Kim Kardashian is under fire for posting a photo of herself this week holding the prescription drug Diclegis, a reformulated version of a pill pulled from shelves in the 1980s after widespread fears that it may have caused birth defects emerged. Turns out, there is also a legal problem at issue here: The fact that her Instagram post, which is almost certainly a sponsored ad, lacks the proper disclosure as required by the Federal Trade Commission (“FTC”). Considering that the Kardashians are known to accept compensation to post on social media (and a lot of it … think: upwards of $10,000 per tweet), they should be informed of the regulations and not be held to them, no? Here's what is at issue …
According to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising both advertisers (the drug company, here) and endorsers (Kim Kardashian, in this case) may be liable for failure to disclose “material connections,” such as payments or free products in exchange for representation of the brand, that they share. This means that bloggers must disclose relationships with advertisers when they receive free products for review, compensation, or other consideration, and vice versa. Such disclosures allow consumers to accurately decide how much weight to give the endorser’s opinions about the product. Here, Kardashian seems to fail to comply with the FTC's disclosure requirements altogether.
You may be wondering: What exactly is an endorsement in the first place? According to the FTC, the independent agency of the U.S. government that is tasked with promoting consumer protection and eliminating and preventing anticompetitive business practices, it is “any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.”
Last year, the FTC released an update to its existing guidelines, entitled “.com Disclosures.” According to the guidelines, disclosures must be “accessible on all platforms used.” Further, in a statement released in connection with the updated guidelines, the agency stated, “The FTC revised the Guides because truth in advertising is important in all media – including blogs and social networking sites.”
While it has been reported that the FTC has no authority to impose civil penalties, this does not appear to be the case anymore. In 2011, the FTC charged Nashville, Tennessee-based Legacy Learning Systems with $250,000 in settlement damages, making it the first ever monetary component for a violation of the blogger endorsement rules. Additionally, the relatively recent controversy involving Cole Haan's failure to disclose a Pinterest campaign suggests that the FTC is, in fact, on the lookout for violations of its guidelines.
UPDATED (August 11, 2015): The Food and Drug Administration has sent a warning letter to Diclegis-maker Duchesnay, notifying the maker that it must discontinue using Kardashian’s social media endorsements because they do not include language that adequately addresses risk factors associated with the use of the pills.