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Earlier this week at the National Advertising Division (NAD) <a href="https://asrcreviews.org/nad-annual-conference-september-23-24-2019/">annual advertising law conference</a>, Mamie Kresses, a senior attorney in the Bureau of Consumer Protection, Advertising Practices division at the Federal Trade Commission (FTC), offered her views on influencers and consumer reviews, two topics near and dear to our hearts. We wanted to share some key takeaways:

Use of Virtual and Nonhuman Influencers

Have you heard of <a href="https://www.instagram.com/lilmiquela/?hl=en">Lil Miquela</a>? She’s an Instagram model who has amassed a following to the tune of 1.6 million people and has collaborated with brands such as Burberry and Gucci. She’s even released her own music and music videos. But here’s the catch – Lil Miquela is a digital avatar, a CGI influencer that started out as a digital art project. Because she looks incredibly realistic, she presents unique issues with respect to advertising law.

What standards should apply to posts by virtual influencers like Lil Miquela (as well as nonhuman, but living, influencers, such as some of Instagram’s most popular cats and dogs)? Ms. Kresses suggested the standards really don’t change in this context, emphasizing that it is paramount to make it clear that what followers are seeing is an advertisement by using adequate disclosures. The group also recognized the inherent tension between virtual influencers making an endorsement and the <a href="https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-publishes-final-guides-governing-endorsements-testimonials/091005revisedendorsementguides.pdf">standard underpinning endorsements</a> – that they reflect the endorser’s truthful experience with the product. In other words, how can a virtual influencer actually endorse anything without being able to use the product? Ms. Kresses stressed that in this scenario, it is important to make clear not only that the post is an ad, but also that the influencer is virtual. This, she said, helps followers understand that the “authentic” post is not quite so. When asked if virtual influencer posts are inherently deceptive, Ms. Kresses stated that the FTC hasn’t taken a position yet, but the underlying principles of advertising law certainly still apply.

Consumer Reviews

A hot topic in this area is incentivized reviews, where a brand induces consumers to leave reviews. Ms. Kresses emphasized that incentivized reviews need to be clearly and conspicuously noted as such, and should be as specific to the circumstances of the incentive as possible. For example, if the brand offered free product in exchange for a review, the reviewer should disclose that he or she received the product for free. But if a reviewer received free product and was paid for the review, this additional fact must also be disclosed. Simply stating that the reviewer received free product, without mentioning the additional payment, would not be a sufficient disclosure.

The need for specificity in the disclosure also applies to employee or friend and family reviewers. Ms. Kresses said it is important to use language that clarifies the relationship or connection between the reviewer and the brand with particularity. For example, simply putting “staff review” before an employee’s review may not adequately convey the relationship between the reviewer and the brand. Ms. Kresses recommended that a more fulsome disclosure, such as “[Company name] employee review,” would make the relationship much clearer to consumers.

Ms. Kresses was asked how the FTC knows which entities to investigate when there are issues with a brand’s consumer reviews. Ms. Kresses mentioned three avenues that could lead the FTC to investigate: (i) consumer complaints, (ii) general monitoring of certain categories of products and (iii) an atypically high number of consumer reviews. The FTC receives a number of complaints each year describing scenarios in which the consumer left negative reviews for a product, only to see that the review was subsequently edited or removed altogether. Such complaints tip off the FTC and may lead to an investigation. The FTC also monitors products in particular categories with which the agency is familiar, or products that contain a certain ingredient with which the agency is familiar, to assess whether the product’s reviews comport with what the FTC knows about the product category or the particular ingredient. If the reviews contain claims that are not likely able to be substantiated, this may raise the FTC’s suspicion. Lastly, the FTC may assess whether a product is getting too many reviews, either compared with historical review numbers or in light of the product type or target consumer audience. For example, if a product is not likely to be reviewed, or historically has very few reviews, but all of a sudden is reviewed a lot, the FTC may inquire further. In a similar vein, if there is a pattern of a brand removing negative reviews, the FTC may also inquire further.

The panel also discussed the <a href="https://www.ftc.gov/enforcement/statutes/consumer-review-fairness-act">Consumer Review Fairness Act</a>, under which the <a href="https://www.ftc.gov/news-events/press-releases/2019/05/ftc-announces-first-actions-exclusively-enforcing-consumer-review">FTC has brought</a> <a href="https://www.ftc.gov/news-events/blogs/business-blog/2019/06/consumer-gag-clauses-totally-not-awesome-under-crfa">five cases</a> to stop brands from unlawfully including non-disparagement clauses in their form contracts with consumers. Ms. Kresses’s bottom line was clear: “Brands cannot censor truthful but less-than-stellar reviews.”

FTC on Influencers and Consumer Reviews from the NAD Conference