Last weekend, 50 popular personal style bloggers each took to their Instagram accounts to post pictures of themselves wearing the same paisley print dress from Lord & Taylor's brand new Design Lab collection. The bloggers (think: those behind Natalie Off Duty, I Hate Blonde, Something Navy, Wendy's Lookbook, Late Afternoon, The Grey, and Extra Petite, among others) garnered quite a bit of attention, with some photos capturing 13,000 or more "likes", and the dress subsequently selling out in a matters of days. The undeniably innovative #DesignLab ad campaign of sorts has been labeled a huge success by an array of fashion sites based on its social media reach and resulting sales volume, but most of these sites fail to take one thing into account: This type of advertising is probably illegal.
According to Lord & Taylor's Chief Marketing Officer Michael Crotty: "The program was designed to introduce Design Lab to this customer where she is engaging and consuming content every day. The goal was to make her stop in her feed and ask why all her favorite bloggers are wearing this dress and what is Design Lab? Using Instagram as that vehicle is a logical choice, especially when it comes to fashion." The 50 fashion bloggers were hand-picked and compensated by the brand, Crotty said. And herein lies the problem.
According to the Federal Trade Commission ("FTC")’s Guides Concerning the Use of Endorsements and Testimonials in Advertising both advertisers (Lord & Taylor, here) and endorsers (the bloggers, in this case) may be liable for failure to disclose material connections (think: 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, NONE of the parties complied with the FTC's disclosure requirements.
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 updated guidelines, “Bloggers receiving free products or other perks with the understanding that they’ll promote the advertiser’s products in their blogs [or social media accounts] would be covered [by the guidelines].” How do I know that social media accounts fall under the blogger disclosure guidelines? Well, according to the guidelines, disclosures must be “accessible on all platforms used.” All platforms = your blog, your Facebook, Twitter, Instagram, Tumblr, etc. Further, in a statement released in connect 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.
Now, roughly a week or so after the campaign went live, it seems that some of the 50 bloggers have caught on, as indicated by their "edited" (as of Monday) captions that now include "#ad", or "sponsored", or in @NatyBaby's case, "#spon" -- which may or may not be “clear and conspicuous" enough of a disclosure to meet the FTC's Guidelines. Moreover, whether or not the bloggers' recent edits to their captions will be sufficient, considering that the campaign is relatively old news now and all of the dresses have been sold, is up for debate.
So, advertisers and bloggers, to avoid complications and potential fines (because you probably can't successfully pose the "I didn't know" argument for too much longer), disclose any material connections AND make your disclosures “clear and conspicuous.” The FTC suggests using “#Ad”, “Ad:” or “Sponsored” in tweets to be clear that a tweet or link within a tweet includes compensated content, and placing clear disclosures near the beginning of your posts, as well.