Sept. 7, 2016

Groups to FTC: End Hidden Ads on Instagram

Companies Increasingly Target Consumers and Teens With Non-Disclosed Ads Through Instagram Celebrity Social Media Accounts Disguised as Everyday Online Interactions

WASHINGTON, D.C. – The Federal Trade Commission (FTC) should strengthen oversight and bring enforcement actions against companies that pay for ad placements on Instagram social media accounts, Public Citizen, the Campaign for a Commercial-Free Childhood and the Center for Digital Democracy said in a letter to the agency today. Public Citizen included research showing the pervasive presence of hidden ads on Instagram, documenting more than 100 examples where products were featured in everyday celebrity, athlete and personality Instagram posts but were most likely non-disclosed paid ads.

This practice, known as non-disclosed advertising through influencer user profiles, 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.

“Reality TV stars, actors and celebrities are often idolized, especially by young girls whose spending power and networks of followers attract companies that use undisclosed associations to prey upon insecurities by pushing beauty and health-related products,” said Kristen Strader, campaign manager for Public Citizen’s Commercial Alert. “The weight loss and cosmetics industries are using Instagram influencers to sneakily market products ranging from teas promising weight loss to glittery eyeshadow. Only a tiny fraction of these ads are disclosed to users.”

The FTC has expressed concern over the increasing number of native advertisements on search engines, news websites and social media, as the advertisements sometimes appear indistinguishable from regular content. Faced with potential FTC enforcement action, the Kardashian family this summer began identifying some Instagram promotions as paid ads. In 2015, the FTC took enforcement action against Lord & Taylor, which paid models who advertised on Instagram without disclosing they were hired. But the FTC must do more, say Public Citizen and other groups.

“It’s bad enough that Instagram celebrities exploit the relationships they form with their developmentally vulnerable young followers to sell children and teens on brands and products,” said Josh Golin, executive director of the Campaign for a Commercial-Free Childhood. “But to do so without even disclosing that they are being compensated is beyond the pale. We urge the FTC to take swift and decisive action to protect children and teens from these unfair and deceptive practices.”

The Public Citizen analysis revealed 113 “influencers” – movie stars, reality TV personalities, famous athletes, fitness gurus, fashion icons and pop musicians – who endorsed a product without disclosure. Based on industry norms, the presumption is that all or most of these influencers were compensated for their endorsements. Many of the celebrities are role models for children and teens, including Rihanna (pop music star) advertising Puma, Kim Kardashian (“Keeping Up with the Kardashians”) endorsing Express Smile (a teeth-whitening company), and pop music groups like One Direction. However, the analysis likely is just the tip of the iceberg when it comes to the use of hidden ads on Instagram. As of June 2016, the social media platform has more than 500 million monthly active users and counts thousands of celebrities and endorsers among its user base.

“Public Citizen’s important new research reveals that the FTC is failing to protect American consumers from acts of digital deception conducted by marketers,” said Jeff Chester, executive director of the Center for Digital Democracy. “Young people are especially vulnerable to these stealth influencer Instagram marketing campaigns. The commission should open up an investigation and, we believe, force Instagram and its marketing partners to stop deceiving the public.”

Read the letter to the FTC.

View examples of Instagram accounts.

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