The Federal Trade Commission means business when it comes to regulating Instagram advertisements.

The consumer rights advocacy group Public Citizen recently complained celebrities weren’t being upfront about which of their posts were sponsored. So, the FTC responded by reviewing the photos and sending warning letters to more than 90 Instagram users. The commission has discussed its standards for advertising on social media before, but has not directly confronted the celebrities named in complaints until now.

Public Citizen wasn’t alone in its push to make sponsored content more transparent—this past summer, the nonprofit Truth in Advertising filed a complaint against the Kardashian family for “deceptive marketing.” Though the FTC won’t name which celebrities received the letters, Public Citizen also included the Kardashians in its petition, in addition to well-known Instagrammers like Rihanna, Michael Phelps, Chris Pratt, Jennifer Lopez, Lindsay Lohan, Lebron James, Drake, Mark Wahlberg, and Blake Lively.

The 113 photos Public Citizen referenced in its complaint usually show the celebrities using a product from the brand that has paid them, with an accompanying caption endorsing it. Products range from makeup and hair care from companies like L’Oreal to athletic gear from Nike and Adidas to snacks from Lay’s and Dunkin’ Donuts.

According to a release on the FTC’s website:

The FTC’s Endorsement Guides provide that 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 could be a business or family relationship, monetary payment, or the gift of a free product. Importantly, the Endorsement Guides apply to both marketers and endorsers.

The release adds that Instagrammers should be clear that their post is an ad within the first three lines of the photo caption, and should avoid writing too many hashtags that could bury disclaimers. The use of hashtags and captions like “#sp” (short for “sponsored”), “Thanks [Brand],” or “partner” do not directly communicate that the post is sponsored and can confuse followers, the FTC says.

In its Endorsement Guides, the FTC writes that ads should be “honest and not misleading”—and consumers should know when they’re reading an endorsement that has been paid-for, because it can affect the way they “[evaluate] the endorser’s glowing recommendation.”

This doesn’t mean your favorite actors, athletes and reality stars are headed to court or getting banned from Instagram anytime soon. Often, it’s the sponsor behind the post that ends up taking the heat for its sneaky ad campaigns. In July, Warner Bros. settled charges that it failed to disclose information about paying “influencers,” like Youtube star PewDiePie, to recommend one of its video games. In March, the department store Lord & Taylor settled charges over its failure to inform consumers that it had sent popular Instagram users free clothing in exchange for promotion of one of its clothing lines.

Victoria Sheridan

Victoria is an editorial intern at Law Street. She is a senior journalism major and French minor at George Washington University. She’s also an editor at GW’s student newspaper, The Hatchet. In her free time, she is either traveling or planning her next trip abroad. Contact Victoria at VSheridan@LawStreetMedia.com.

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Last week, an uproar over General Mills’ new legal terms caused a great deal of commotion, so much so that the company reversed the changes within a few days. While things have calmed down, it is nevertheless important to examine what could have been a dangerous change to consumer legal rights. 

General Mills, a major company in the food industry, recently underwent a change in its legal terms on Thursday, April 17. The affect the changes had on consumers was extremely unfair.  Under the new legal terms of General Mills, consumers that interact with the company in ways such as downloading a coupon from a website, joining their group on Facebook, enter a sweepstakes, or other such actions would have to give up their right to sue the company. Instead, costumers would be forced to solve their disputes with the company through arbitration or negotiation. Clever, right?

When asked to comment about the new policy, General Mills spokesperson Mike Siemienas noted that buying a General Mills product or ‘liking’ one of the company’s pages on Facebook would not bar an individual from suing. However, he did note that if someone liked a page in order to download a coupon, that action would constitute as ‘joining the General Mills online community’ and the right to sue would be forfeited.

Thankfully, the added language to General Mills’ legal terms evoked a strong response from consumers of the company’s brands. People took to the internet to protest the changes, and their efforts did not go without notice. It only took a few days for General Mills to revert back to their old legal terms and issuing an apology about the changes to consumers‘ rights.

If these changes were so unpopular, what could have prompted the company to issue new legal terms in the first place?

Recently, General Mills had to pay large sums of money for losses in legal suits. For example, the company paid a sum of 8.5 million dollars over a lawsuit involving the Yoplait brand’s product Yoplus. In response, the company tried to prevent other cases by preventing many of its consumers from being able to sue. The tactic here, called ‘forced arbitration,’ aims to minimize the costs of legal action taken against a company. If the General Mills’ legal changes had stayed in place, the policy would have prevented many consumers from filing suit against the company in court. Those who took such actions that would prevent them from suing under the policy would have had to enter into arbitration to settle their claim. Under forced arbitration, the arbitrator’s decision is binding, and so consumers would have also lost any chance of appeal. Moreover, under forced arbitration, individuals are not permitted to sue, enter into a class action law suit, or appeal any decision that has been reached.

It is fortunate that General Mills decided to rescind their new legal changes; however, the example is but one among many actions companies that have taken to protect themselves from potential lawsuits. While it is important to note that the voice of angry consumers can evoke changes in company policies, there are other laws and policies in effect that limit consumer legal rights.

In 2008, a Whataburger in Texas placed a sign on their window saying that once customers entered, they forfeit the right to sue the company. While this is perhaps an extreme example, there are many other companies that contain clauses in their legal terms that prevent customers from suing and entering into class action lawsuits. Public Citizen, a consumer advocate non-profit, lists on their website companies that contain such clauses in their legal terms. Among the many corporations are Comcast, Verizon, AT&T, Wells Fargo, American Express, Dell, Toshiba, Starbucks, Netflix, and the list continues.

It is alarming that there are so many companies operating in this country that contain provisions in their legal terms that basically prevent consumers from exercising their rights. When consumers enter into forced arbitration with these companies to settle claims, they are placed into binding agreements with arbitrators who usually take the company’s side.

Non-profits such as Public Citizen can only do so much to counter the tactics of large corporations. That is why it is encouraging that the response from angry consumers forced General Mills to back down on its new legal policy. The fact that so many people were outraged over the changes caused the company to realize that these legal changes could have resulted in a loss of many consumers. This example shows that consumers do have power to fight back against unfair legal policies. If people continue to band together and withhold business from companies with such policies, other changes could be forthcoming.

[New York Times] [The Atlantic] [NACA] [CNN Money] [Public Citizen]

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Sarah Helden (@shelden430)

Featured image courtesy of [ GeneralMills via Flickr]

Sarah Helden

Sarah Helden is a graduate of The George Washington University and a student at the London School of Economics. She was formerly an intern at Law Street Media. Contact Sarah at staff@LawStreetmedia.com.

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