TikTok, a New Frontier for FTC Guideline Violations

Whether or not branded content will reach a large American audience may be tricky to foresee due to TikTok’s unique algorithm-based feed.[i]  A person posting on TikTok in London may usually expect her content to only reach a few individuals, but enough interaction with this post could cause it to go viral and reach a large international audience.[ii]  If in this video the girl was promoting a product produced by a family member, would she be subject to discipline under the FTC disclosure requirement?  In typical lawyer fashion the answer is, it depends. 

   With the transcending popularity of Tiktok thousands of individuals are transforming from average people to influencers overnight.[iii]  This newfound pool of minicelebrities has given companies a new group of individuals they can market their products through.[iv]  However, this could pose potential problems for laypeople who are uninformed on the Federal Trade Commission’s (FTC) standards for branded content.

     The FTC requires disclosure of branded content if it is reasonably foreseeable that the post will affect U.S. consumers.[v]  Disclosure is required if a creator has any financial, employment, personal, or family relationship with a brand.[vi]  Financial relationships are not limited to products, these relationships include receiving anything of value.[vii]  The FTC requires that disclosures be overt within the message of endorsement.[viii]  This means that disclosures of branded content should appear on the post itself and should not be concealed by hashtags or other information.[ix]    

     Around 93 percent of paid content on Instagram violates FTC guidelines.[x]  Despite this widespread aversion to FTC policy, the FTC has only resolved a limited number of matters relating to influencer marketing since 2011.[xi]  Most of these resolutions have come in the form of warnings and individual enforcement actions.[xii]  For example, Warner Bros. Home Entertainment, Inc. settled charges with the FTC related to a marketing campaign for a video game where they provided thousands of dollars to Youtubers to play its games and upload videos of their gameplay.[xiii]  The settlement required Warner Bros to disclose its connection with influencers, and to educate influencers about proper disclosure, and to potentially withhold paying influencers for non-compliance.[xiv]  In a separate action the FTC responded to non-compliance by sending out ninety letters to social media influencers informing them about disclosure requirements.[xv]  This shows that the FTC responds in varying methods of slaps on the wrist.

     Some commentors have suggested that a lack of consistency mixed with lenient punishments might not be enough to convince influencers of the necessity to disclose branded content.[xvi]  Currently the FTC does not have a guide of potential fines for neglecting to disclose branded content.[xvii]  The current structure does not provide influencers with a reason to comply with FTC disclosure guides in view of potential costs of disclosing advertisements.[xviii]  Consistent disclosure of branded content by an influencer could cost them in terms of their following.[xix]  A guide detailing potential fees influencers could incur for non-disclosure might provide influencers with incentive to make proper disclosures.[xx]         

     Some scholars have suggested that the FTC adopt a disclosure emoji to accommodate influencers who are bound by constraints on text length.[xxi]  In her note proposing an FTC disclosure emoji, one scholar suggested that the emoji would be a useful tool for FTC disclosures, because it would accommodate multiple social media platforms, including those which limit text length like Twitter and TikTok.[xxii]  A simple emoji that denotes branded content could clear up any confusion about how to disclose.  

     Whether or not someone will be subject to FTC discipline is ambiguous and will continue to be so long as the FTC does not actively enforce disclosure policies.[xxiii]  While the FTC has attempted to clarify proper disclosures in recent years the process of disclosure could be streamlined to comport with modern social media practices in the form of a dedicated emoji or hashtag.[xxiv]  As Bob Dylan once said, “the times they are a-Changin’” If the FTC wants more than seven percent of paid content to comport with their disclosure guidelines on a social media platform like Instagram then they might need to change their practices for the times.[xxv]       

[i] Corbett Drummey, Gaining ROI With Influencers on TikTok, FORBES (May 28, 2021), https://www.forbes.com/ sites/forbesagencycouncil/2021/05/28/gaining-roi-with-influencers-on-tiktok/?sh=471e66307a22.

[ii] Id.

[iii] Antonie Forest, Why Brands Must Focus on TikTok Now (and How), FORBES (Oct. 11, 2021), https://www.forbes .com/sites/forbesagencycouncil/2021/10/11/why-brands-must-focus-on-tiktok-now-and-how/?sh=236a7b524953.

[iv] Id.

[v] Lesley Fair, Disclosures 101 for Social Media Influencers, FTC (Nov. 5, 2019), https://www.ftc.gov/system/files/ documents/plain-language/1001a-influencer-guide-508_1.pdf.

[vi] Id.

[vii] Id.

[viii] Id.

[ix] Id.

[x] Elizabeth A. Casale, Influencing the Ftc to Update Disclosure Rules for the Social Media Era, 40 Mitchell Hamline L.J. Pub. Pol'y & Prac. 1, 12 (2019) (citing CBS NEWS, (Sept. 23, 2017, 1:59 PM), https://www.cbsnews.com /news/business-behind-being-a-social-media-influencer/ [https://perma.cc/MB28-5KFT]).

[xi] Id.

[xii] Lauryn Harris, Too Little, Too Late: Ftc Guidelines on "Deceptive and Misleading" Endorsements by Social Media Influencers, 62 How. L.J. 947, 975 (2019).

[xiii] Id.

[xiv] Id.

[xv] Id.

[xvi] Tisha James, The Real Sponsors of Social Media: How Internet Influencers Are Escaping Ftc Disclosure Laws, 11 Ohio St. Bus. L.J. 61, 83 (2017).

[xvii] Id.

[xviii] Tyler Fredricks, Not Content with Content Influencers: How the Ftc Should Promote Advertisement Disclosure, 19 Va. Sports & Ent. L.J. 29, 47 (2019).

[xix] Id.

[xx] James, supra.

[xxi] Fredricks, supra.

[xxii] Christina Sauerborn, Making the Ftc <<unknown Symbol>>: An Approach to Material Connections Disclosures in the Emoji Age, 28 Fordham Intell. Prop. Media & Ent. L.J. 571, 629 (2018).

[xxiii] James, supra.

[xxiv] Sauerborn, supra.

[xxv] BOB DYLAN, THE TIMES THEY ARE A-CHANGIN’, (Columbia Records 1964).