 had this happen where they were specifically suppressing any sort of negative reviews, like the company itself. If they got a review below four stars, four out of five stars, they were blocking them, they were deleting them, and they were, you know, you can like like a review. Right. They were only liking the five-star reviews, so it pushes them up to the top because the reviews with the most likes go up there.

SPEAKER_01 15:29

Yeah.

SPEAKER_00 15:29

So once that happened, Fashion Nova ultimately ended up having to pay $4.2 million because of this. And now just in 2025, they paid, I think it was $2.4 million back to consumers. So if you bought a Fashion Nova product during the time period that they were doing this, you were part of the class that got all of that money back. Wow. And I mean, it just goes to show, again, the influence that kind of hidden marketing can have on people. So it's so important to identify any connection that you have to the product.

SPEAKER_01 16:10

I have a question, but it's not, it's just like a I guess a behavioral uh response. If you're on a website like Sephora or Ulta or whatever, and you're looking at a product and you see the star ratings and you see that maybe it's got like 4.5 out of five stars, and you're looking at the reviews, and almost nearly all of them say this is a paid promotion or this is a paid, this is a paid review, what is your like response to that? How does that affect the way you perceive the product? Just like on a personal, like you personally does it affect, do you do you are you more do you find it more credible? Is it uh something that you're like, okay, they're they're being paid to do so? Like, how does that impact the way that you uh consume?

SPEAKER_00 16:54

Yeah, that's a that's an interesting question. I feel like I I'm a big review reader, like before I buy anything, I'm scrolling through all the reviews. A lot of times I'm specifically clicking like the one and two star reviews because I want to see what went wrong before I buy it. Right. But yeah, when I see a paid partnership, I I don't think I necessarily have a negative opinion on it. I might just want to look at other ones too to make sure that they're not all paid.

SPEAKER_02 17:26

Yeah, cross-reference.

SPEAKER_00 17:28

Right. But but again, that's because there is a trust aspect there. You know, I don't know if they're fully telling the truth. So if they're if if the review says I'm a partner with Sephora or whoever, but I genuinely love this product, I would buy it with or without ever having any affiliation with Sephora, like that that is good enough for me.

SPEAKER_01 17:55

That that particular bit with or without some sort of paid partnership, that's uh that's for me personally. I feel like I'm less less inclined to, I don't know, if it's if it's paid, sometimes I think it does affect whether or not I I think it's reliable information. But yeah. Okay. I was just curious.

SPEAKER_02 18:15

Um and I think it's important to highlight some other cases that relate perhaps to that might connect the last episode to this episode as well. Like as we've been talking about this whole time, the FTC is focused on what is in the advertisements and how they're being advertised. Sometimes we see that happen at the same time. Where the FTC goes after companies for the what and the how, right? So a perfect example of this was uh a case against TME LLC. TME in 2020. TME is like a it's a company that that produces like a detox tea. It's supposed to detoxify the body and do something, right? What TME was claiming that their 30-day detox tea was doing, let me just read it from here. Uh they claimed that their TME 30-day detox pack would help consumers lose weight, that its other teas would fight cancer, clear clogged arteries, decrease migraines, treat and prevent flus, and treat colds. So that sounds like a claim. You've got to be a good thing. That would be substantiated. Yeah, right. That seems like something that in the last episode we talked about, the FTC would really hone in on. Needing receipts. Want want the scientific back evidence, right? Yeah. What do you mean? This 30-day detox tea will prevent flus. What does that mean? Or if you have an active flu, taking this detox tea for 30 days will treat, you know, uh it fights cancer. What does that mean? Right. Right. So they were making all of these unsubstantiated claims which needed substantiation. Yeah. Number one. Number two, they were paying a lot of very popular social media influencers, including Cardi B, including um Adrienne Bullion. Yeah. From the Cheetah Girls. Apologize if I'm not pronouncing her last name correctly. Yes, from the Cheetah Girls. Yeah. Um, and a bunch of other popular social media influencers on Instagram. I think TikTok too, but it was primarily focused on Instagram back in 2017 and 2018. Yeah. Um, and actually we'll we'll post up for the listeners, but the FTC sent individual warning letters to every single one of these influencers who Teamy paid as a part as an ad partner, like a teamy partner, um, to promote their products. And what they claimed against Teamy basically was the the what, right? Like the claims that they were making were essentially bogus and not backed by scientific evidence, meaning unsubstantiated. And number two, that they were that they weren't properly like managing their influencers' endorsements. They did again like they said that they just went rogue. Right. That they they did again like individually um communicate with the influencers themselves, as we talked about. These endorsement guides apply to both the individual influencers like and the companies. Yeah.

SPEAKER_00 21:12

Yeah, I think that's an important clarification to make is it's not just in like influencers posting, it's not just like, oh, you should do this. It's like you will get a warning letter too. If you're not following these, they're gonna come after you too.

SPEAKER_02 21:25

And they they basically said and in the warning letters are pretty much identical because all of the ads are very similar. It's like a video of somebody holding up the T or saying how it improved, you know, insert here. Yeah um, but the warning letters basically said that they weren't disclosing their teamy partnership adequately, um, or any any anything again to like help substantiate the claims that Teamy was making. Or that they were claiming in their videos, right? That the team me helped their digestion or team me helped prevent the fluid colds or prevent the flu. Whatever it was. Uh teamy ended up having Having to pay almost a million dollars back to consumers. Yeah. Specifically $930,000. Yeah. Um, for the deceptive claims that they were making. That's crazy. Um yeah, and I think I think this will sort of take us into next episode's discussion about how the FTC very often works with the FDA to target the Federal Uh Food and Drug Administration to I was gonna say target, but uh go after or review the claims that are made by companies who are marketing different health products, like dietary supplements and vitamins. Yeah. The FDA's realm is sort of more focused on prescription drugs, but we see really the connection and the the collaboration between the FTC and the FDA when we're in the realm of health products, wellness products, um, and different types of supplements, yeah, like juices or like powders or any kind of um vitamins that we very often see on the market.

SPEAKER_01 23:03

Awesome. Perfect. Thanks for joining us on Regulated Beauty, where we bring clarity to the legal side of beauty and wellness. If you found today's discussion insightful, be sure to subscribe and share the podcast.

SPEAKER_02 23:16

Have questions or topics you'd like us to cover, connect with us at leachman.com or follow us on social media.

SPEAKER_00 23:22

Until next time, stay informed and stay well.