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Nov. 30, 2016

Groups Tell FTC: Enforce Your Own Policy, End Hidden Ads on Instagram

FTC Has Yet to Enforce Its Policy and Stop Companies That Target Consumers and Teens With Nondisclosed Ads Through Instagram

WASHINGTON, D.C. – Undisclosed paid ads are a serious problem on Instagram, and the Federal Trade Commission (FTC) has yet to take action to enforce its policy, Public Citizen, the Campaign for a Commercial-Free Childhood and the Center for Digital Democracy said in a letter (PDF) to the agency today.

The letter was a follow-up to a letter the groups sent to the FTC on Sept. 7, which documented more than 100 examples where products were featured in everyday celebrity, athlete and personality Instagram posts but were most likely nondisclosed paid ads. The letter sent today includes 50 new examples of undisclosed influencer posts on Instagram. The FTC has a policy stating that paid endorsements should be identified with #advertisement or #ad hashtag, however the FTC has yet to respond to the groups’ request to enforce its own policy.

The practice of nondisclosed influencer advertising covertly promotes products that could harm consumers, especially teens and young adults. A core principal of fair advertising law in the United States is that people have a right to know when they are targets of advertising. On Instagram, disguised ads are rampant; deceived consumers often believe celebrities are making genuine, self-directed and enthusiastic endorsements of brands. They don’t realize that those celebrities are paid and may not even use the touted brand.

The letter also points to an emerging form of influencer marketing that uses average consumers as marketing agents, and cites Influenster and BzzAgent as the primary agencies.

“Recently, an even more deceitful version of influencer marketing has emerged where average consumers are sent free products in exchange for posts directing their close friends and family to purchase those products,” said Kristen Strader, campaign coordinator for Public Citizen’s Commercial Alert program. “Some consumers may expect celebrities to be paid for product endorsements, but not their closest friends.”

A Public Citizen survey shows that many users of Influenster and BzzAgent are not disclosing that they have received a free product, deceiving their followers in the same way that celebrity “influencers” do. The organization blames Influenster and BzzAgent, not their users, for this systematic deception.

“Consumers are being bamboozled by the digital scam known as influencer marketing. Products are being pitched using deceptive tactics, tricking a consumer into believing they are receiving legitimate advice or recommendations online,” said Jeff Chester, executive director of the Center for Digital Democracy. “The FTC needs to crack down on these 21st Century scammers, and ensure that the public is treated fairly by digital advertisers.”

“There is abundant evidence that children and teens are particularly vulnerable to advertising masquerading as ‘content.’ The longer the FTC lags on this issue, the more children and teens are subject to this form of unfair and deceptive advertising,” said Josh Golin, executive director of the Campaign for a Commercial-Free Childhood.

Read the letter (PDF).

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