Why Greater FTC Enforcement Is Needed to Curtail Deceptive Practices in Influencer Marketing

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WORTH THE CLICK: WHY GREATER FTC ENFORCEMENT IS NEEDED TO CURTAIL DECEPTIVE PRACTICES IN INFLUENCER MARKETING

Table of Contents

Introduction

I. Influencer and Affiliate Marketing

A. The Rise of Influencer Marketing

B. The Appeal of Affiliate Marketing

C. The Importance of Endorsement Enforcement in Influencer Marketing

II. The Current Deceptive Advertising Legal Regime and Disclosure Requirements

A. The FTC’s Deceptive Advertising Framework

B. Disclosure Requirements for Affiliate Links

III. The FTC’s Enforcement Regime

A. The FTC’s Enforcement Mechanisms

B. Insights from the FTC’s Exercise of its Enforcement Discretion

1. Parties Subject to Endorsement Enforcement

2. Closing Letter Commonalities and the Pursuit of Settlement Orders

3. Settlement Order Terms

IV. Proposal: A Multipronged Enforcement Approach

A. Targeting Top Influencers

B. Targeting Affiliate Marketing Companies

C. Pursuing Consent Orders

D. Avoiding a Strict Liability Approach

E. Increasing FTC Engagement with Individual Influencers

Conclusion

Introduction

Rach Parcell founded Pink Peonies as a blog to document her first year of marriage in 2010.[1] Within three years, what had started as mere hobby had rapidly grown into a full-fledged business.[2] Today, Parcell has over 16,300 followers on Twitter,[3] over 98,000 “likes” on Facebook,[4] and over 931,000 followers on Instagram.[5] Parcell leverages the relationship she has built with her loyal followers to generate income from affiliate links, sponsored posts, and her recently launched clothing line.[6]

Parcell is an “influencer.” Broadly defined, an influencer is anyone who has the ability to impact someone’s purchase decisions.[7] In 2014, Parcell earned over $960,000 just from sharing affiliate links;[8] these links are specially coded to enable a brand to credit a consumer’s purchase to an influencer and provide the influencer with a commission based on the sale.[9] Today, top influencers can make six figures a month, or at least $1.2 million annually, solely from affiliate links.[10]

Like Parcell, most influencers have built their followings by sharing insights and images of their everyday lives.[11] Initially, influencers do not receive compensation for their posts; they personally purchase the products they choose to promote.[12] But as an influencer’s following grows, so do the opportunities to generate profits from brand “partnerships” and “collaborations,” as well as affiliate links.[13] These profitable promotional opportunities, regardless of their moniker, are considered endorsements that the Federal Trade Commission (FTC) is empowered to regulate under Section 5 of the FTC Act.[14] To protect consumers from deceptive advertising practices, the FTC requires clear and conspicuous disclosure of an endorsement when there is a material relationship between the influencer and the brand that a consumer might not reasonably expect.[15] Without clear and conspicuous disclosures of these material relationships, consumers struggle to determine the nature of the relationship between the influencer and the brand promoted in any given post and to accurately evaluate how much weight to give the influencer’s endorsement.[16]

The FTC Guides Concerning Use of Endorsements and Testimonials in Advertising (the Guides) provide the FTC’s interpretation of how Section 5 of the FTC Act applies to the use of endorsements in advertising and establish broad principles that govern endorsement disclosure requirements.[17] Other scholarship in this area champions revisions to the Guides to further clarify when disclosures are required and what constitutes an adequate disclosure.[18] However, revisions are unnecessary because the Guides provide detailed examples that demonstrate how the principles apply to a wide range of endorsement situations.[19] Moreover, the adaptability of the Guides enables their application to endorsements across a variety of new and emerging advertising platforms.[20] The FTC has even provided specific guidance confirming that influencers must clearly and conspicuously disclose any endorsement compensated through affiliate links.[21] Yet, influencers do not disclose and brands do not require influencers to disclose these relationships at an alarming rate.[22] To date, the FTC’s enforcement actions have failed to effectively address the nondisclosure of endorsements in the affiliate marketing industry because the FTC has chosen to limit its enforcement power to discrete influencer marketing campaigns.[23]

The FTC has made individual influencers seemingly invincible by declining to pursue enforcement actions against them.[24] And the practices of the affiliate networks—which comprise a $4.5 billion dollar industry—appear to have escaped scrutiny, as they are entities distinct from any individual marketing campaign or any particular brand.[25] Therefore, to effectively protect consumers from deceptive affiliate marketing, the FTC must pursue enforcement actions against individual influencers and affiliate network companies for failing to clearly and conspicuously disclose endorsements compensated through affiliate links.

The FTC should leverage consent orders to set the industry standard for clear and conspicuous disclosures of affiliate links and effective influencer endorsement disclosure monitoring programs.[26] To protect its enforcement legitimacy, the FTC should avoid pursuing enforcement mechanisms that would result in strict liability for any failure to disclose an endorsement.[27] The FTC should also increase its outreach efforts to individual influencers to minimize endorsement disclosure issues with up-and-coming influencers.[28]

Part I of this Note discusses the rise and appeal of influencer marketing, which highlights the importance of enforcing endorsement disclosure requirements to protect consumers from deceptive advertising practices. Part II provides an overview of the FTC’s deceptive advertising legal regime, explaining its application to endorsement disclosures in the influencer and affiliate marketing context. Part III explores the FTC’s prophylactic mission, enforcement mechanisms, and enforcement discretion by examining how the FTC exercises its enforcement discretion with respect to influencer endorsements and affiliate marketing. Part IV proposes the FTC pursue a multipronged enforcement approach to better protect consumers from influencers who fail to meet affiliate link disclosure requirements. This approach includes pursuing enforcement actions against top influencers and affiliate marketing companies and increasing engagement with the influencer community to increase voluntary compliance with disclosure requirements.

I. Influencer and Affiliate Marketing

The influencer marketing industry growing exponentially, and it shows no signs of slowing down.[29] Affiliate marketing, a subset of influencer marketing, enables brands to monitor the return on their investment and reap the benefits of working with influencers to promote their products.[30] Together, the rise and appeal of influencer marketing highlight the importance of the FTC enforcing endorsement disclosure requirements.[31]

A. The Rise of Influencer Marketing

An influencer is anyone “who ha[s] the power to affect purchase decisions of others because of their (real or perceived) authority, knowledge, position, or relationship.”[32]Specifically, this Note focuses on non-celebrity, professional influencers.[33] These are individuals who have developed loyal followings by sharing insights and images from their everyday lives online.[34] The FTC defines influencers as endorsers because influencers provide “advertising message[s] … that consumers are likely to believe reflect[] the opinions, beliefs, findings, or experiences of [the influencer, and not] the sponsoring advertiser.”[35]

Endorsements from influencers are distinguishable from traditional celebrity endorsements. As ordinary people sharing their everyday lives on social media, influencers are more relatable and their endorsements are seemingly more authentic than endorsements from traditional celebrities.[36] Thus, an influencer’s endorsement is often equivalent to a peer recommendation and can carry significant weight with her followers.[37]

This “trusted voice speaking to their personal audience … is the most effective and organic exposure a brand can get.”[38] One study found that 49 percent of consumers rely on influencer recommendations when making purchasing decisions.[39] Approximately 40 percent had purchased an item after seeing an influencer endorsement on social media, and 20 percent had shared a product they learned about from an influencer with their own friends and family.[40] Accordingly, companies are increasingly diverting money from traditional advertising and investing in the power of influencers.[41]

Influencers often leverage their followings across multiple social media platforms, including a personal blog, YouTube, Facebook, Instagram, Twitter, and Snapchat.[42] Influencers post over 200,000 sponsored images every month on Instagram, an image-based social media platform.[43] An influencer with three to seven million followers can earn on average $75,000 per Instagram post.[44] An influencer with one to five hundred thousand followers can earn on average $5,000 per Instagram post.[45] Compensation ranges from $2,000 to $300,000 per post depending on the social media platform and the influencer’s number of followers.[46] Accordingly, top influencers have the potential to earn between $1 million and $3 million per year simply by sharing products through sponsored posts and affiliate links.[47] Even influencers with smaller followings can generate income in the high six figures.[48] This profitability allows many influencers to pursue being an influencer as a full-time job.[49]

However, a large number of followers is not the same thing as influence.[50] Brands must carefully select influencers that can convert views, likes, and shares into sales.[51] Further, measuring this conversion and return on investment is often hard to do.[52]

B. The Appeal of Affiliate Marketing

Affiliate marketing solves the challenge of ensuring a brand’s return on investment from sponsored social media posts. Instead of paying a significant fee for a sponsored post that has no guarantee of generating sales, a brand only pays an influencer when the influencer successfully generates a sale.[53] The brand provides the influencer with specially coded hyperlinks to share across her social media platforms, and the influencer earns a commission each time a consumer clicks the link shared by the influencer and completes a purchase from the brand.[54]

Some brands manage their affiliate programs in-house, but most brands work with an affiliate network (“network”)—a company that brings together brands and influencers.[55] Networks recruit brands and influencers, generate the hyperlinks for influencers to share, track brand and influencer performance, collect payments from brands, and issue consolidated payments from multiple brands to influencers.[56] Networks also advise influencers on leveraging their followings to maximize profit and direct influencers with regard to permissible practices as a network member.[57]

For brands and influencers in the fashion, beauty, and lifestyle industries, rewardStyle is the premiere affiliate network company.[58] In 2014, rewardStyle’s network of over 9,000 influencers and 4,000 retailers generated $282 million in sales.[59] Today, rewardStyle’s network consists of over 200,000 brands around the world[60] and has generated over one billion dollars in sales since its founding in 2011.[61]

RewardStyle has innovated beyond basic hyperlinks and provides influencers with embeddable widgets containing affiliate links, which allow influencers to add an easily shoppable visual to their blog posts.[62] The network also developed LIKEtoKNOW.it to monetize Instagram posts for influencers.[63] Instagram allows influencers to include the text of a web address in a post caption, but Instagram does not make that text clickable and, thus, a consumer cannot quickly use an affiliate link in one step if the consumer wants to purchase a product from an influencer’s post.[64] To circumvent this problem, rewardStyle encourages consumers to sign up for LIKEtoKNOW.it.[65] When the consumer “likes” an Instagram post that an influencer created according to LIKEtoKNOW.it’s specifications, rewardStyle sends the consumer an email containing affiliate links to the products shared in the Instagram post.[66] As with affiliate links that influencers share on other platforms, LIKEtoKNOW.it minimizes the number of steps a consumer must take to shop the products an influencer has endorsed, while also turning a profit for the influencer, network, and brand. In the first nine months of LIKEtoKNOW.it’s operation, rewardStyle generated $10 million in sales.[67]

For influencers, affiliate links are a significant revenue stream.[68] This is remarkable because, of the consumers who click on an affiliate link, only 1 or 2 percent make a purchase and only 3 percent of purchases include the exact item from the affiliate link.[69] Nonetheless, these profits are possible because affiliate links enable influencers to earn a commission on a consumer’s entire purchase.[70] Commissions range from 3 to 20 percent,[71] and RewardStyle’s average commission is 13 percent.[72] Thus, a top influencer can generate well over $1.2 million in annual revenue from affiliate links alone.[73] Accordingly, affiliate marketing is a rapidly growing industry, and experts projected that brands would spend $4.5 billion on affiliate marketing in 2016.[74]

C. The Importance of Endorsement Enforcement in Influencer Marketing

The FTC requires influencers to disclose any material connection between themselves and a brand that consumers might not reasonably expect.[75] These disclosures are necessary to ensure consumers can accurately evaluate and give appropriate weight to an influencer’s endorsement.[76] Consumers view influencers as their peers, and will give the same high-level of value to a fashion influencer’s opinion as they would to a best friend that goes shopping with them.[77] A best friend’s endorsement of a particular pair of shoes will typically be independent of any material relationship with the brand. In contrast, the employee who assists the consumer in a store clearly has a relationship with the brand. The consumer will be wary of placing as much value on the employee’s opinion because the consumer knows that the economic benefit that comes from making the sale motivates the employee’s endorsement. Without clear and conspicuous disclosures of material relationships, a consumer cannot effectively determine whether an influencer’s endorsement should be given the weight of a trusted friend or of a brand’s employee.

Despite disclosure requirements, just less than half of brands require influencers to disclose material connections,[78] and one in four influencers report that brands have specifically asked them not to disclose their material connection to the brand.[79] Market forces alone are unlikely to correct this deceptive advertising practice, because clear and conspicuous disclosures jeopardize the inherent power of influencers by revealing that what a consumer perceives to be a peer recommendation is actually a paid advertisement.[80] Thus, effective FTC enforcement of endorsement disclosure requirements in influencer marketing is critical to preventing consumer deception and enabling consumers to make informed purchasing decisions. Effective enforcement will also benefit brands and influencers, who stand to lose essential credibility when consumers discover the extent of their nondisclosures and feel betrayed by what they once thought was an “authentic and trustworthy” voice.[81]

II. The Current Deceptive Advertising Legal Regime and Disclosure Requirements

The FTC’s deceptive advertising legal regime applies to endorsement disclosures in the influencer and marketing context. An overview of the FTC’s deceptive advertising legal regime provides the foundation for understanding the FTC’s endorsement disclosure requirements for influencers, brands, and intermediaries.

A. The FTC’s Deceptive Advertising Framework

Section 5 of the FTC Act empowers the FTC to require influencers disclose affiliate links through its mandate “to prevent persons, partnerships, or corporations … from using … unfair or deceptive acts or practices in or affecting commerce.”[82] The FTC Act does not define “deceptive acts or practices.”[83] Thus, the FTC has issued a policy statement outlining its interpretation of “deception.”[84] This policy statement guides the FTC’s enforcement regime.[85]

The FTC defines deception as “a representation, omission, or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.”[86] An omission is deceptive when (1) the “information necessary to prevent a … reasonable expectation or belief from being misleading is not disclosed,”[87] and (2) “consumers are likely to have chosen differently but for the deception.”[88] An omission is deceptive when it is “likely to mislead reasonable consumers under the circumstances. The test is whether the consumer’s interpretation or reaction is reasonable.”[89] It is sufficient as long as it misleads “a significant minority” of reasonable consumers.[90] The Sixth Circuit has affirmed that a “significant minority” can be as few as 10 percent of reasonable consumers.[91] This definition of deception does not require the FTC to prove actual deception[92] or an intent to deceive.[93]

The FTC’s Guides Concerning Use of Endorsements and Testimonials in Advertising (the Guides) elaborate on the application of these principles in the context of the use of endorsements and testimonials in advertising.[94] Although the Guides are promulgated under the FTC’s rulemaking authority,[95] they are distinct from trade regulation rules.[96] Thus, the Guides provide only “the general principles that the Commission will use in evaluating endorsements and testimonials,” and compliance with those principles is voluntary, not compulsory.[97]

The Guides define an endorsement as “any advertising message … that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.”[98] An endorser is “[t]he party whose opinions, beliefs, findings, or experience the message appears to reflect … and may be an individual, group, or institution.”[99] To prevent an endorsement from being deceptive, the Guides require disclosure of any “connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (that is, the audience does not reasonably expect the connection).”[100] All disclosures must be made “clearly and conspicuously.”[101]

Although the Guides repeatedly state that all disclosures must be made “clearly and conspicuously,” the Guides do not define this standard.[102] Thus, the FTC has issued additional guidance to clarify how this standard applies.[103]

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…. 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; … and whether the language of the disclosure is understandable to the intended audience.[104]

With respect to proximity and placement, this framework requires that disclosures are “effectively communicated to consumers before they make a purchase or incur a financial obligation.”[105] The FTC considers all of these factors together to determine whether “the overall net impression of the ad” is misleading to a reasonable consumer.[106]

These general principles are adaptable and intended to be applied on a case-by-case basis.[107] Ultimately, “[l]iability as an endorser turns on whether a consumer would reasonably attribute the views, opinions, or beliefs expressed as personal to the speaker or merely as those of the sponsoring advertiser.”[108] Because this framework is context-dependent, it is flexible enough to be applied across the broad spectrum of existing and emerging advertising platforms—including influencer marketing.[109]

The Guides offer several examples that specifically demonstrate how these principles apply to influencers.[110] In one example, the influencer must to disclose that she received a product for free through a network marketing program.[111] Even though the influencer’s decision to write a review on her personal blog is voluntary, this post is an endorsement and she must disclose because her receipt of the product for free is a material connection that her readers might not reasonably expect.[112] In another example, disclosure is similarly required when an influencer receives a video game system for free from the manufacturer in exchange for posting a review of the product on his personal blog.[113] Again, the influencer’s relationship to the brand is not obvious to consumers without a disclosure.[114] Furthermore, these examples demonstrate that the nature of the relationship between the influencer and the brand—in which the brand gave the influencer something of value—is a fact that is likely to have a significant impact on how much weight and credibility a consumer gives to the influencer’s endorsement.[115]

The examples in the Guides also highlight that the influencer and the advertiser are both responsible for ensuring that the material relationship is clearly and conspicuously disclosed with the endorsement.[116] One example expressly imputes liability to an influencer “if she fails to disclose clearly and conspicuously that she is being paid for her services.”[117] Moreover, an advertiser must monitor the influencers it works with to ensure that those influencers make clear and conspicuous endorsement disclosures.[118] When an advertiser discovers deficient or nonexistent disclosures, the advertiser must “take steps necessary to halt the continued publication of deceptive representations.”[119] The advertiser cannot escape liability for the influencer’s deceptive representations or omissions by employing an advertising service to develop and administer the advertising campaign.[120] As Mary Engle, Associate Director for Advertising Practices at the FTC, has emphasized, the advertiser’s duty to monitor extends to “all third-party marketing affiliates that may endorse or promote a brand.”[121]

B. Disclosure Requirements for Affiliate Links

An influencer’s use of an affiliate link is an endorsement that requires clear and conspicuous disclosure of the relationship between the influencer and the advertiser. By broadly defining endorsements to include “any advertising message,” the FTC ensured that regulations governing endorsements would extend to new and non-traditional forms of advertising.[122] New and non-traditional forms of advertising—like affiliate marketing—are endorsements when “consumers are likely to believe [the advertising message] reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.”[123] Affiliate links are endorsements because an influencer’s followers are likely to attribute the influencer’s recommendation of a product and inclusion of a link to purchase that product to the influencer, not the brand.[124] Further, the FTC requires clear and conspicuous disclosure of any connection between influencers and brands “that might materially affect the weight or credibility of the endorsement.”[125] Therefore, an influencer must clearly and conspicuously disclose her use of an affiliate link because the link allows both the influencer and the brand to profit from an influencer’s personal recommendation to her followers that a particular product is worth purchasing, and that connection may materially affect the weight a consumer gives to the influencer’s endorsement.[126]

In its May 2015 publication, The FTC’s Endorsement Guides: What People Are Asking, the FTC confirmed that it requires influencers to clearly and conspicuously disclose any endorsement compensated through affiliate links.[127] The FTC reiterated that the influencer’s should place the disclosure as close to the endorsement as possible, and that the influencer must include the disclosure each time she shares an affiliate link on any platform.[128] The FTC indicated that “affiliate link” by itself would likely not be an adequate disclosure because “[c]onsumers might not understand that ‘affiliate link’ means that the person placing the link is getting paid for purchases through the link.”[129] Instead, the FTC recommended influencers state, “I get commissions for purchases made through links in this post.”[130]

The FTC also rejected the argument that it might be common knowledge that influencers receive payment for promoting products and make commissions from the links on their websites.[131] The FTC reasoned that it is immaterial that a majority of consumers might be aware of these practices because any omission “that misleads a significant minority of reasonable consumers is deceptive.”[132] Similarly, distinctions between a personal blog and a full-time influencer’s blog are likely immaterial because in either instance it is likely that a significant minority of reasonable consumers might not be aware that the influencer is receiving commissions from the links on her website absent a disclosure.[133]

Thus, in accordance with the Guides, the influencer is responsible for clearly and conspicuously disclosing that she earns a commission from an affiliate link, and the brand is responsible for implementing a monitoring program to ensure adequate disclosures accompany an influencer’s affiliate link.[134] The FTC has affirmatively stated that pursuing an enforcement action against an individual influencer for endorsement disclosure violations “might be appropriate in certain circumstances.”[135] Nevertheless, in May 2015, the FTC stated that it is not actively monitoring individual influencers for insufficient and nonexistent endorsement disclosures.[136] The FTC will evaluate, on a case-by-case basis, any concerns brought to their attention about a particular influencer’s insufficient or nonexistent endorsement disclosures.[137]

Currently, the FTC focuses its enforcement efforts in this area on brands and their advertising agencies.[138] Brands cannot avoid liability by delegating all or part of a promotional program to an outside entity.[139] Additionally, the FTC will hold advertising agencies that pay and direct influencers responsible for the inadequate and nonexistent endorsement disclosures of those influencers.[140] These intermediaries, like brands, are responsible for educating influencers on adequate disclosures and implementing a reasonable monitoring program to ensure influencers make adequate disclosures.[141]

III. The FTC’s Enforcement Regime

The FTC has a variety of enforcement mechanisms available to address an influencer’s failure to clearly and conspicuously disclose that she earns a commission from an affiliate link. In accordance with the FTC’s consumer protection mission, these enforcement mechanisms are intended to be exercised in a preventative, not punitive, manner.[142] Thus, the prevention of future violations is the primary focus of each enforcement action.[143]

Additionally, the FTC must exercise its enforcement discretion strategically to maximize its limited resources.[144] This enforcement discretion includes the consideration of the number of consumers potentially deceived, the degree of physical or economic harm, the incentives for brands to employ a particular deceptive practice, and the likelihood that market forces will correct that practice.[145] Because the FTC addresses enforcement on a case-by-case basis,1[146] the FTC’s influencer endorsement enforcement actions provide insight that is critical to understanding when and how the FTC’s endorsement mechanisms can be used to prevent consumer deception.

A. The FTC’s Enforcement Mechanisms

The FTC has broad investigative authority that provides the basis for its enforcement mechanisms.[147] This investigative authority empowers the FTC to “gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce.”[148] Through its far-reaching investigative authority, the FTC can require individuals and brands to submit reports responding to specific questions.[149] The FTC can use this reporting mechanism independently from a law enforcement action to gather non-public data on particular business practices and develop responsive policy recommendations.[150]

Opening an investigation into whether an advertiser has engaged in a deceptive practice is the FTC’s first step towards any enforcement action.[151] An investigation can be initiated “upon the request of the President, Congress, governmental agencies, or the Attorney General; upon referrals by the courts; upon complaint by members of the public; or by the Commission upon its own initiative.”[152] The launch of an investigation does not guarantee that the FTC will pursue an enforcement action.[153]

The FTC may resolve a pending investigation by closing the investigation, seeking a consent order, or issuing a complaint.[154] When the FTC closes an investigation, it may issue a public closing letter indicating that the FTC is not recommending enforcement action.[155] Closing letters do not provide a determination as to whether a violation has occurred, and the FTC reserves the right to take further action on the matter in the future.[156] The FTC and an advertiser may enter into a consent order before or after the FTC issues a complaint.[157] A consent order allows the advertiser to settle deception allegations, often without admitting liability, and waives any right to judicial review.[158] An advertiser is liable for a civil penalty of up to $16,000 for each violation of a consent order.[159]

Following an investigation, the FTC can bring a case directly in federal court.[160] To enforce any civil penalty or seek consumer redress, the FTC must pursue litigation in court.[161] Moreover, the FTC may elect to challenge a deceptive or unfair practice directly in court by seeking a preliminary and permanent injunction.[162] Judicial enforcement is advantageous because “the court may award both prohibitory and monetary equitable relief in one step” and “a judicial injunction becomes effective immediately.”[163]

Alternatively, when the FTC issues a complaint and the advertiser contests the allegations, the parties may proceed with an administrative trial and an administrative law judge will recommend either entering a cease and desist order or dismissing the complaint.[164] An advertiser is liable for a civil penalty of up to $16,000 for each violation of a cease and desist order.[165] After all judicial review of a cease and desist order is complete, the FTC may seek relief for consumers by filing a civil action in federal court against the advertiser.[166]

Once a cease and desist order is final, the FTC can hold a non-party liable for committing a deceptive act that violates the order.[167] The FTC can collect a civil penalty from the non-party, provided the FTC can prove that it had placed the non-party on notice by providing the non-party with a copy or synopsis of the order.[168] A similar strict liability enforcement mechanism is available through the FTC’s administrative rulemaking power. Rulemaking enables the FTC to address deceptive practices in a particular industry by identifying specific acts and practices that it considers to be deceptive.[169] The FTC can hold a party strictly liable for a civil penalty of up to $11,000 for each violation of an administrative rule without having to prove the party had notice of the rule.[170]

The FTC also has a variety of opportunities to promote voluntary compliance through outreach and engagement with stakeholders.[171] “Surfs” are one such opportunity.[172] The FTC collaborates with law enforcement agencies on organized surfs of the Internet to identify instances of deceptive advertising practices.[173] Following a surf, the FTC issues warning letters to the individuals and companies that were found to be using potentially deceptive advertising practices.[174] A warning letter identifies the questionable practice, explains the applicable law, and provides an opportunity for the individual or company to voluntarily comply with the law.[175]

Public outreach mechanisms include disseminating business and consumer education publications and working papers, hosting public workshops and seminars, and giving speeches at industry conferences.[176] Through workshops and seminars, the FTC convenes academics, industry representatives, and consumer advocates to discuss regulatory concerns and potential solutions.[177] By creating a forum for stakeholders to engage in a productive discourse, these workshops and seminars provide the FTC with invaluable information to further “its policymaking and enforcement efforts” and raise the profile of significant regulatory issues.[178] These workshops have also led to substantive staff or FTC reports.[179]

The FTC also leverages its social media presence, in a similar fashion as influencers, to increase awareness of its enforcement activities and regulatory guidance.[180] Its social media presence enables the FTC to “answer questions and solicit input from the public on various consumer protection subjects.”[181] For instance, the FTC has used Twitter to host conversations with consumers on issues including online security and identity theft.[182]

All of these mechanisms align with the FTC’s mission of preventing the use of unfair or deceptive practices in commerce.[183] Because the launch of an investigation does not guarantee that the FTC will pursue an enforcement action, the FTC can leverage its investigative authority and prosecutorial discretion to motivate advertisers to take immediate corrective action and update internal policies.[184] Moreover, the risk or actual issuance of an administrative complaint can incentivize an advertiser to enter a consent order consisting of a voluntary agreement to discontinue the alleged deceptive practices and take steps to prevent future violations.[185] Additionally, the civil penalties facing advertisers who violate an order are more preventative than punitive because they discourage advertisers from engaging in particular deceptive practices.[186] Thus, the FTC has a variety of enforcement mechanisms to choose from when evaluating how best to prevent a particular deceptive advertising practice.

B. Insights from the FTC’s Exercise of its Enforcement Discretion

Because the FTC addresses enforcement on a case-by-case basis, the FTC’s influencer endorsement enforcement actions to date provide insight that is critical to understanding who will be subject to an FTC endorsement enforcement investigation or action, when the FTC will pursue settlement orders, and on what terms the FTC will settle an action.

1. Parties Subject to Endorsement Enforcement

Under the Guides, brands share responsibility for adequate endorsement disclosures with influencers.[187] Although the FTC has not ruled out bringing enforcement actions against individual influencers, the FTC primarily focuses its enforcement efforts on brands and their advertising firms.[188] To date, the FTC has pursued enforcement of endorsement disclosure requirements not only against brands, but also an entertainment marketing network,[189] several public relations firms,[190] and an individual influencer.[191]

In 2011, the FTC pursued an endorsement enforcement action against the brand, Legacy Learning Systems, Inc. (Legacy).[192] The FTC alleged that through Legacy’s online affiliate marketing program, individuals “falsely posed as ordinary consumers or independent reviewers without clearly disclosing they were paid substantial commissions for every sale they generated.”[193] Influencers who shared Legacy’s affiliate links earned commissions “ranging from 20% to 45% of the cost of each instructional course sold.”[194] Influencers endorsed Legacy’s products on their personal websites, and elsewhere on the Internet without disclosing their material connection to Legacy.[195] The FTC found that twenty-five of these affiliates generated “at least $5 million in sales.”[196] The FTC pursued enforcement against Legacy for the “failure to disclose, or disclose adequately, that the endorser receives financial compensation from the sale of Legacy’s products” because “[t]his fact would be material to consumers in their purchasing decision.”[197] In June 2011, the FTC finalized the order settling charges of deceptive advertising against Legacy.[198]

In some cases, the FTC has not pursued enforcement against the brand, and it has instead proceeded with enforcement only against the party that is responsible for directing and compensating the influencers.[199] As a result of inadequate endorsement disclosures in a YouTube influencer campaign promoting Microsoft’s Xbox One system, the FTC initiated an investigation into the actions of Microsoft Corporation (Microsoft), Microsoft’s advertising agency, Starcom Media Vest Group (Starcom), and Machinima, Inc. (Machinima), an entertainment network that contracted with Starcom to run the YouTube influencer campaign.[200] Ultimately, the FTC closed its investigation into Microsoft and Starcom and issued a complaint against Machinima.[201] In its closing letter, the FTC acknowledged that Microsoft and Starcom were responsible for the influencers’ failures to disclose.[202] Nevertheless, the FTC found that “the failures to disclose here appear to be isolated incidents that occurred in spite of, and not in the absence of, policies and procedures designed to prevent such lapses.”[203] Moreover, the FTC considered that “Microsoft and Starcom took swift action to require that Machinima insert disclosures into the campaign videos once they learned that Machinima has paid the influencers and that no disclosures had been made.”[204] Thus, the FTC pursued enforcement action only against Machinima, who was the party that was responsible for recruiting, contracting with, directing, and compensating the influencers.[205]

There is at least one instance in which the FTC has initiated an investigation into an individual influencer for failing to disclose her material relationship with a brand.[206] The influencer had made numerous paid media appearances endorsing a home security system.[207] The FTC’s investigation reviewed the influencer’s media appearances, website, and blog posts to determine whether she had adequately disclosed her relationship with the brand.[208] Ultimately, the FTC issued a closing letter to the influencer and pursued enforcement action against the brand.[209] In deciding to close their investigation, the FTC considered that the influencer immediately took steps to “revise her website and other online materials within her control to include appropriate disclosures.”[210] This case demonstrates that even though the FTC is not actively monitoring the behavior of individual influencers, the FTC is willing to take the first step towards an enforcement action against an individual influencer by initiating an investigation into that individual influencer’s endorsement disclosure practices.

2. Closing Letter Commonalities and the Pursuit of Settlement Orders

The FTC has issued closing letters in investigations involving the enforcement of endorsement disclosure requirements when the FTC determines that the failure of the brand or advertising agency to require an influencer to disclose their material relationship with the brand is an isolated incident with a limited reach.[211] In most of these instances, the endorsements had a limited reach due to the small number of influencers who posted, and some of those influencers did include a disclosure in their posts.[212] The FTC also considered whether the brand and advertising agency took corrective action as soon as they were aware of the disclosure issue,[213] and whether the brand and advertising agency had implemented a new influencer endorsement disclosure policy that complies with FTC guidance or updated an existing policy to ensure adequate disclosures in the future.[214] Finally, the FTC did not pursue further enforcement action when it had not previously publicly addressed an issue, such as whether a contest entry constituted a material connection and whether a pin on Pinterest constituted an endorsement.[215]

In contrast, the FTC has pursued further enforcement action in cases where the influencer campaigns have resulted in significant monetary returns to the brand[216] and where the influencer campaigns have reached several million consumers.[217] Moreover, the FTC has pursued enforcement in cases where the contracts with influencers subjected the influencers’ posts to pre-approval[218] and where the contracts with influencers did not require disclosures[219] or adequate disclosures.[220] The FTC has also pursued further enforcement for “fail[ing] to implement a reasonable monitoring program to ensure that … affiliates clearly and prominently disclose their relationship with [the brand].”[221] With these enforcement actions, the FTC has signaled its willingness to pursue failures to disclose, inadequate disclosures, and failures to monitor influencers when the deceptive advertising practice has a large impact on consumers.

3. Settlement Order Terms

Settlement orders are reflective of the FTC’s prophylactic mission and aim to prevent future violations by the same party. Part I of an order addressing endorsement disclosures typically states, “[R]espondents … shall not misrepresent, in any manner, expressly or by implication, … that the [] endorser is an independent user or ordinary consumer of the product or service.”[222] Part II of an order usually states, “[R]espondent … shall clearly and conspicuously, and in close proximity to the representation, disclose a material connection, if one exists, between such endorser and Respondent.”[223] To accomplish these goals, orders require respondents to educate influencers about disclosures through the signing of a disclosure agreement,[224] make compensation to influencers contingent on adequate disclosure,[225] and disqualify any non-compliant influencer from an affiliate program or future influencer campaign.[226] Orders also outline monitoring programs tailored to the party’s business practices.[227] For example, Legacy’s order required Legacy to monitor, on a monthly basis, its “top fifty revenue-generating [a]ffiliates” and “a random sample of fifty [additional affiliates]” to ensure disclosures are clearly and conspicuously made.[228] An order may also include a non-punitive monetary payment to provide redress.[229]

IV. Proposal: A Multipronged Enforcement Approach

In accordance with the FTC’s preventative mission, the FTC should pursue endorsement disclosure enforcement actions against top influencers and large affiliate networks that result in consent orders.[230] The FTC should protect its enforcement legitimacy in this area by avoiding enforcement mechanisms that would result in strict liability for a failure to disclose an endorsement.[231] Further, the FTC should increase its outreach to individual influencers to prevent endorsement disclosure problems with up-and-coming influencers.[232]

This multipronged enforcement approach maximizes the FTC’s limited resources and minimize harm to consumers by targeting individuals and companies who possess the potential to cause great economic harm by generating purchases through deceptive practices.[233] Increased enforcement efforts in this area are critical; although consumers can easily evaluate the products for themselves, this is an area that is not experiencing market correction because there is a considerable incentive to misrepresent and not disclose material relationships.[234]

A. Targeting Top Influencers

The FTC should pursue endorsement disclosure enforcement actions against top influencers. The FTC typically pursues enforcement actions against the least cost avoider: the party that is best situated to avoid similar deceptive acts in the future.[235] With regard to proper disclosure of affiliate links, the individual influencer who is sharing the link is the party best situated to ensure adequate disclosures are made on each advertising platform that influencer uses. Further, the FTC has not ruled out enforcement against an individual influencer, and it has previously initiated at least one investigation into the endorsement disclosures of an individual influencer.[236]

April 2016 “marked the first time the [FTC] directly contacted influencers to provide guidance on proper disclosure.”[237] Following calls for FTC enforcement action against members of the notorious Kardashian family and other celebrities who have failed to make adequate endorsement disclosures on their Instagram accounts,[238] the FTC issued over 90 warning letters to over to brands and influencers.[239] These warning letters flagged Instagram posts that appeared to endorse a product or service without a proper disclosure.[240] In the letters the FTC reminded influencers and brands that they are subject to the Guides and any material connection must be disclosed clearly and conspicuously.[241] Notably, these letters only addressed endorsement disclosures on Instagram and did not address disclosures on any other media platforms or in connection with affiliate links.[242] Nor did these letters indicate that the FTC would take any further enforcement action against the influencers or brands.[243]

The FTC learned that some of the flagged posts were not paid endorsements, but were products the influencer independently decided to promote.[244] This further highlights the importance of clear and conspicuous endorsement disclosures.[245] These disclosures enable consumers to know that when there is no disclosure there is no material relationship between the influencer and the brand she is promoting.[246] Consumers can then make fully informed decisions about how much weight to give to any given endorsement.[247]

For the brands and influencers who did fail to disclose paid endorsements, the warning letters had a limited impact. At least two brands responded by reviewing their endorsement disclosure policies and implementing the FTC’s recommendations for clear and conspicuous disclosures.[248] However, a Freedom of Information Act request from The National Law Journal “turned up no records of correspondence from any celebrit[y] [influencers] or their representatives [to the FTC].”[249] From May 1 to June 12, 2017, Public Citizen monitored the Instagram accounts of 46 influencers who received a warning letter from the FTC.[250] Public Citizen found,

Of the influencers who posted sponsored content, only one fully and consistently complied with FTC policy. While some users posted advertisements using a disclosure, the same influencers continued to post undisclosed content. In total, 327 (79 percent) of the 412 advertisements posted by the 46 influencers did not comply with FTC standards.[251]

Although the FTC can, and has, taken limited action against individual influencers these actions have clearly been insufficient.  As one commentator noted, “[The FTC’s] enforcement thus far has proven inconsistent and arguably ineffective, leaving consumers vulnerable to confusion when viewing brands’, celebs’, and influencers’ posts.”[252] Thus, it is essential that the FTC pursue further enforcement action, starting with formal investigations into the endorsement disclosure practice of individual influencers.

To maximize the FTC’s limited enforcement resources, the FTC should pursue enforcement action only against professional influencers that generate a significant amount of revenue from affiliate links and have millions of followers. Government action against these individuals is necessary because for many of these individuals, being an influencer is their full-time job.[253] Thus, they have a responsibility to know and follow the laws that govern and regulate their industry—which includes adequately disclosing material relationships.

Pursuing selected professional influencers will not only encourage adequate endorsement disclosures among other professional influencers, but will also demonstrate to up-and-coming influencers that making adequate endorsement disclosures is a non-negotiable element of true success as a professional influencer.

B. Targeting Affiliate Marketing Companies

The FTC should also pursue endorsement disclosure enforcement actions against affiliate networks. The FTC has previously pursued enforcement against a brand’s in-house affiliate marketing program whose affiliates failed to disclose or adequately disclose their material relationship with the brand.[254] However, both brands and intermediaries are responsible for implementing programs to monitor their influencers’ disclosures and ensure all disclosures are clear and conspicuous.[255] Moreover, the FTC typically pursues enforcement actions against the party that is responsible for directing and compensating the influencers because that party is best situated ensure compliance with endorsement disclosure requirements.[256] Thus, affiliate networks—which are responsible for recruiting, directing, and compensating influencers—are best situated to monitor influencers for adequate endorsement disclosures.[257] Therefore, the FTC should pursue enforcement action against affiliate networks whose influencers fail to disclose or fail to adequately disclose their material relationships.

With complete control of their recruitment of influencers, affiliate networks can make admission to their program contingent on completing an endorsement disclosure training course or signing an endorsement disclosure agreement.[258] As the party that tracks influencer performance and advises influencers on how to maximize profit, the network is best positioned to implement an endorsement disclosure monitoring program and advise influencers on the adequacy of their disclosures.[259] The network can incentivize influencer compliance by making compensation contingent on adequate disclosures and expelling non-complaint influencers from the program.[260] Additionally, the affiliate network can also add disclosures to embeddable widgets and promotional emails that contain affiliate links.[261]

C. Pursuing Consent Orders

The FTC has an effective tool for enforcement against influencers and affiliate networks: the consent order. A consent order allows the advertiser to settle deception allegations by entering into a voluntary agreement to discontinue the alleged deceptive practices and take steps to prevent potential future violations.[262] Closing investigations into individual influencers and affiliate networks with consent orders is consistent with the FTC’s other enforcement actions involving influencers who failed to disclose or adequately disclose material relationships.[263] Further, consent orders are warranted where the deceptive practice has impacted several million people or generated millions in revenue.[264]

It is essential for the FTC to pursue consent orders in these cases and demonstrate that adequate endorsement disclosures with affiliate links are non-negotiable in influencer marketing. This will serve the FTC’s prophylactic mission by encouraging other influencers to make adequate endorsement disclosures and other affiliate networks to take steps to ensure their influencers make adequate endorsement disclosures. Thus, the FTC can leverage the terms of the consent orders to establish effective endorsement disclosure monitoring systems that set an industry standard, ensuring compliance with FTC endorsement disclosure requirements.[265]

Ending these investigations with closing letters would be inappropriate because these failures to disclose or adequately disclose are not isolated incidents.[266] Rather, these professional influencers and affiliate marketing companies reach millions of consumers on a daily basis across multiple advertising platforms, generating millions in revenue.[267] Moreover, this is not a novel issue.[268] The FTC has publicly and clearly stated that an affiliate link is an endorsement that requires an adequate disclosure of the material relationship between the blogger and the brand.[269]

D. Avoiding a Strict Liability Approach

The FTC could pursue a strict liability approach through administrative adjudication or administrative rulemaking.[270] However, it would be incredibly challenging for the FTC to prosecute every instance where an influencer fails to disclose or inadequately discloses a material relationship with an affiliate link.[271] A mechanism that cannot be effectively enforced lacks a deterrent effect. Further, if the FTC fails to monitor and subsequently prosecute each and every breach, prosecution of only some breaches becomes more punitive than preventative. Accordingly, a strict liability approach to enforcement with respect to influencer endorsement disclosures would jeopardize the legitimacy of the FTC’s enforcement power and yield more punitive than preventative results.

E. Increasing FTC Engagement with Individual Influencers

Outreach and engagement with stakeholders are the FTC’s most important prophylactic enforcement mechanisms.[272] As an initial step, the FTC should raise the profile of the two guidance documents[273] it has created to help businesses and individuals apply the Guides to influencer marketing.[274] The FTC’s distribution of these documents should be targeted to top influencers and affiliate networks because they are the least cost avoiders. Further, the FTC should encourage affiliate networks to disseminate these documents their influencers.

In its capacity as a convenor, the FTC should hold a public workshop or seminar to bring together influencers and advertisers who can speak to influencer marketing across multiple social media platforms and industries.[275] Through these dialogues, the FTC can actively engage with influencers and advertisers to identify areas of confusion with the Guides and opportunities to educate influencers on how to make adequate endorsement disclosures.[276]

Through its social media presence, the FTC can directly engage with influencers on their turf. Thus, the FTC should promote its guidance documents to influencers on its social media channels.[277] The FTC should also ensure that it disseminates information through social media about its enforcement activities relating to endorsement disclosures.[278] Without effective communication to influencers about the FTC’s increased enforcement activities in this area, those actions will have little deterrent effect. Moreover, the FTC should leverage its Twitter presence to host a Twitter chat with influencers and informally field questions from influencers about adequate endorsement disclosures.[279]

The FTC should also explore opportunities to engage with the influencer community and encourage voluntary compliance through partnerships with brands, affiliate networks, and professional influencers. A partnership could be as simple as including an FTC presentation on endorsement disclosure requirements at a national influencer conference.[280] A partnership could also take the form of collaborating on a blog or social media post with a prominent influencer like Bryan Boy, who strives to be transparent with his followers about his endorsements.[281]

Finally, the FTC should also take an assertive approach to outreach and add affiliate link marketing and influencers to the list of targets during organized surfs.[282] Following the surfs, the FTC can issue warning letters to non-compliant influencers to promote adequate endorsement disclosures.[283] The FTC’s issuance of warning letters in April of 2016 demonstrates that this type of outreach is feasible, yet not completely effective.[284] Nevertheless, preventing deceptive endorsements at their inception requires educating professional and amateur influencers about how to adequately disclose material connections with affiliate links.[285]

Conclusion

With the influencer marketing industry growing exponentially, it is critical that the FTC makes it clear to influencers, affiliate networks, and brands alike that disclosure of material connections is non-negotiable. The FTC’s guidance provides ample public notice and opportunity for voluntary compliance with endorsement disclosure requirements.[286] Yet, the non-compliance of individual influencers and affiliate networks with affiliate link disclosure requirements continues at an alarming rate and escapes FTC scrutiny.[287] The proposed multipronged enforcement approach leverages the FTC’s enforcement discretion to give greater authority to the existing FTC guidance on endorsements.[288] By pursuing enforcement against selected influencers and affiliate networks, the FTC can seek consent orders that set the industry standard for clear and conspicuous disclosures of affiliate links and effective influencer monitoring programs.[289] This approach maximizes the FTC’s limited resources by targeting the least cost avoiders to increase compliance with endorsement disclosure requirements, thus allowing consumers to effectively evaluate influencer endorsements.


[1] Rach Parcell, About, Pink Peonies, http://pinkpeonies.com/about/ (last visited Nov. 27, 2016).

[2] See id.

[3] Rach Parcell (@rachparcell), Twitter, https://twitter.com/rachparcell (last visited Aug. 2, 2017).

[4] Pink Peonies (@thepinkpeonies), Facebook, https://www.facebook.com/thepinkpeonies/ (last visited Aug. 2, 2017).

[5] Rach Parcell (@rachparcell), Instagram, https://www.instagram.com/rachparcell/ (last visited Aug. 2, 2017).

[6] See Parcell, supra note 1; see also Rachel Strugatz, The Blogosphere Pays Off More Than Ever, Women’s Wear Daily (Jan. 11, 2016), http://wwd.com/business-news/media/chiara-ferragni-fashion-bloggers-money-make-income-millionaire-kristina-bazan-kylie-jenner-10306124/.

[7] Influencers, Bus. Dictionary, http://www.businessdictionary.com/definition/influencers.html (last visited Nov. 27, 2016).

[8] Rachel Strugatz & David Yi, Top Bloggers’ Incomes Approach New Heights, Women’s Wear Daily, June 12, 2014, at 1, 6.

[9] See Benjamin Edelman & Wesley Brandi, Risk, Information, and Incentives in Online Affiliate Marketing, 52 J. Mktg. Res. 1, 2 (2015).

[10] Rachel Strugatz, ShopStyle Banks on Bloggers, Relaunches Influencer Network, Women’s Wear Daily (June 10, 2015), http://wwd.com/business-news/media/shopstyle-collective-bloggers-10145965/.

[11] See Brian Solis, The Influencer Marketing Manifesto: Why the Future of Influencer Marketing Starts with People and Relationships Not Popularity 1 (2016).

[12] See id.

[13] See Strugatz, supra note 6.

[14] See 15 U.S.C. § 45 (2016).

[15] See 16 C.F.R. § 255.5 (2016).

[16] See infra Part I.C.

[17] See 16 C.F.R. § 255.0.

[18] See, e.g., Leah W. Feinman, Note, Celebrity Endorsements in Non-Traditional Advertising: How the FTC Regulations Fail to Keep up with the Kardashians, 22 Fordham Intell. Prop. Media & Ent. L.J. 97, 137-42 (2011).

[19] See, e.g., 16 C.F.R. § 255.0.

[20] See, e.g., id.

[21] Fed. Trade Comm’n, The FTC’s Endorsement Guides: What People Are Asking 18-19 (2015), https://www.ftc.gov/system/files/documents/plain-language/pdf-0205-endorsement-guides-faqs_0.pdf.

[22] See infra Part I.C.

[23] See infra Part III.B.1.

[24] See infra Part III.B.1.

[25] See Strugatz, supra note 6; see also infra Part III.B.1.

[26] See infra Part IV.C.

[27] See infra Part IV.D.

[28] See infra Part IV.E.

[29] See infra Part I.A.

[30] See infra Part I.B.

[31] See infra Part I.C.

[32] Influencers, supra note 7.

[33] Simply referred to as “influencers” throughout this Note.

[34] See Solis, supra note 11, at 1.

[35] 16 C.F.R. § 255.0(b) (2016).

[36] See Solis, supra note 11, at 1.

[37] See id.; see also Nielsen, Global Trust in Advertising: Winning Strategies for an Evolving Media Landscape 4 (2015) (“In fact, two-thirds (66%) say they trust consumer opinions posted online—the third-most-trusted format.”).

[38] Paresh Dave, Firms Turn to Online ‘Influencers’ to Spread the Word on Social Media, L.A. Times (Jan. 1, 2015), http://www.latimes.com/business/la-fi-advertising-disrupted-20150102-story.html.

[39] Marty Swant, Twitter Says Users Now Trust Influencers Nearly as much as Their Friends, Adweek (May 10, 2016, 1:38 PM), http://www.adweek.com/news/technology/twitter-says-users-now-trust-influencers-nearly-much-their-friends-171367.

[40] Id.

[41] See Dave, supra note 38; Christine Moorman, Social Media Spending Triples but Falls Short of Expectations, Forbes (Aug. 23, 2016, 9:50 AM), http://www.forbes.com/sites/christinemoorman/2016/08/23/social-media-spending-triples-but-falls-short-of-expectations/#7bd5ab357cff.

[42] See The Data Team, Celebrities’ Endorsement Earnings on Social Media, The Economist (Oct. 17, 2016, 3:16 PM), http://www.economist.com/blogs/graphicdetail/2016/10/daily-chart-9.

[43] Id.

[44] Id.

[45] Id.

[46] Id.

[47] Strugatz, supra note 6.

[48] Strugatz, supra note 10.

[49] See id.

[50] See Solis, supra note 11, at 3.

[51] See Yuyu Chen, Inside the Rocky, Love-Hate Relationship Between Marketers and ‘Influencers,’ Digiday (May 9, 2016), http://digiday.com/brands/inside-rocky-love-hate-relationship-marketers-influencers/.

[52] See id.

[53] See Edelman & Brandi, supra note 9, at 2.

[54] See id.When the consumer clicks on the specially coded hyperlink, the link places a “cookie” on the consumer’s computer. Id. The cookie enables the brand’s website to recognize that the influencer referred the consumer to the brand through an affiliate link and pay the influencer a commission if the consumer makes a purchase. Id. at 2-3.

[55] See id. at 2. Amazon, eBay, and Apple all manage their affiliate programs in-house. Id.

[56] See id.

[57] See id.; see also Francesca Mari, The Click Clique, Texas Monthly (Sept. 2014), http://www.texasmonthly.com/articles/the-click-clique/ (“When one popular rewardStyle blogger became so successful featuring outfits under $100 that she was suddenly able to incorporate more-expensive clothing, [the network] quickly intervened. ‘All of a sudden, her earnings are going down with us[.] … So we had to say, “You’re not converting whenever you show the Tibi or the McQueen or whatever else, because your reader is only spending a hundred dollars or less online at any given time. You got rich, but your readers didn’t.”’”).

[58] See Mari, supra note 57.

[59] Elizabeth Holmes, How Style Bloggers Earn Sales Commissions, One Click at a Time, Wall St. J. (Feb. 11, 2015, 11:33 PM), http://www.wsj.com/articles/how-style-bloggers-earn-sales-commissions-one-click-at-a-time-1423693911.

[60] LiketoKnow.it, rewardStyle, https://www.rewardstyle.com/register/ltk (last visited Nov. 27, 2016).

[61] rewardStyle, https://www.rewardstyle.com/ (last visited Nov. 27, 2016).

[62] Holmes, supra note 59.

[63] Id.

[64] See id.

[65] See id.

[66] Id.

[67] Id.

[68] See Strugatz, supra note 6.

[69] Mari, supra note 57.

[70] See id.

[71] Holmes, supra note 59.

[72] Mari, supra note 57.

[73] Strugatz, supra note 10.

[74] Strugatz, supra note 6.

[75] 16 C.F.R. § 255.5 (2016).

[76] See Fed. Trade Comm’n, supra note 21, at 2.

[77] See supra notes 36-37 and accompanying text.

[78] Solis, supra note 11, at 16.

[79] Lindsay Stein, One in Four Influencers Asked Not to Disclose Paid Promotion, Advert. Age (Aug. 10, 2016), http://adage.com/article/cmo-strategy/influencers-asked-disclose-arrangement/305389/.

[80] See Solis, supra note 11, at 1.

[81] Thomas Harvey, Marketing Your Brand with Influencers? Make Sure the FTC Hits the “Like” Button, The Recorder, Sept. 22, 2016, at 9.

[82] 15 U.S.C. § 45(a)(2) (2016) (emphasis added).

[83] See id. § 45. The FTC Act defines “false advertising” with respect to regulating the advertising of “food, drugs, devices, services, or cosmetics” under 15 U.S.C. § 52. See id. § 55(a)(1) (“[A]n advertisement, other than labeling, which is misleading in a material respect.”).

[84] See Fed. Trade Comm’n, FTC Policy Statement on Deception 1 (1983) [hereinafter FTC Policy Statement on Deception], https://www.ftc.gov/system/files/documents/public_statements/410531/831014deceptionstm t.pdf, appended to Clifford Associates, Inc., 103 F.T.C. 110, 174 (1984).

[85] See ABA Section of Antitrust Law, FTC Practice and Procedure Manual 26-27 (2d ed. 2014).

[86] See FTC Policy Statement on Deception, supra note 84, at 2.

[87] Id. at n.4; see also Aronberg v. FTC, 132 F.2d 165, 167 (7th Cir. 1942) (“The ultimate impression upon the mind of the reader arises from the sum total of not only what is said but also of all that is reasonably implied.”).

[88] See FTC Policy Statement on Deception, supra note 84, at 1.

[89] Id.

[90] Id. at n.20.

[91] See Firestone Tire & Rubber Co. v. FTC, 481 F.2d 246, 249 (6th Cir. 1973) (affirming the FTC’s finding of deception where the ad “misled 15% (or 10%) of the buying public”).

[92] See FTC Policy Statement on Deception, supra note 84, at n.4 (“The issue is whether the act or practice is likely to mislead, rather than whether it causes actual deception.”).

[93] See Regina Corp. v. FTC, 322 F.2d 765, 768 (3rd Cir. 1963) (“Proof of petitioner’s intention to deceive is not a prerequisite to a finding of a violation; it is sufficient that deception is possible.”).

[94] See 16 C.F.R. § 255.0(a) (2016).

[95] See 15 U.S.C. § 57a(a)(1)(A) (2016) (“the Commission may prescribe … interpretative rules and general statements of policy with respect to unfair or deceptive acts or practices in or affecting commerce.”).

[96] Federal Trade Commission: Law, Practice and Procedure § 13.01 (2015) (“Guides, enforcement policy statements and interpretations are not conclusive legally on the issue of whether the law has been violated, but they do inform the public about the Commissions [sic] enforcement intentions and the likely outcome of a proceeding involving the issues covered. On the other hand, trade regulation rules constitute a statement of the law, and the legality of the prohibited conduct ceases to be an issue to be litigated in an enforcement action.”).

[97] 16 C.F.R. § 255.0(a).

[98] Id. § 255.0(b) (emphasis added).

[99] Id.

[100] Id. § 255.5. The FTC can require influencers to clearly and conspicuously disclose material relationships because the First Amendment does not protect misleading commercial speech. See Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557, 563 (1980).

[101] 16 C.F.R § 255.5.

[102] See id. § 255.0.

[103] See e.g., Fed. Trade Comm’n, .com Disclosures: How to Make Effective Disclosures in Digital Advertising (2015), https://www.ftc.gov/system/files/documents/plain-language/bus41-dot-com-disclosures-information-about-online-advertising.pdf.

[104] Id. at i-ii.

[105] Id. at 14 (emphasis added); see also FTC Policy Statement on Deception, supra note 84, at 4 (“Thus, when the first contact between a seller and a buyer occurs through a deceptive practice, the law may be violated even if the truth is subsequently made known to the purchaser.”).

[106] Fed. Trade Comm’n, supra note 103, at 6.

[107] 16 C.F.R. § 255.0 (“Whether a particular endorsement or testimonial is deceptive will depend on the specific factual circumstances of the advertisement at issue.”).

[108] FTC v. Garvey, No. 00-9358, 2001 U.S. Dist. LEXIS 25060, at *18 (C.D. Cal. Nov. 8, 2001).

[109] See Fed. Trade Comm’n, supra note 103, at 6.

[110] See 16 C.F.R. § 255.0 ex. 8; id. § 255.1 ex. 5; id. § 255.5 ex. 7.

[111] Id. § 255.0 ex. 8.

[112] Id.

[113] Id. § 255.1 ex. 7.

[114] Id.

[115] Id.

[116] Id. (“Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.”); see also id. § 255.1(d) (“Advertisers are subject to liability for … failing to disclose material connections between themselves and their endorsers. Endorsers also may be liable for statements made in the course of their endorsements.”).

[117] Id. § 255.1 ex. 5.

[118] Id.

[119] Id.

[120] Id. (“In order to limit its potential liability, the advertiser should ensure that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated.”).

[121] Anthony DiResta et al., Regulators and Industry Thought Leaders Discuss Issues in Social Media Advertising – Highlights from “The FTC, Native Advertising and Consumer Privacy,” JD Supra Bus. Advisor (Sept. 29, 2016), http://www.jdsupra.com/legalnews/regulators-and-industry-thought-leaders-22009/.

[122] 16 C.F.R. § 255.0(b) (emphasis added).

[123] Id. (emphasis added).

[124] See Fed. Trade Comm’n, supra note 21, at 18.

[125] 16 C.F.R. § 255.5.

[126] See Mari, supra note 57.

[127] Fed. Trade Comm’n, supra note 21, at 18-19.

[128] Id.

[129] Id. at 18.

[130] Id.

[131] Id. at 3.

[132] Id. (emphasis added); see also FTC Policy Statement on Deception, supra note 84, at n.20.

[133] See Fed. Trade Comm’n, supra note 21, at 3.

[134] See supra notes 116-18 and accompanying text.

[135] See Fed. Trade Comm’n, supra note 21, at 3.

[136] See id.

[137] See id.; see also infra Part IV.A. (discussing the FTC’s issuance of warning letters to Instagram influencers in response to letters from Public Citizen and Truth in Advertising).

[138] See id.

[139] See id. at 17; see also supra notes 120-21 and accompanying text.

[140] See Fed. Trade Comm’n, supra note 21, at 17.

[141] Id.

[142] See Jef I. Richards, Deceptive Advertising: Behavioral Study of a Legal Concept 12 (1990). Section 5 of the FTC Act empowers the FTC “to prevent persons, partnerships, or corporations … from using … unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45(a)(2) (2016) (emphasis added).

[143] See infra Part III.B.

[144] The FTC received over three million consumer complaints in 2015. Stats & Data 2015, Fed. Trade Comm’n, https://www.ftc.gov/node/943403 (last visited Nov. 27, 2016). In contrast, it only exercised its prosecutorial discretion to file 107 actions and obtain 178 orders. Id. During this same time period, the FTC was operating on a $307 million-dollar budget with 1,144 full-time employees, split between its consumer protection and competition promotion missions. FTC Appropriation and Full-Time Equivalent (FTE) History, Fed. Trade. Comm’n, https://www.ftc.gov/about-ftc/bureaus-offices/office-executive-director/financial-management-office/ftc-appropriation (last visited Nov. 27, 2016).

[145] See Richards, supra note 142, at 17-19; FTC Policy Statement on Deception, supra note 84 (emphasis added).

[146] See Fed. Trade Comm’n, supra note 21, at 3.

[147] See A Brief Overview of the Federal Trade Commission’s Investigative and Law Enforcement Authority, Fed. Trade. Comm’n (July 2008), https://www.ftc.gov/about-ftc/what-we-do/enforcement-authority [hearinafter A Brief Overview]; see also 15 U.S.C. § 43 (2016) (“The commission may … prosecute any inquiry necessary to its duties.”).

[148] 15 U.S.C. § 46(a).

[149] See id. § 46(b).

[150] See A Brief Overview, supra note 147.

[151] See ABA Section of Antitrust Law, supra note 85, at 183.

[152] 16 C.F.R. § 2.1 (2016).

[153] See ABA Section of Antitrust Law, supra note 85, at 195.

[154] Id.

[155] See e.g., Letter from FTC to Microsoft Corporation and Starcom MediaVest Group (Aug. 26, 2015), available at https://www.ftc.gov/system/files/documents/cases/160317machinimacmpt.pdf.

[156] See e.g., id.

[157] See ABA Section of Antitrust Law, supra note 85, at 196.

[158] A Brief Overview, supra note 147.

[159] Id.

[160] A Brief Overview, supra note 147.

[161] Id.

[162] Id.; see also 15 U.S.C. § 53(b) (2016).

[163] Id.

[164] Id.

[165] Id.

[166] See 15 U.S.C. § 57b(a)(2) (2016); see also A Brief Overview, supra note 147.

[167] See A Brief Overview, supra note 147; see also 15 U.S.C. § 45(m)(1)(B) (2016).

[168] See A Brief Overview, supra note 147.

[169] See 15 U.S.C. § 57a(a)(1)(B); A Brief Overview, supra note 147. Recall that the Guides are promulgated under this authority, but are distinct from and do not carry the same weight as trade regulation rules. See supra notes 95-97 and accompanying text.

[170] A Brief Overview, supra note 147; see also 15 U.S.C. § 45(m)(1)(A).

[171] William E. Kovacic, The Federal Trade Commission as Convenor: Developing Regulatory Policy Norms Without Litigation or Rulemaking,13 Colo. Tech. L.J. 17, 19 (2015) (“Congress gave the FTC capacity to serve as a convenor—to engage in a diverse array of activities that facilitate norms development.”).

[172] See ABA Section of Antitrust Law, supra note 85, at 220.

[173] Id.

[174] Id.

[175] Id.

[176] 1 American Bar Ass’n Section of Antitrust Law, Consumer Protection Law Developments (Second) 523 (2d ed. 2016).

[177] See id. at 153, 525; see, e.g.,Press Release, Fed. Trade Comm’n, FTC to Host Spring Seminars on Emerging Consumer Privacy Issues (Dec. 2, 2013), https://www.ftc.gov/news-events/press-releases/2013/12/ftc-host-spring-seminars-emerging-consumer-privacy-issues.

[178] American Bar Ass’n Section of Antitrust Law, supra note 176, at 525.

[179] See, e.g., Fed. Trade Comm’n, FTC Staff Report: Self-Regulatory Principles for Online Behavioral Advertising i-iv (2009).

[180] See id. at 525-26.

[181] Id.

[182] See, e.g., Twitter Chat: Talking to Kids About Online Safety, Security, and Privacy, Fed. Trade Comm’n, https://www.ftc.gov/news-events/events-calendar/2017/02/twitter-chat-talking-kids-about-online-safety-security-privacy (last visited Mar. 1, 2017); Tax Identity Theft Awareness Twitter Chat, Fed. Trade Comm’n, https://www.ftc.gov/news-events/events-calendar/2017/01/tax-identity-theft-awareness-twitter-chat (last visited Mar. 1, 2017).

[183] See 15 U.S.C. § 45 (2016).

[184] See infra Part III.B.

[185] See infra Part III.B.

[186] See A Brief Overview, supra note 147.

[187] Supra notes 116-21 and accompanying text.

[188] Fed. Trade Comm’n, supra note 21, at 17; see also supra notes 134-37 and accompanying.

[189] See Press Release, Fed. Trade Comm’n, Xbox One Promoter Settles FTC Charges That it Deceived Consumers with Endorsement Videos Posted by Paid ‘Influencers’ (Sept. 2, 2015), https://www.ftc.gov/news-events/press-releases/2015/09/xbox-one-promoter-settles-ftc-charges-it-deceived-consumers.

[190] See, e.g., Letter from FTC to Hyundai Motor America (Nov. 16, 2011), available at https://www.ftc.gov/sites/default/files/documents/closing_letters/hyundai-motor-america/111116hyundaimotorletter.pdf [hearinafter Hyundai Closing Letter].

[191] See Letter from FTC to Alison Rhodes-Jacobson (Mar. 10, 2014), available at https://www.ftc.gov/enforcement/cases-proceedings/closing-letters/alison-rhodes-jacobson. Although the FTC sent warning letters to individual influencers in April 2017, those letters did not initiate any formal investigation or other enforcement action against individual influencers. See Press Release, Fed Trade Comm’n, FTC Staff Reminds Influencers and Brands to Clearly Disclose Relationship, available at https://www.ftc.gov/news-events/press-releases/2017/04/ftc-staff-reminds-influencers-brands-clearly-disclose.

[192] See Press Release, Fed. Trade Comm’n, FTC Approves Final Order Settling Charges That Firm Used Misleading Online Reviews (June 10, 2011), https://www.ftc.gov/news-events/press-releases/2011/06/ftc-approves-final-order-settling-charges-firm-used-misleading.

[193] Id.

[194] Id.

[195] See Complaint, In re Legacy Learning Sys., Inc., FTC File No. 102-3055, at ¶¶ 5-6 (June 10, 2011), available at https://www.ftc.gov/sites/default/files/documents/cases/2011/06/110610legacylearningcmpt.pdf [hearinafter Legacy Learning Complaint].

[196] Id. at ¶ 8.

[197] Id. at ¶ 12.

[198] Press Release, supra note 192.

[199] Compare Complaint, In re Machinima, Inc., FTC File No. 142-3090 (Mar. 17, 2016), available at https://www.ftc.gov/system/files/documents/cases/160317machinimacmpt.pdf [hearinafter Machinima Complaint], with Complaint, In re Warner Bros. Home Entertainment Inc., FTC File No. 152-3034, at ¶¶ 4, 7-10, 13 (Nov. 17, 2016), available at https://www.ftc.gov/system/files/documents/cases/161811warner_bros_complaint.pdf [hearinafter Warner Bros. Complaint] (asserting that although Warner Bros. hired an advertising agency to run a YouTube influencer campaign—Warner Bros. set the minimum requirements for each influencer’s video and the videos were subject to pre-approval by Warner Bros.—and thus, Warner Bros. was responsible for ensuring that the influencers adequately disclosed their material relationship).

[200] See Press Release, supra note 179.

[201] Id.

[202] Letter from FTC to Microsoft Corporation and Starcom MediaVest Group, supra note 155.

[203] Id.

[204] Id. (emphasis added).

[205] See Machinima Complaint, supra note 199, at ¶¶ 9-22.

[206] See Letter from FTC to Alison Rhodes-Jacobson (Mar. 10, 2014), available at https://www.ftc.gov/enforcement/cases-proceedings/closing-letters/alison-rhodes-jacobson.

[207] See id.

[208] See id.

[209] See id.; Press Release, Fed. Trade Comm’n, Home Security Company ADT Settles FTC Charges that Endorsements Deceived Consumers (Mar. 6, 2014), https://www.ftc.gov/news-events/press-releases/2014/03/home-security-company-adt-settles-ftc-charges-endorsements.

[210] Letter from FTC to Alison Rhodes-Jacobson, supra note 206.

[211] See, e.g., Letter from FTC to Cole Haan (Mar. 20, 2014), available at https://www.ftc.gov/system/files/documents/closing_letters/cole-haan-inc./140320colehaanclosingletter.pdf [hearinafter Cole Haan Closing Letter] (noting the FTC did not pursue enforcement because “the contest ran for a limited time and drew a relatively small number of contestants”); Letter from FTC to Nordstrom Rack (Feb. 22, 2013), available at https://www.ftc.gov/sites/default/files/documents/closing_letters/nordstrom-rack/130222nordstromrackletter.pdf [hearinafter Nordstrom Rack Closing Letter] (noting the FTC did not pursue enforcement because of “the limited nature of the event at issue”); Letter from FTC to AnnTaylor Stores Corp. (Apr. 20, 2010), available at https://www.ftc.gov/sites/default/files/documents/closing_letters/anntaylor-stores-corporation/100420anntaylorclosingletter.pdf [hearinafter AnnTaylor Closing Letter] (noting the FTC did not pursue enforcement because the event at issue was the first and only such event).

[212] See, e.g., Nordstrom Rack Closing Letter, supra note 211 (noting the FTC did not pursue enforcement because of “the fact that several social media influencers who posted content about the preview did disclose”); Letter from FTC to HP Inkology (Sept. 27, 2012), available at https://www.ftc.gov/sites/default/files/documents/closing_letters/hp-inkology/120927hpinkologycltr.pdf [hearinafter HP Inkology Closing Letter] (noting the FTC did not pursue enforcement because “a relatively small number of bloggers posted content … and a few of those bloggers did adequately disclose their material connections”); Letter from FTC to Hyundai Motor America (Nov. 16, 2011), available at https://www.ftc.gov/sites/default/files/documents/closing_letters/hyundai-motor-america/111116hyundaimotorletter.pdf [hearinafter Hyundai Closing Letter] (noting the FTC did not pursue enforcement because “a relatively small number of bloggers received the gift certificates, and [] some of them did, in fact, disclose this information”); AnnTaylor Closing Letter, supra note 211 (noting the FTC did not pursue enforcement because “only a very small number of bloggers posted content about the preview, and several of those bloggers disclosed”).

[213] See, e.g., Hyundai Closing Letter, supra note 212 (noting the FTC decided not to pursue enforcement because “upon learning of the misconduct, the media firm promptly took action to address it”); supra note 203 and accompanying text.

[214] See, e.g., Nordstrom Rack Closing Letter, supra note 211 (noting the FTC did not pursue enforcement because of “Nordstrom’s having revised its written social media policies to adequately address [the FTC’s] concerns”); HP Inkology Closing Letter, supra note 212 (noting the FTC did not pursue enforcement because “both companies have revised their written social media policies to adequately address [the FTC’s] concerns”); Hyundai Closing Letter, supra note 212 (noting the FTC did not pursue enforcement because “the actions at issue here were contrary both to Hyundai’s established social media policy, which calls for bloggers to disclose their receipt of compensation, and to the policies of the media firm in question”); AnnTaylor Closing Letter, supra note 211 (noting the FTC did not pursue enforcement because LOFT adopted a written policy following the incident “stating that LOFT will not issue any gift to any blogger without first telling the blogger that the blogger must disclose the gift in his or her blog”).

[215] Cole Haan Closing Letter, supra note 211.

[216] See, e.g., Legacy Learning Complaint supra note 195, at ¶ 8 (alleging that twenty-five of Legacy’s affiliates “are responsible for at least $5 million in sales”).

[217] Machinima Complaint, supra note 199, at ¶ 21 (alleging Machinima’s influencers’ videos “generated more than 30 million views”); Press Release, Fed. Trade Comm’n, Warner Bros. Settles FTC Charges It Failed to Adequately Disclose It Paid Online Influencers to Post Gameplay Videos (July 11, 2016), https://www.ftc.gov/news-events/press-releases/2016/07/warner-bros-settles-ftc-charges-it-failed-adequately-disclose-it (“Over the course of the campaign, the sponsored videos were viewed more than 5.5 million times.”); Press Release, Fed. Trade Comm’n, FTC Approves Final Lord & Taylor Order Prohibiting Deceptive Advertising Techniques (May 23, 2016), https://www.ftc.gov/news-events/press-releases/2016/05/ftc-approves-final-lord-taylor-order-prohibiting-deceptive (“In total, the influencers’ posts reached 11.4 million individual Instagram users over just two days, led to 328,000 brand engagements with Lord & Taylor’s own Instagram handle, and the dress quickly sold out.”).

[218] See, e.g., Warner Bros. Complaint, supra note 199, at ¶ 9 (“By contract, influencers’ videos were subject to pre-approval … to ensure that they conformed with respondent’s requirements. On at least one occasion, respondent reviewed and approved an influencer video with an inadequate sponsorship disclosure before it was made public.”); Complaint, In re Lord & Taylor, LLC, FTC File No. 152-3181, at ¶ 7 (May 23, 2016) [hearinafter Lord & Taylor Complaint] available at https://www.ftc.gov/system/files/documents/cases/160523lordtaylorcmpt.pdf (alleging Lord & Taylor subjected influencer’s posts to pre-approval, edited some of the influencers’ proposed posts, and did not edit any of the 50 Instagram posts to add a disclosure).

[219] See, e.g., Lord & Taylor Complaint, supra note 218, at ¶ 6 (“Although Lord & Taylor’s Design Lab influencer contracts detailed the manner in which Respondent was to be mentioned in each Instagram posting, the contracts did not require the influencers to disclose in their postings that Respondent had compensated them, nor did Respondent otherwise obligate influencers to disclose that they had been compensated.”); Machinima Complaint, supra note 199, at ¶ 14, 20 (“Respondent did not otherwise oblige the influencers to disclose in their videos that they had been compensated.”).

[220] See, e.g., Warner Bros Complaint, supra note 199, at ¶ 9 (“Respondent did not require that the YouTube influencers be instructed to place a sponsorship disclosure clearly and conspicuously in the video itself. Nor did respondent require that the YouTube influencers be instructed to place the sponsorship disclosure ‘above the fold’ in the description box, or visible without consumers having to scroll down or click on a link.”).

[221] See, e.g., Legacy Learning Complaint supra note 195, at ¶ 9 (noting that even though a contract clause required affiliates to “comply with the FTC guidelines on disclosures” it was ineffective without a monitoring program).

[222] Decision and Order, In re Legacy Learning Systems, Inc., FTC File No. 102-3055, at 3 (June 10, 2011), [hearinafter Legacy Learning Order] available at https://www.ftc.gov/sites/default/files/documents/cases/2011/06/110610legacylearningdo.pdf; see also Decision and Order, In re Warner Bros. Home Entertainment Inc., FTC File No. 152-3034, at 3 (Nov. 21, 2016), [hearinafter Warner Bros. Order] available at https://www.ftc.gov/system/files/documents/cases/161811_c-4595_warner_bros_do.pdf; Decision and Order, In re Lord & Taylor, LLC, FTC File No. 152-3181, at 3 (May 23, 2016), [hearinafter Lord & Taylor Order] available at https://www.ftc.gov/system/files/documents/cases/160523lordtaylordo.pdf; Decision and Order, In re Machinima, Inc., FTC File No. 142-3090, at 3 (Mar. 17, 2016), [hearinafter Machinima Order] available at https://www.ftc.gov/system/files/documents/cases/160317machinimado.pdf.

[223] Lord & Taylor Order, supra note 222, at 4; see also Warner Bros. Order, supra note 222, at 3; Machinima Order, supra note 222, at 3; Legacy Learning Order, supra note 222, at 4.

[224] See, e.g., Lord & Taylor Order, supra note 222, at 4; see also Warner Bros. Order, supra note 222, at 4; Machinima Order, supra note 222, at 4; Legacy Learning Order, supra note 222, at 5.

[225] See, e.g., Machinima Order, supra note 222, at 4; Legacy Learning Order, supra note 222, at 5.

[226] See, e.g., Warner Bros. Order, supra note 222, at 4; Lord & Taylor Order, supra note 222, at 4-5; Machinima Order, supra note 222, at 5; Legacy Learning Order, supra note 222, at 4.

[227] Compare Legacy Learning Order, supra note 222, at 4-5, with Warner Bros. Order, supra note 222 (establishing a monitoring program requiring monitoring and review of all of their influencers’ postings made as part of any future influencer campaign).

[228] Legacy Learning Order, supra note 222, at 4.

[229] See, e.g., id. at 5-6 (requiring a $250,000 payment for redress).

[230] See supra Part III.A.

[231] See infra Part IV.D.

[232] See infra Part IV.E.

[233] See Richards, supra note 142 at 17-19.

[234] See FTC Policy Statement on Deception, supra note 84; see also supra Part I.C.

[235] See supra Part III.B.1.

[236] See supra notes 129-32 and accompanying text; see also supra notes 206-10 and accompany text.

[237] C. Ryan Barber, Who Got Those Social ‘Influencer’ Letters from the FTC? Read the Full List., Nat’l L. J. (May 5, 2017), http://www.nationallawjournal.com/id=1202785302263?kw=Who%20Got%20Those%20Social%20%27Influencer%27%20Letters%20From%20the%20FTC?%20Read%20the%20Full%20List.&et=editorial&bu=National%20Law%20Journal&cn=20170505&src=EMC-Email&pt=Daily%20Headlines#!.

[238] Letter from Public Citizen to FTC (Sept. 7, 2016), available at http://www.citizen.org/documents/Letter-to-FTC-Instagram-Endorsements.pdf; Letter from Truth in Advertising to FTC (Aug. 25, 2016), available at https://www.truthinadvertising.org/wp-content/uploads/2016/08/8_25_16-ltr-from-TINA-to-FTC-re-Kardashian-Jenner-Instagram-posts.pdf.

[239] Press Release, supra note 191.

[240] Sample Letter from FTC to Influencer (Apr. 19, 2017), available at https://www.ftc.gov/news-events/press-releases/2017/04/ftc-staff-reminds-influencers-brands-clearly-disclose.

[241] Id.

[242] See id.

[243] See id.

[244] C. Ryan Barber, How In-House Lawyers Responded to the FTC’s ‘Influencer’ Letters, Nat’l L. J. (May 26, 2017), http://www.nationallawjournal.com/home/id=1202787613698?kw=How%20In-House%20Lawyers%20Responded%20to%20the%20FTC%27s%20%27Influencer%27%20Letters#!.

[245] See supra Part I.C.

[246] See supra Part I.C.

[247] See supra Part I.C.

[248] Barber, supra note 244.

[249] Id.

[250] Press Release, Public Citizen, Investigation Shows that FTC’s Reminder Letters Are Ineffective at Disclosing Paid Posts on Instagram (June 26, 2017), available at https://www.citizen.org/media/press-releases/investigation-shows-ftc%E2%80%99s-reminder-letters-are-ineffective-disclosing-paid-0.

[251] Id.

[252] In Light of Continued Violations, How Effective Were the FTC’s Letters Really?, The Fashion Law (June 7, 2017), http://www.thefashionlaw.com/home/in-light-of-continued-violations-how-effective-were-the-ftcs-letters-really.

[253] See Strugatz, supra note 10.

[254] See supra notes 192-98 and accompanying text.

[255] See supra notes 216-21 and accompanying text.

[256] See supra Part III.B.1.

[257] See supra Part III.B.1.

[258] See supra Part III.B.3.

[259] See supra Part I.2. But cf. Mari, supra note 57 (noting that rewardStyle provides influencers with “links out to the most updated rules and laws” and places the burden on the influencer to comply with the law).

[260] See supra Part III.B.3.

[261] See supra Part I.B.

[262] See supra Part III.B.3.

[263] See supra notes 216-21 and accompanying text.

[264] See supra notes 216-21 and accompanying text.

[265] See supra Part III.B.3.

[266] See supra notes 211-15 and accompanying text.

[267] See supra Part I.

[268] See supra notes 211-15 and accompanying text.

[269] See supra notes 127-30 and accompanying text.

[270] See supra notes 167-70 and accompanying text.

[271] See, e.g., supra note 43 and accompanying text.

[272] See Annual Highlights 2015: Education, Fed. Trade Comm’n (2015), https://www.ftc.gov/reports/annual-highlights-2015/education (last visited Nov. 27, 2016). For a discussion of how FTC has effectively used similar outreach measures in the privacy context see generally Steven Hetcher, The FTC as Internet Privacy Norm Entrepreneur, 53 VAND. L. REV. 2041 (2000).

[273] The two guidance documents are .com Disclosures: How to Make Effective Disclosures in Digital Advertising and The FTC’s Endorsement Guides: What People Are Asking. See supra notes 21, 103-04.

[274] See supra note 176 and accompanying text.

[275] See supra notes 176-79 and accompanying text.

[276] See supra note 179 and accompanying text.

[277] See supra note 180 and accompanying text.

[278] See supra note 180 and accompanying text.

[279] See supra notes 180-82 and accompanying text.

[280] See supra note 167 and accompanying text.

[281] Bryan Boy (@bryanboy), Twitter (May 13, 2017, 8:43 AM), https://twitter.com/bryanboy/status/863404332502220800 (“Why am I the only one disclosing my travels are subsidized for and or I’m being #sponsored? Why! I mean. This is just ridiculous”); Bryan Boy (@bryanboy), Twitter (Feb. 5, 2017, 4:15 PM), https://twitter.com/bryanboy/status/828381582109110276 (“I think it’s important to own up for what we are. I make a living via paid endorsements.”).

[282] See supra notes 172-73 and accompanying text.

[283] See supra notes 174-75 and accompanying text.

[284] See supra Part IV.A.

[285] See Updated: Why Does the FTC Keep Ignoring Endorsement Violations, The Fashion Law (Dec. 15, 2015), http://www.thefashionlaw.com/home/why-does-the-ftc-keep-ignoring-endorsement-violations (“The FTC is either not getting its message out in a sufficient manner or [influencers] … are simply disregarding them.”).

[286] See supra Part II.B.

[287] See supra Part I.C.; supra Part III.B.1.

[288] See supra Part IV.

[289] See supra Part IV.

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