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The Art of Disclosure: Fashion’s Influence Economy and the FTC

As the importance of native advertising continues to grow, are brands and digital influencers coming clean with consumers about the deals that power fashion’s influence economy?
Digital influencers on Instagram | Source: Instagram/@lauramercier, @nicolettemason, @songofstyle, @manrepeller, @chrisellelim, @sincerelyjules
  • Lauren Sherman

NEW YORK, United States — This September, lifestyle guru Aimee Song's first book, "Capture Your Style: Transform Your Instagram Images, Showcase Your Life and Build the Ultimate Platform," will hit retailers. And if the size of her 3.6 million-strong Instagram following is any indication, it's sure to be a commercial success. A mere mention in one of Song's Instagram posts is powerful marketing, attracting tens of thousands of likes and hundreds of comments. It's little wonder, then, that companies from Laura Mercier to Dior have paid her to market their brands and products to her followers.

Song is something of a poster child for fashion’s lucrative influencer economy from which top digital stars generate hundreds of thousands — and, in some cases, millions — of dollars each year in income, not to mention perks like free product, travel and meals. Indeed, Song’s business is so good — she is thought to earn into the six figures for long-term projects — that she has written an instructional manual about how to achieve her level of success.

For some fashion influencers, amassing a following on social media is simply a hobby, or no more than an exercise in personal brand building. But as fashion businesses move their marketing dollars online and the number of native advertising deals grows, it’s becoming more difficult to discern between organic commentary and paid sponsorship.

Are consumers being deceived?


In 2009, the Federal Trade Commission — an independent agency of the US government tasked with consumer protection — issued a list of guidelines regarding "dot com" disclosures for sponsored content. The guidelines were updated in 2013 and once again in 2015 to account for newer forms of social media.

The rules unequivocally require that paid marketing posts are disclosed as such, but do not stipulate specific language. “There is some vagueness,” says Susan Scafidi, professor of fashion law at Fordham Law School and founder of the Fashion Law Institute. “There are some questions in the guidelines as to whether a simple ‘#ad’ is enough.”

The guidelines do clearly delineate when and where disclosures should take place, however. “Required disclosures must be clear and conspicuous. In evaluating whether a disclosure is likely to be clear and conspicuous, advertisers should consider its placement in the ad and its proximity to the relevant claim. The closer the disclosure is to the claim to which it relates, the better,” says the latest version of the FTC rules, which continue: “Additional considerations include: the prominence of the disclosure; whether it is unavoidable; whether other parts of the ad distract attention from the disclosure; whether the disclosure needs to be repeated at different places on a website; whether disclosures in audio messages are presented in an adequate volume and cadence; whether visual disclosures appear for a sufficient duration; and whether the language of the disclosure is understandable to the intended audience.”

Are influencers complying?

A series of recent articles examining these issues, written by Julie Zerbo, a consultant and editor-in-chief of, has raised the question once again. In her pieces, Zerbo has taken independent influencers (including Song), websites and traditional editors and publishers to task for failing to properly disclose when they've received compensation from a brand in exchange for favourable coverage. But the issue may be less black-and-white than Zerbo suggests.

It is the marketer's job to try to blur the lines between the personal and the promotional and it's the FTC's job to make sure those lines don't get too blurry.

To be sure, the question is particularly pertinent at the moment. Although the FTC has yet to target influencers themselves, instead going after the brands that pay for undisclosed influencer marketing, the agency has recently shifted its enforcement tactics from simply shaming offending brands to charging them with violations. In the past, companies like Ann Taylor and Cole Haan were publicly taken to task for running influencer campaigns that didn't follow the FTC guidelines. However, no legal action was taken against these companies. That changed in the past year when American department store Lord & Taylor was formally accused by the FTC of violating its guidelines. The wrongdoing: 50 influencers were paid between $1,000 and $4,000 to post Instagram photos to wear a specific paisley dress sold at the retailer, but many failed to disclose that they were paid, or that they were given the dress for free.

In March 2015, facing a civil penalty of up to $16,000 for each violation, Lord & Taylor settled with the FTC. "A year ago, when it came to our attention that there were potential issues with how the influencers posted about a dress in this campaign, we took immediate action with the social media agencies that were supporting us on it to ensure that clear disclosures were made,” read a statement released by Lord & Taylor.

“We cooperated fully with the FTC's inquiry into the marketing of this dress and have of course agreed to uphold the current version of the guidelines,” the statement continued. “It is worth noting that the FTC has changed its guidelines since last year and we applaud the new guidelines that clarify the rules. We have educated our teams about them and require that any outside agencies or partners we work with understand and adhere to them as well. Further, we encourage the FTC to continue to update and communicate their guidelines clearly and swiftly as the digital and social media landscape rapidly evolves. We remain dedicated to our core values of transparency and honesty in everything that we do for our customers. Lord & Taylor is deeply committed to our customers and we never sought to deceive them in any way, nor would we ever. In the FTC's consent order, there is no finding of wrongdoing whatsoever.”


According to sources working in digital ad sales, some brands prefer to work with influencers who are lax when it comes to disclosing native advertising. But as the Lord & Taylor case proved, the FTC is getting serious with brands, and practices that deviate from official guidelines can have consequences. What about individual influencers? “We compare it to a dandelion and a root,” says FTC assistant director Richard Cleland. “The brand is the root. Our view here is that if we get at the root, we take care of lots of dandelions.”

“It is the marketer’s job to try to blur the lines between the personal and the promotional and it’s the FTC’s job to make sure those lines don’t get too blurry,” Scafidi adds. “That means [calling out] high profile companies creating the product, rather than individuals.”

But as individual influencers gain greater celebrity and their incomes continue to rise, will that change? What's more, many influencers are launching their own product lines, from a namesake shoe by Chiara Ferragni (aka The Blonde Salad) to Elin Kling's advanced-contemporary label Totême. What difference might this make?

Why people vilify bloggers for what has been pretty standard throughout the industry is something that perplexes me.

“I wouldn’t be surprised if the FTC has started investigating individuals,” says Brian Igel, a New York-based lawyer that represents brands in fashion and publishing, including Nylon magazine (which was named in the Lord & Taylor case), as well as individual bloggers. “In the past, the FTC went to great lengths to calm fears that these individual bloggers would not be subject. But anybody can be held responsible for a failure to disclose.”

Many digital influencers are frustrated by what is widely considered to be a double standard regarding disclosure requirements in print media versus what’s required online. Print magazine editors have long received so-called “swag” — or free gifts — often covering products in their publications shortly after receiving them. Then there are the handshake deals that regularly occur between print magazines and brands.

Visit the fashion closet at a major glossy and you’ll see a rack of clothes labelled “advertisers.” Indeed, publishing executives routinely promise editorial credits along with standard advertising buys, showing up at sales meetings with tabbed magazines to indicate where editors mentioned the brand. “Why people vilify bloggers for what has been pretty standard throughout the industry is something that perplexes me,” says one influencer, who asked to remain anonymous. That’s not to say the FTC won’t investigate print publications. “That’s native advertising as far as I’m concerned,” says Cleland.

Another point of contention is whether or not the consumer can tell if something is a paid advertisement or not. The FTC does not require disclosure on product placement in television shows because it’s not an outright endorsement. But when a celebrity stars in a brand’s advertising campaign, there is a near-universal understanding that the person is being paid, therefore the FTC sees no need for a disclosure.

Some avid followers of digital influencers likely understand their lifestyle idols receive free product and are often paid to use and wear those products. But in the words of the FTC: “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.”


“There are media consumers who are very savvy about how blogging and digital publishing works, consumers who casually follow digital publishers on social media and might not realise there's an entire industry behind it, and others who just don't care — or who do not know to care,” says writer and digital influencer Nicolette Mason. “When there's a lack of transparency and disclosure in combination with casual or passive digital consumption, advertising works as it is intended to by subliminally sending messaging about products and campaigns. On the end of the extreme, others who are more savvy may assume that everything is sponsored or paid.”

“It’s all about a relationship that you have with your followers,” adds digital influencer Chriselle Lim. “Once they trust you, it's your responsibility to be transparent, real and honest with them. The quality of our content remains the same, if not better when something is sponsored,” she continues. “If anything, with sponsorships we are able to put even more money behind the creative direction and production and my viewers and readers seem to always respond very well to sponsored content.”

Both Mason and Lim say that they are diligent when it comes to proper disclosures. Many influencers also have agents and managers that, along with negotiating contracts and devising business strategies, help to ensure their clients are following the rules. “We have conversations with our influencer clients frequently about the FTC and similar industry related topics and make sure they are aware of the specific disclosure requirements in each and every contract they enter into,” explains Vanessa Flaherty, senior vice president at the agency Digital Brand Architects. “We also have conversations with the brand or agency partner at the start of every partnership regarding specific verbiage for the disclosures.”

Flaherty says that things get tricky when influencers strike wider brand ambassador deals. “The FTC’s disclosure requirements are pretty straightforward when it comes to sponsored content, but approach a gray area when an influencer who has or had a relationship with a brand posts organic content featuring the brand, which is not specifically sponsored,” she says. “For example, if they are a brand ambassador for a company and are doing extra, organic posts because they just really love the product and/or have a content story to tell. In these situations we advise clients to err on the side of caution, but I do understand their hesitation to include disclosures when they are merely creating content which is part of their everyday editorial cycle and not sponsored.”

As for Song, who might be watched more closely given her stature: “While FTC guidelines are always changing, I follow along and disclose as needed, using hash tags and telling my readers,” she says. “The FTC guidelines are gray in certain areas though, like content that isn’t contractually sponsored. I create content multiple times a day, and very often organically include items from past or current sponsors and brands I love, but which I'm not paid to do and are not tied to a specific contract.”

To be sure, the only way for influencers and brands to avoid being taken to task — or worse, fined — for deceiving consumers is to own up to their partnerships. “These guidelines could have been written in one word: transparency,” Scafidi says. “Just disclose.”

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