Scandal prompts FTC to crack down on social media influencers

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Scandal prompts FTC to crack down on social media influencers

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Scandal prompts FTC to crack down on social media influencers

The Federal Trade Commission building in Washington, D.C.

Image: Alex Brandon/AP/REX/Shutterstock

By Kellen Beck2017-09-08 18:07:57 UTC

The Federal Trade Commission (FTC) settled charges against individual social media influencers for the first time Thursday, setting a new precedent: influencers need to unambiguously disclose their connections to brands and companies they are promoting.

Thursday's settlement specifically requires two YouTubers — Trevor "TmarTn" Martin and Thomas "Syndicate" Cassell — to clearly disclose relationships with brands they promote in the future. Along with that settlement, the FTC revealed Thursday that it has sent these warning letters to 21 unnamed Instagram influencers stating that connections between themselves and the products they are endorsing "should be clearly and conspicuously disclosed" per the FTC's Endorsement Guides.

The FTC updated their Endorsement Guides on Thursday to reflect their more defined stance against social media influencers not disclosing their connections to brands they promote, and provided a clear list of dos and don'ts for influencers:

• Clearly disclose when you have a financial or family relationship with a brand

• Don't assume followers know about all your brand relationships

• Ensure your sponsorship disclosure is hard to miss

• Don't assume disclosures built into social media platforms are sufficient

• Treat sponsored tags, including tags in pictures, like any other endorsement

• Don't use ambiguous disclosures like "Thanks," #collab, #sp, #spon, or #ambassador

• On image-only platforms like Snapchat, superimpose disclosures over the images

• Don't rely on disclosures that people will see only if the click "more"

The FTC added that the 21 warning letters sent to Instagram influencers were follow-ups on 90 educational letters sent in April, detailing what individuals need to do to avoid charges from the FTC. 

Most sites like Instagram already include rules for users posting endorsements, but they aren't as well-defined as the FTC's guidelines.

The FTC's guidelines stand for anyone who would be considered an influencer on social media

The scandal with YouTubers Martin and Cassel that started it all began back in July 2016 when internet sleuths discovered that the two YouTubers — who regularly made videos and published tweets promoting a gambling website related to the game Counter-Strike: Global Offensive -- were the owners of that same website: CSGOLotto. 

Here's how the now-defunct, third-party gambling site CSGOLotto worked: CS:GO players who collected cosmetic weapon skins in the game could put up their skins against another gambler's skins, and a digital coin toss would determine who the winner of the whole pot was. 

Although there's no real money exchanging hands, individual CS:GO skins are worth anything from $1 to over $1,000. Skins themselves can be obtained through randomly dropped loot crates (opened with a key that costs $2.50) or purchased through the Steam community marketplace. The rarest and most attractive skins can easily be sold for hundreds of dollars.

YouTubers Martin and Cassell posted multiple videos of themselves winning huge pots on their own website without disclosing that they owned it, and the FTC alleges that the two paid other influencers thousands of dollars to promote CSGOLotto across multiple platforms without disclosure. This pattern began in late 2015, and many tweets and videos relating to CSGOLotto from these individuals have been deleted. 

After the scandal broke, CS:GO developer Valve sent out cease and desist letters to two dozen gambling sites associated with its games, including CSGOLotto.

The FTC's guidelines stand for anyone who would be considered an influencer on social media, including people on YouTube, Instagram, Twitter, Facebook, Twitch, and Snapchat. There's a possibility that influencers who violate these guidelines could be charged, especially those who have already been warned.

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September 8, 2017 at 01:23PM