You may recall a Forbes article from this past winter that declared that Ugg boots are back, in part thanks to the Kardashian/Jenners. According to the article, “Who better to chaperone the Ugg’s resurgence than Kardashian clan members Kendall and Kylie Jenner? In November, the influential duo was snapped shopping for Ugg boots on New York’s Madison Avenue. That the two were likely paid for their paparazzi-documented shopping spree and the accompanying Instagram shots they posted won’t deter their millions of followers.”
The sisters’ trip to the Ugg store came complete with photos on their Instagram and Twitter accounts, maybe an appearance on their apps. Forbes notes, “So, smart move, Ugg. And welcome back.” Our take on Ugg’s tactic: It may be a “smart” move but it is probably also an illegal one and significant of a larger legal phenomenon.
As you may know, the Federal Trade Commission (“FTC”) is the government agency that that is tasked with promoting consumer protection, and eliminating and preventing anticompetitive business practices. In this role, the FTC issues guidelines (which are legally binding) that govern “Endorsements and Testimonials in Advertising,” among other things. According to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising both advertisers and endorsers must disclose material connections (think: payments or free products in exchange for representation of the brand) that they share.
The Guidelines also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ad campaigns. If these Guidelines are not met, the FTC may file suit in accordance with Section 5 of the Federal Trade Commission Act (15 USC 45), which prohibits ”unfair or deceptive acts or practices in or affecting commerce.”
Hardly a novel requirement, the FTC has long required advertisers and endorsers to disclose their material connections so consumers can be made aware. Thus, when a celebrity has been paid to endorse a product or service and they fail to disclose that fact, both the advertiser and endorser may be liable. The most novel aspect of all of this is social media. Yet, the FTC has adapted to development of social media advertising. In March 2013, the FTC updated its “DotCom Disclosures” Guidelines, in which the FTC emphasized that consumer protection laws apply to both traditional media and social media.
As such, in order to avoid violating the Guidelines, the FTC suggests using “#Ad”, “Ad:” or “Sponsored” in tweets or Instagram photos to indicate that a post or link within a post includes compensated content, and placing clear disclosures near the beginning of blog posts or videos, in this case, as well. It really is that easy! And yet, our friends, the Kardashian/Jenners consistently evade the Guidelines.
According to the fashion press and industry sources, the reality television family is known to accept compensation in exchange for posting on social media (and a lot of it … according to CR Fashion Book, Kendall, for instance, rakes in $300,000 for a single Instagram post). They can demand such rates due to their vast amount of influence over consumers, as indicated, in part, by their enormous social media followings. With this in mind, they arguably have a duty, as sophisticated parties (with sophisticated lawyers), to be informed of the regulations and be held to them, no?
You may recall that last July, Kim Kardashian came under fire for posting a photo of herself on Instagram holding the prescription drug Diclegis without posting a disclaimer that the posting was sponsored. While it seems that the FTC never took action, the Food and Drug Administration (“FDA”) did, holding that a review of Kardashian’s posts resulting in a finding that they were “false or misleading in that it presents efficacy claims for Diclegis, but fail to communicate any risk information associated with its use and omit material facts.” And as a result, the reality star and her mother both posted updated endorsements (labeled as “#CorrectiveAd”), complete with acknowledgement of the pill’s side effects. The new post included a caption that read:
I guess you saw the attention my last #morningsickness post received. The FDA has told Duchesnay, Inc., that my last post about Diclegis (doxylamine succinate and pyridoxine HCl) was incomplete because it did not include any risk information or important limitations of use for Diclegis. A link to this information accompanied the post, but this didn’t meet FDA requirements. So, I’m re-posting and sharing this important information about Diclegis.
If we remove the FDA from the equation and focus primarily on the FTC and its Guidelines, we have several instances of potential violations to examine.
Consider the case at hand. If we are to believe the press surrounding Kendall and Kylie Jenner’s excursion to the Ugg store, and there is a lot of it, the sisters are being compensated. However, such an endorsement did not come by way of Kendall and Kylie starring in an Ugg ad campaign or a commercial or another traditional form of advertising. Instead, they were caught by the paparazzi in a seemingly candid manner while shopping at the Ugg store (and if reports are true, they were also paid by Starbucks to carry the company’s coffee cups during the shopping trip). They subsequently shared photos of themselves in Ugg products. This seems to be EXACTLY the sort of thing to which the FTC’s Guidelines apply. As indicated above: “The Guidelines make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ad campaigns.”
This is not the first time we have seen the famous family accept some form of compensation, whether it be a check, free goods, or “something of value” in exchange for endorsing a brand’s products. Older sister, Kim Kardashian, recently took to her Instagram and Snapchat accounts to promote JetSmarter. The photos were posted without a disclaimer that indicates sponsorship or endorsement.
Similarly, there are all of the vague and disclaimer-less tweets touting products. For instance, Kim K tweeted a photo of her “Evening Routine,” which included Neutrogena, La Mer, and Lancer products, among others. And then, of course, there are the countless Balmain looks all of the sisters are pictured wearing. According to reports, the girls are not compensated to wear Balmain, but the accuracy of that is very much up for debate.
In short: the legality of the Kardashian/Jenners online presence is very much questionable in terms of the FTC.
Before we put this one to bed, it is worth addressing one question, in particular. Isn’t it common knowledge that the Kardashian/Jenners are paid to tout products? And the FTC’s answer for that is no. Much like with bloggers, many famous figures mention products or wear garments or accessories in their photos/posts and have no connection to the marketers of those products – they don’t receive anything for their reviews or get a commission.
“They simply recommend [or wear] those products to their readers because they believe in them,” the FTC notes. “Moreover, the financial arrangements between some [celebrities] and advertisers may be apparent to industry insiders, but not to everyone else. Under the law, an act or practice is deceptive if it misleads ‘a significant minority’ of consumers. Even if some readers are aware of these deals, many readers aren’t. That’s why disclosure is important.”
It seems that there is a much larger issue at play here, and it is that FTC violations truly run rampant throughout the blogosphere and social media platforms. The FTC is either not getting its message out in a sufficient manner or famous faces (whether they be the Kardashians or the 50 bloggers Lord & Taylor tapped to be part of its Design Lab campaign earlier this year) are simply disregarding them. The latter, if it is the case, is probably the result of seemingly few actions taken by the FTC to enforce such guidelines in the fashion industry.
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. In terms of fashion-specific actions, the FTC targeted Ann Taylor LOFT in connection with a 2010 event, which aimed to lure bloggers by noting that the “Bloggers who attend will receive a special gift, and those who post coverage from the event will be entered in a mystery gift card drawing where you can win up to $500 at LOFT!” Thereafter, Cole Haan came under fire for failing to disclose a Pinterest campaign. Such actions suggest that the FTC is, in fact, on the lookout for violations of its guidelines.
UPDATE (6/20/16): It is worth noting that in some recent posts, the Kardashian/Jenners have included “sp” and “spon,” such as the Instagram post below. However, as previously indicated by the FTC in its guidelines, such disclosures attempts would likely be deemed invalid.