On September 7, 2017, the U.S. Federal Trade Commission (FTC) announced that it had entered into a proposed consent agreement with two individuals and their company that allegedly ran an online gaming community website that allowed users to gamble virtual currency. According to the FTC complaint, the two individuals promoted the gaming site and not only failed to disclose their ownership interest in the site or that they were playing with company money, but they also paid other social media influencers between $2,500 and $55,000 to promote the site.
As we had previously written, in the Spring of 2017, the FTC issued 90 letters to social media influencers and the companies they may have endorsed on Instagram. The letters reminded the recipients that the FTC expects any “material connection” between an influencer and the provider/service/company to be conspicuously disclosed. A “material connection” is a “a connection that might affect the weight or credibility that consumers give the endorsement,” which can be a direct payment, free products, an ownership interested in the company, or even a family connection to the company. As part of the FTC’s September 7 announcement, the FTC also stated that it sent warning letters to 21 social media influencers who had received the Spring letters. (The FTC did not disclose the names of the influencers or companies that received the warning letters.) Consequently, the FTC may be bringing additional actions in this area. Continue reading