Stay ADvised: What's New This Week, March 29
In This Issue:
- Too Many Influencers Not Calling an Ad an #Ad, Warns UK Advertising Regulator
- FTC Broadcasts Settlement With Antenna Co. Over Fake Free Cable Claims
Too Many Influencers Not Calling an Ad an #Ad, Warns UK Advertising Regulator
Who hasn't rolled their eyes at least once this week after viewing a post by a non-compliant influencer? Apparently the UK's Advertising Standards Authority (ASA) is #onit (at least in the UK).
According to a recent report, a sweep of 122 UK-based social media influencers revealed that a large majority failed to properly disclose when their content was an advertisement, in violation of the ASA's advertising codes. The ASA has further informed influencers who are not compliant that they may very soon be subject to enforcement if they do not shape up.
The ASA conducted the report as part of its increased monitoring function "to assess whether advertising content was properly disclosed" in compliance with the UK Advertising Codes' requirement that influencers clearly acknowledge advertising content as such. After spending three weeks reviewing 24,000 social posts—including 5,700 ads—on the accounts of 122 representative UK-based influencers, the ASA found that only 35 percent of ads were "clearly labeled and obviously identifiable as advertising."
The report found a lack of (or inconsistent) compliance across many influencer accounts, regardless of the advertising sector. Influencers failed to disclose ads that, in ASA's experience, were very likely to be advertising. There were some notable trends in the lack of compliance, said the ASA:
- Inconsistent disclosure across related content: Many influencers failed to label ad content across multiple related videos. "It's not enough to label the first part of the story," said the ASA, because the rest might not be "obviously recognizable as ads."
- Inconsistent disclosure across content and posts: Still-image posts would often be labeled as such, but video stories would not.
- Visibility of ad labels: Ads that did label videos as ads were often posted in small handwriting and difficult to spot. "The label must be present and be easy to spot, on desktop, mobile or other devices," said the ASA.
- Affiliate content is still an ad: Many influencers used #affiliate and #af in an apparent attempt to denote that the content was an ad, but the ASA said that was not enough. Using #ad or similar or the platform's paid disclosure tool is the best way to go.
- Ads for influencers' own brands: Where the content does not clearly state that the influencer is advertising their product with statements such as "Here is my book" or "Today we have launched my collection," the word "ad" should be placed prominently on the content.
The ASA conducted the study in the wake of a steady increase in complaints about influencer ads; in 2020, ASA saw more than a 50 percent increase in such complaints. The low compliance numbers obtained in the study were especially unacceptable given the ASA's significant work educating influencers on marketing compliance requirement, said the organization.
As many know, the FTC is currently reviewing and updating its Endorsement and Testimonial Guides, and it is significant to note that FTC Commissioner Rohit Chopra signaled an impending change in 2020 when he issued a statement signaling he believes the FTC should codify its "enforcement guides into formal rules." The UK has rules regarding influencer marketing attribution, which may serve as a guide, much as this ASA Report can also serve as a guide to influencers here in the U.S.
FTC Broadcasts Settlement With Antenna Co. Over Fake Free Cable Claims
It turns out that rabbit ears are not back (for those who remember the old days of television). Customers who purchased television antennas and signal amplifiers after seeing advertisements promoting them as a means to cancel their cable service—and get free cable—were in for an unwelcome surprise when they tried to tune in to their favorite shows and found a lot of dead air. The company that the Federal Trade Commission (FTC) alleged took advantage of consumers by making these deceptive product claims has agreed to settle FTC charges that it wildly fibbed about the performance of its antennas and signal amplifiers.
Wellco sold its TV antennas and amplifiers under different brand names, including TV Scout, SkyWire, SkyLink, and Tilt TV, but the products and the marketing were essentially the same. Since 2017, the company and its owner and CEO George M. Moscone ran the allegedly deceptive advertisements on the brand websites. A marketing agency the company hired also advertised on social media and via targeted emails, said the FTC in the complaint it filed in the Southern district of New York.
The FTC’s complaint alleged that the company made a number of unsubstantiated efficacy and performance claims about the product in its advertisements, primarily claiming that its antenna could provide customers with multiple cable channels in HD quality for free after a one-time purchase of the device. The ads further promoted the concept that customers would avoid the high cost of cable using the easy-to-operate device—all they had to do to get the free cable was “simply” plug in the Wellco antenna to the television.
The deceptive ad campaign strongly oversold the products and is a study in claims that regulators routinely find deceptive. According to the complaint, the settling defendants falsely claimed “A NASA scientist created this antenna so that the little guy could ‘fight back’ and enjoy their favorite TV shows in HD without handing over their hard-earned cash to the cable companies.” The company also represented that its product was “the #1 rated indoor HDTV antenna in America,” would permit consumers to get more channels than any other TV antenna on the market, and would work in both remote and densely populated areas.
The complaint further alleged that the company used fabricated testimonials from supposed customers who raved about the product in social media, claiming to have saved substantial sums of money by giving up their now superfluous cable. In addition to fake testimonials, the FTC alleged the company advertising intentionally mimicked news reports to add legitimacy to its claims.
Thousands of customer complaints later, there was no evidence that the product worked as advertised, said the FTC. Meanwhile, Wellco netted millions of dollars in sales thanks to its deceptive marketing misrepresentations.
The company and its CEO individually agreed to settle the claims including a $31.82 million judgment against them, jointly and severally, largely suspended upon payment of $650,000.
False claims? Check. Phony endorsements? Check. Native advertising gone wrong? Check. Liability for the corporate and individual defendants? Check. Defendants’ campaign here was worthy of a “spot the issues” law school exam and is a reminder that the FTC is always interested in consumer protection cases that can check many boxes.