NAD Monitoring Program Results in Decision on Influencer Marketing

This case, which originated from the NAD’s monitoring program, underscores the importance of brands educating and monitoring their networks of influencers.

The NAD’s Decision

The NAD is an advertising industry self-regulatory body. While better known for hearing disputes between competitors, the NAD also maintains a monitoring program and opens cases against parties it considers to be engaged in false or misleading advertising.

As an e-commerce fashion retailer, Revolve works with influencers in a number of ways, including giving influencers clothing credits in exchange for social media posts. Through its monitoring program, the NAD identified two such posts that tagged Revolve and included the hashtag #revolveme but did not properly disclose the influencers’ transactional relationship with the brand. It also appears from the NAD’s decision that these references to Revolve were placed in the truncated portion of the post that could not be viewed without clicking “more.”

In cases involving influencer marketing, the NAD is guided by the FTC’s Endorsement Guidelines, which require the “clear and conspicuous” disclosure of any “material connection” between the influencer and the brand being endorsed. A material connection can arise in a number of ways but will exist any time the influencer receives a material benefit from the brand, such as a payment or a free or discounted product. The FTC has taken the position that merely tagging the brand is not a sufficient disclosure of a material connection, and that a disclosure is not clear and conspicuous if it appears in the truncated portion of the post.

In response to the NAD’s inquiry, Revolve had the two influencers update their posts, but the NAD still took issue with certain aspects. One of the posts was updated to include the hashtag #giftedbyrevolve, which the NAD found insufficient because it “runs words together and thus makes it difficult for consumers to understand it.” The other post tagged both Revolve and another brand, followed by the hashtag #sponsored, which the NAD found to be ineffective because consumers would not know which of the two brands sponsored the post. These objections generally align with the FTC’s Endorsement Guidelines and the positions the agency has articulated in supplemental guidance.

Finally, the NAD also discussed the guidance that Revolve provided to its influencers on compliance with the FTC’s Endorsement Guidelines, recommending that Revolve provide more robust and prominent compliance instructions to its influencers. The NAD’s opinion was light on exactly what Revolve’s guidance lacked and what would be considered sufficient. Regardless, the FTC’s Endorsement Guidelines make clear that advertisers are responsible for the actions of their influencers, and the agency has advised advertisers to implement measures to train and monitor their influencers.

Key Takeaways

This case is a good reminder for brands to provide detailed guidance to their influencers on compliance with the FTC’s Endorsement Guidelines, and to maintain a monitoring program that keeps track of what their influencers are posting and whether those posts is legally compliant. Although brands cannot be expected to review every piece of content shared by their influencers, the FTC has stated that brands must make a reasonable effort to keep tabs on what their influencers are saying.

With uncertainty around the new Administration’s priorities in the consumer protection space, this case is also a reminder that the NAD will not hesitate to tackle influencer marketing issues identified through its monitoring program. Because the NAD does not possess any legal authority, participation in its proceedings is voluntary. However, if an advertiser refuses to participate in a NAD proceeding or to comply with NAD recommendations, the organization will refer the matter to the FTC and issue a press release discussing the matter, which, in practice, places pressure on advertisers to cooperate.

If you have any questions or concerns about compliance with influencer disclosure requirements, please do not hesitate to reach out to the ArentFox Schiff Advertising & Promotions team.