Bloomberg Law
July 27, 2020, 8:00 AM

INSIGHT: Legal Pitfalls of ‘Influencer’ Marketing During the Pandemic

Michael Kurzer
Michael Kurzer
Ropes & Gray LLP
Merissa Pico
Merissa Pico
Ropes & Gray LLP
William Ognibene
William Ognibene
Ropes & Gray LLP

Consumers are spending more time online during the Covid-19 pandemic with recent studies indicating social media engagement has increased 61% over normal usage rates. Furthermore, nationwide lockdowns have made it impossible to operate traditional marketing operations, leading some companies to rely instead on “influencers” to generate content and maintain their brand image.

Increased activity on social media and use of influencers, however, comes with increased scrutiny from both consumers and regulators, especially in this uncharted pandemic environment.

In the context of social media, an “influencer” is anyone who has the power and sway to affect the purchasing decisions or other actions of their followers through the original content they upload on social media. While the type and form of influencer content varies (i.e., a picture on Instagram, testimonial video on YouTube, a blog post), the intended effect is an endorsement of a company, its product, or service.

Further, the influencer business model has proven to be uniquely effective and helpful to companies in spite of the pandemic and associated lockdown restrictions, because influencers can continue to engage with audiences and create content from home.

FTC Is Watching ‘Social Influencing’ Ads

The Federal Trade Commission is the main federal agency that oversees and enforces federal law in the marketing and advertising space. Advertisers must ensure that they and their influencers do not make misleading claims about products, especially if related to health and Covid-19.

To mitigate legal risks and meet consumer expectation of putting health concerns above profits, brands must consider how they control and monitor their message, as well as the underlying legal agreements they have in place with their influencers.

Below are some specific points to consider.

Striking the Right Tone

The Covid-19 pandemic has created new sensitivities and pitfalls for advertisers. Brands must be wary that the influencers they hire do not appear to exploit the pandemic or make light of the situation. Advertisers should monitor influencer content and build safeguards and controls into their agreements with influencers.

To ensure that they stay on message, companies can provide influencers with content guidelines that identify topics that the company believes are in line with its values and are appropriate for influencer to address, such as the company’s efforts to combat the crisis or support communities. If an influencer’s content strays from these guidelines, advertisers may wish to include a right to terminate the relationship or take down the offending post.

Taking Proper Precautions

Any influencer content should be responsive to the crisis and consistent with any legal restrictions in place. For example, multiple individuals in photos and videos should be depicted as socially distant from one another. If an influencer is using pre-recorded content that does not align with such precautions, such as a video of a large party, advertisers should consider a disclaimer stating such content was pre-recorded.

Covid-19 Products & Solutions

In general, companies must be judicious when making advertising claims about the health and medical properties of its products and services. This is especially true for those that claim to treat Covid-19. The FTC has been paying specific attention to such statements.

Since the pandemic began, the FTC has sent warning letters to approximately 200 companies which claimed that their products can treat or prevent Covid-19, but without providing competent and reliable scientific evidence. A company’s responsibility extends to their use of influencers, as companies can be liable for damages, even if such claims are made by the influencers they hire.

In March, skincare company Teami LLC faced action by the FTC, in part due to misleading claims made by the company’s influencers. The case settled for $15.2 million. Companies must ensure that their social media marketing is backed by scientific evidence and warn influencers not to make any unsubstantiated claims, especially those related to Covid-19.

Battling Counterfeit Goods

Tactics and scams aimed to deceive online consumers are on the rise, especially with counterfeit goods. Companies should consider helping consumers avoid counterfeit goods by providing education and information on how to distinguish company branded products from imposters.

Additionally, companies should be mindful of their online advertising practices during a time when many are experiencing shortages of goods. For example, a consumer who sees an online advertisement for a product that happens to be out of stock may not realize that a counterfeit equivalent is not the real product, especially if he or she just saw the advertisement on the same site.

Therefore, if a company knows that its supply of products is low or out of stock on a particular merchant platform, it should consider ceasing any advertising of such product on that particular site until its stock is replenished.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Michael Kurzer is counsel in Ropes & Gray’s intellectual property transactions practice in New York

Merissa Pico is an associate in Ropes & Gray’s intellectual property transactions practice in New York.

William Ognibene is an associate in Ropes & Gray’s corporate practice in New York.

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