Brief:

• The Federal Trade Commission settled its first-ever complaint against two social media influencers for not disclosing their connection to a business they touted to online followers. Trevor "TmarTn" Martin and Thomas "Syndicate" Cassell, two influencers in the gaming industry, were charged with deceptively endorsing CSGO Lotto without disclosing their part ownership of the gambling website, the FTC said.
• Martin and Cassell allegedly posted YouTube videos of themselves gambling on the website and urging others to use the service. They also paid other influencers between $2,500 and $55,000 to promote the gambling website to their followers on YouTube, Twitch, Twitter and Facebook, while prohibiting those fellow influencers from saying anything negative about the site.
• The settlement order requires Martin and Cassell to clearly and conspicuously disclose connections with an endorser, or between an endorser and any promoted product or service. The agreement will be subject to public comment until Oct. 10, after which the FTC will decide whether to make the proposed consent order final.

Insight:

The fledgling social influencer industry either needs to adopt a set of best practices endorsed by major advertising trade associations or develop its own self-regulatory framework to encourage common standards and help to resolve consumer complaints. Otherwise, the federal government's various consumer protection and law enforcement agencies will bear the greatest burden of policing the industry, and with the influencer space growing rapidly, the FTC doesn't likely have the bandwith to monitor everyone.

A more proactive approach to self-regulation would boost the social influencer industry to thrive in transparency and encourage innovation while avoiding a Wild West, "anything goes" atmosphere that will only sow distrust among consumers and lead to a slew of legal problems in the future. The last thing any industry wants is the onerous oversight of lawmakers and regulatory agencies, but if enough consumers get burned or defrauded, a major crackdown could certainly be likely. In addition, class actions could bury both influencers and their agents in legal fees for years.

The influencer industry, which includes tech companies that provide the platform for social stars, needs to strongly consider the FTC's endorsement guidelines that were updated last week. The update covers topics such as clear tags in pictures, Instagram and Snapchat disclosures of free travel or products, whether a disclosure must be at the beginning of a post and the subtle differences of various terms like "ambassador" versus "sponsored." The FTC's guidelines are a must-read for social influencers and the broader industry supporting them, as they'll likely continue to evolve as the space develops.