Monday, June 20, 2016

The Art of Disclosure: Fashion’s Influence Economy and the FTC

This September, lifestyle guru Aimee Song’s first book, "Capture Your Style: Transform Your Instagram Images, Showcase Your Life and Build the Ultimate Platform," will hit retailers. And if the size of her 3.6 million-strong Instagram following is any indication, it’s sure to be a commercial success. A mere mention in one of Song’s Instagram posts is powerful marketing, attracting tens of thousands of likes and hundreds of comments. It’s little wonder, then, that companies from Laura Mercier to Dior have paid her to market their brands and products to her followers.

Song is something of a poster child for fashion’s lucrative influencer economy from which top digital stars generate hundreds of thousands — and, in some cases, millions — of dollars each year in income, not to mention perks like free product, travel and meals. Indeed, Song’s business is so good — she is thought to earn into the six figures for long-term projects — that she has written an instructional manual about how to achieve her level of success.

For some fashion influencers, amassing a following on social media is simply a hobby, or no more than an exercise in personal brand building. But as fashion businesses move their marketing dollars online and the number of native advertising deals grows, it’s becoming more difficult to discern between organic commentary and paid sponsorship.

Are consumers being deceived?

In 2009, the Federal Trade Commission — an independent agency of the US government tasked with consumer protection — issued a list of guidelines regarding “dot com” disclosures for sponsored content. The guidelines were updated in 2013 and once again in 2015 to account for newer forms of social media.

The rules unequivocally require that paid marketing posts are disclosed as such, but do not stipulate specific language. “There is some vagueness,” says Susan Scafidi, professor of fashion law at Fordham Law School and founder of the Fashion Law Institute. “There are some questions in the guidelines as to whether a simple ‘#ad’ is enough.”

The guidelines do clearly delineate when and where disclosures should take place, however. “Required disclosures must be clear and conspicuous. In evaluating whether a disclosure is likely to be clear and conspicuous, advertisers should consider its placement in the ad and its proximity to the relevant claim. The closer the disclosure is to the claim to which it relates, the better,” says the latest version of the FTC rules, which continue: “Additional considerations include: the prominence of the disclosure; whether it is unavoidable; whether other parts of the ad distract attention from the disclosure; whether the disclosure needs to be repeated at different places on a website; whether disclosures in audio messages are presented in an adequate volume and cadence; whether visual disclosures appear for a sufficient duration; and whether the language of the disclosure is understandable to the intended audience.”

Are influencers complying?

A series of recent articles examining these issues, written by Julie Zerbo, a consultant and editor-in-chief of, has raised the question once again. In her pieces, Zerbo has taken independent influencers (including Song), websites and traditional editors and publishers to task for failing to properly disclose when they’ve received compensation from a brand in exchange for favourable coverage. But the issue may be less black-and-white than Zerbo suggests.

To be sure, the question is particularly pertinent at the moment. Although the FTC has yet to target influencers themselves, instead going after the brands that pay for undisclosed influencer marketing, the agency has recently shifted its enforcement tactics from simply shaming offending brands to charging them with violations. In the past, companies like Ann Taylor and Cole Haan were publicly taken to task for running influencer campaigns that didn’t follow the FTC guidelines. However, no legal action was taken against these companies. That changed in the past year when American department store Lord & Taylor was formally accused by the FTC of violating its guidelines. The wrongdoing: 50 influencers were paid between $1,000 and $4,000 to post Instagram photos to wear a specific paisley dress sold at the retailer, but many failed to disclose that they were paid, or that they were given the dress for free.

by Lauren Sherman, BOF |  Read more:
Image: Instagram/@lauramercier, @nicolettemason, @songofstyle, @manrepeller, @chrisellelim, @sincerelyjules