Platforms such as Twitter, Instagram, Facebook, and TikTok have completely transformed advertising and marketing, which in turn requires new laws for these changes. Additionally, the rise of “influencers” has further changed the way companies bring awareness to products and services. These advancements, however, have also led to legal problems concerning proper marketing, disclosure, intellectual property use, and contracting. This article will discuss the top influencer legal issues for those who advertise or market for companies and brands.
What is an Influencer?
With the rise in popularity of social media and heavy advertising on online platforms, you’ve likely heard the term “influencer” floating around. Generally, social media influencers are digital creators with large followings that regularly create and offer content that educates, entertains, or engages their audience. Influencers use their platforms to set trends, increase their popularity, and often change popular social media culture. Consequently, social media influencers can serve as valuable assets for any company looking to advertise or market their brands using popular platforms.
General Factors that Define Influencers
This broad definition of an influencer, however, means that many kinds of people can categorize themselves as such. Some general factors to consider in determining whether someone is an influencer include those who:
- Hold positions of credibility or authority;
- Actively post engaging, entertaining, or educational content in a particular area;
- Have a fairly sizeable following of fans on social media; or
- Can leverage their authority to influence their followers’ purchasing decisions.
Influencer Categories
The industry typically categorizes influencers into groups based on their popularity, and the size of their following:
- Mega (or celebrity) Influencers have greater than 1 million followers;
- Macro Influencers have between 100,000 and 1 million followers;
- Micro-Influencers have between 10,000 and 100,000 followers;
- And Nano Influencers have between 1,000 (or less) to 10,000 followers.
Though these distinctions broadly describe influencers, they help companies determine the value of a given person’s marketing. Understandably, a world-renowned celebrity with over 10 million followers will likely expect greater compensation than a niche creator with only 1,500.
What are the different creator niches?
While there are categories for likely everything you can think of, some of the predominant industries include:
- Fashion
- Beauty
- Travel
- Lifestyle
- Celebrities
- Entertainment
- Sports
- Animals
- Gaming
- Cryptocurrency
- Health and Fitness
- Family and Parenting
- Business and Technology
Niche markets are important because they address the public’s varied interests and drive specific engagement. As a result, influencers who have the confidence of their community can have a greater impact on driving sales, growth, and brand representation.
Experts recommend that upcoming influencers determine and focus on a niche, because doing so may increase their value to prospective companies. Influencer legal issues can arise in any of these creator niches. Therefore, influencers must be aware of all types of influencer legal issues to ensure they do not run into any issues.
Influencer Legal Issues – FTC Regulation
Currently, the Federal Trade Commission (FTC) is responsible for the regulation of social media marketing. This authority comes under Section 5(a) of the FTC Act. This Act prohibits “unfair or deceptive acts or practices in or affecting commerce.”
In November 2019, the FTC published guidance for influencers, “Disclosures 101 for Social Media Influencers.” This guideline aims to detail how advertisers and endorsers can practice safely and legally, avoiding influencer legal issues.
Importantly, when influencers endorse a product through social media, they must make it clear when they have a “material connection” with a brand.
What is a material connection to a brand?
“A ‘material connection’ to the brand includes a personal, family, or employment relationship or a financial relationship such as the brand paying you or giving you free or discounted products or services.” Influencers have a responsibility to make proper disclosures and to be familiar with the contents of the FTC Endorsement Guide.
FTC Disclosure Requirements
There are various requirements and recommendations that influencers must include, including:
- Place the disclosure with the endorsement message itself.
- If you are making a video, have disclosures in the video, not just in the comments.
- If you are making an endorsement on a livestream, repeat the disclosure several times so that viewers who only watch a part of the livestream are more likely to see it.
- Use should use simple and clear language when making a disclosure, such as using terms like “advertisement,” “ad,” and “sponsored.”
- Include hashtags on their post or “thank you” messages to brands.
Things Influencers Cannot Do
One of the most important factors is that influencers cannot make false or misleading statements. For example, you cannot talk about an experience with a product you never used.
If you thought a product was terrible, you cannot say that it was terrific. You also cannot make up claims about a product that an advertiser would be unable to prove.
What happens if an influencer fails to abide by the FTC rules?
Failure to abide by FTC rules could result in law enforcement action taken by the agency. In 2017, the FTC resolved their first action against Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, influencers in the online gaming community, for deceptive endorsement of the online gambling service CSGO Lotto.
The creators allegedly paid other influencers thousands of dollars to promote the website without requiring them to disclose. Additionally, the FTC has issued warning letters to influencers or brands who fail to comply with their guidance. Keeping up with the FTC’s promulgated guidance will help influencers avoid potential legal complexities in the future.
Intellectual Property Influencer Legal Issues
Social media influencers may also encounter influencer legal issues regarding intellectual property rights. Influencers must avoid infringing upon existing copyrights or trademarks while endorsing a product.
Influencer Legal Issues with Copyright Laws
Copyrights protect the original works of authorship such as:
- Photographs
- Videos
- Written text
- Art
- Sound recordings
- Cinematographic films, and
- Other original creations.
Influencers must ensure that they have permission to use the creative works of others in any type of endorsement. For example, an influencer cannot make a promotional video using the music of an artist without receiving their permission beforehand.
Influencer Legal Issues with Trademark Laws
Trademarks are used to identify the source of the goods and services from one seller from those of others. Influencers should obtain permission from a brand to use their trademark, name, logo, or products in a promotional video.
A best practice to avoid infringing another’s trademark rights is to ensure there is no confusion about the source of goods or services. Therefore, always disclose the rightful owner’s rights in the mark, or obtain permission to use the mark.
Protecting Influencers’ Own Intellectual Property Rights
On the other hand, many influencers are creators who should also protect their own intellectual property rights from the companies they work with. Social media influencers can both register and enforce infringements against their intellectual property. Creators can register their videos with the copyright office or register their channel’s name with the trademark office upon creation.
When social media influencers collaborate with companies to endorse their brand, they should make sure to agree upon terms in the contract of their partnership. Otherwise, companies may improperly exploit the use of an influencer’s name, resources, or posts.
Influencer Contracts
One of the predominant contracts used in influencer marketing is the “influencer agreement.” An agreement between the brand and the influencer lays out the terms of the partnership. It also describes each party’s obligations. It is crucial to define these responsibilities at the outset to avoid influencer legal issues in the future.
What to include in an Influencer Agreement
These contracts can also ensure that both parties to the contract are adhering to FTC guidelines. Parts of an influencer agreement may be outlining:
- The type of content needed
- Who has creative control over the campaign
- How many times the influencer must post per day, week, month, or year
- The length of the campaign
- Payment details
- Ownership of intellectual property
- Standard contract clauses (such as names, dates, deliverables, etc.)
Some contracts may include obscure, but important provisions, such as “behavior clauses.” These clauses indicate certain behaviors that do not align with a brand and may lead to the termination of a relationship.
Influencer as an Employee or Independent Contractor
Another important legal consideration is whether the influencer is labeled an employee or an independent contractor. The more control a company exerts over an influencer’s work, the greater the chance a court will consider them an independent contractor.
Since courts view employees and independent contractors differently for liability purposes, it is important for companies to pay attention to that distinction.
Publicity and Privacy
Two other important legal considerations for influencers are publicity and privacy. A violation of someone’s rights of publicity could occur if an influencer misappropriates a picture or video of someone for commercial purposes without their permission.
This may occur when creating promotional materials in areas where there are bystanders who may be captured on camera. Additionally, influencers should seek to avoid using the image, likeness, name, or quotes from a celebrity to promote their business as the celebrity may be unhappy with the way they are portrayed.
As for privacy, influencers may interact with businesses that have clients. Many business clients have an expectation of privacy. Therefore, using their information without their permission may constitute a violation of their rights. To avoid problems with privacy, make sure to not share any information about a client, business, or employee that is not previously agreed upon.
Questions?
As the importance of social media influencers increases, it is important to be cognizant of the influencer legal issues that may arise out of these endeavors. The points above highlight some of the key considerations for influencers or companies, looking to engage in these kinds of endorsement practices.
If you have any questions, contact us today for a consultation.
