NAD Case: Influencer Material Disclosure

This NAD case is a good reminder of the importance of influencers properly disclosing material connections in the same manner that endorsement is made.

For example, suppose there is an image and no video/audio. In that case, then simply using hashtag#Ad or #(Company)Ambassador is sufficient, as long as these disclosures are not buried in a string of hashtags or below the “Read More” button. 

Now, according to the updated FTC guidelines, if an endorsement is made verbally, then the disclosure must also be made verbally. This kind of makes sense to me, but it becomes complicated when endorsements are made in Reels and Stories. Last year, FTC sent warning letters to several influencers and some sugar trade groups for not disclosing material connections in videos. I write about this here. Aside from that group of FTC letters, there hasn’t been much action with this new guidance, which is why this NAD case is so interesting. 

• From NAD case stating what the company has agreed to do. "Requiring its influencers to include a verbal notice of their partnership with ... in any video influencer material."
  

 These rules ensure that consumers are not misled, which is important as we count on the honesty of reviews to make purchasing decisions. These disclosure requirements also apply to ambassadors, investors, and family members of companies. In this case, actor Demi Moore seemed to cross this line.

• From NAC case. "... challenged a social media post by Demi Moore in which she stated that her promotion of ... was "not an ad" and failed to disclose that she is an investor in the brand.
   

 The Demi Moore example is pretty over the top, but the likelihood that the other claims would have been cited in warning letter or agency action seems relatively low. This shows that “poking the bear,” which in this case is a very large company in the antacid space, can lead to increased challenger scrutiny. When in doubt, be very careful when disrupting category leader incumbents.

Wondering what the National Advertising Division (NAD) is? Check out this post. 

There are some more interesting items in this case. Please read it here. 

Disclaimer: The educational information provided here is for informational purposes only. Contact an attorney for specific legal advice. Rule #1 in compliance is to ensure marketing is truthful and not misleading.