Image: Burberry

Ahead of Riccardo Tisci’s highly-anticipated debut in September 2018, Burberry was in promotion mode. In order to build hype and generate sales, the British brand erected giant branded teddy bears and wrapped taxis with its monogram across the globe. It also sent its new $390 “B Series” tees, the first official product from Tisci’s tenure, to influencers and celebrities, including Lily James, Matt Smith, Rihanna, and Chris Lee, among others, at least some of whom, in turn, posted photos of themselves in the shirts on their social media accounts – which were then reposted by Tisci. This is the cycle of a fashion gift and from it, consumer interest and media buzz abounds.

Far from an isolated instance, fashion brands sending out gifted products to individuals with a following, who either capture their wardrobes via their social media or have their attire captured by way of paparazzi (or both) is a well-established practice. As Launchmetrics revealed in its spring 2018 report, “The State of Influencer Marketing in Fashion, Luxury & Cosmetics,” a whopping 98 percent of brands make use of influencer marketing by lending samples and/or gifts to influencers for the exclusive purpose of those influencers posting such items on their social media accounts.

Moreover, the New York-based launch-to-market software company found that nearly 50 percent of the influencers it polled said that their willingness to collaborate with brands for free depends “on the type of compensation they offer me.” Among the top factors? “Trips and gifting.”

With that in mind, you may recall that in August 2018, Dior sent a handful of fashion’s biggest influencers Saddle Bags in furtherance of its push to revive the archival John Galliano style under the watch of creative director Maria Grazia Chiuri. Louis Vuitton is similarly known to gift its bags. The same goes for Chanel, and the list goes on.

In theory, gifting is an effective way for brands to bank on the power of celebrities and Instagram influencers – and editors, too! – on the cheap. For the cost (as distinct from retail price) of a t-shirt in Burberry’s case or a bag, fashion brands can advertise themselves to the followings of social media stars, thereby, avoiding having to pay for a full-blown, traditional ad campaign, even if the actual efficacy of such large-scale influencer campaigns is up for debate.

As digital marketer and consultant Dina Fierro told Fashionista this summer, “In order for influencer marketing to be effective, you want it to feel authentic — as opposed to feeling like a carefully orchestrated and meticulously timed campaign.” If not carefully executed, such efforts could actually backfire. “People who are buying high-value products from the house of Dior, I think they could see this kind of marketing and be repelled by it — especially repelled by the [specific] product,” she says.

Nonetheless, brands are devoting resources to gifting, and in most cases, walking a fine line in terms of legality. In the Dior saddle bag instance, save for a few influencers who used a #SuppliedByDior tag, most of the Instagram posts went without any initial indication that the bags were, in fact, gifts from the brand (with the unspoken expectation of Instagram coverage), and as a result, would almost certainly run afoul of federal advertising laws in the U.S.

What is the law?

According to the Federal Trade Commission (“FTC”),  celebrities and influencers – and media companies and their editors, alike – have a duty to disclose their relationships with other entities when making endorsements outside the context of traditional ad campaigns. The government agency – which is tasked with promoting consumer protection, and eliminating and preventing anticompetitive business practices – has held just like how paid-for posts must be disclosed as such, posts that feature gifted – or lent – products also likely need to come with language that indicates that.

As the FTC has stated in the past, if there is a “material connection” between an endorser and an advertiser – in other words, “a connection that might affect the weight or credibility that consumers give the endorsement – that connection should be clearly and conspicuously disclosed, unless it is already clear from the context of the communication.” A material connection, says the FTC, “could be a business or family relationship, monetary payment, or even the gift of a free product.”

 In accordance with U.S. law, Burberry would likely be running afoul with this new influencer campaign, as none of the social media posts thus far include any language to indicate that the t-shirts were gifts. (The FTC has explicitly stated that “Thanks” is not a sufficient disclosure).

However, the rules in Britain, where Burberry is headquartered, are different. According to the British Advertising Standards Authority (“ASA”), “Consumers should always be aware when they are being advertised to. Failure to disclose the commercial relationship an influencer may leave a brand at risk of a complaint to the ASA.” The ASA goes on to make an important distinction, though, stating, “When the brand has control over the content of the post and rewards the influencer with a payment, free gift, or other perk, the post becomes an ad.”

On the other hand, when brands and/or PR companies send products to influencers and celebrities in the hope of receiving a positive review or endorsement, the ASA has said that this “does not require disclosure because this kind of activity is not covered by the Code [of Non-broadcast Advertising, Sales Promotion and Direct Marketing].”

The law, as it stands, seems to shield Burberry from liability, although it is worth pondering how long this will be good law and whether, in light of the prevalence of gifting as a mechanism of advertising, the Code will be updated to include the necessary disclosure of gifted products for the purpose of an advertising-type endorsement.

Meanwhile, back in the U.S., the FTC Act is a U.S.-specific law, but the FTC has held that its jurisdiction applies to all entities operating in commerce in the U.S. In fact, the FTC has stated in the past that its disclosure rules apply to non-U.S. companies and individuals “to the extent it is reasonably foreseeable that [their content] will be seen by and affect U.S. consumers.”

Given that the pool of users that are subjected to any brand or individual’s social media content is increasingly global and not limited in terms of geography, this is a point worth considering, especially for foreign companies that have some tangible business ties to the U.S. This includes most major fashion brands, which tend to have New York headquarters.

As for whether consumers know – or care – that such content has been carefully crafted by brands is another matter entirely. There is also least some indication that consumers do not place an enormous emphasis on whether a product is a gift, or whether it was purchased by the influencer/celeb. But at the same time, it is also nearly impossible at times to distinguish between gifts and actual purchases.