Lord & Taylor Enters Native Advertising Consent Decree

In 2009, the Federal Trade Commission updated its endorsement guidelines to, among other things, include bloggers. In 2013 it updated its DotCom Disclosure guidelines to address social media.   It issued numerous warnings before finally cracking down in 2015 in the AmeriFreight matter.

For the past several years, the Federal Trade Commission expressed increasing concern over the use of “native advertising” content that bears a similarity to the news, feature articles, product reviews, entertainment, and other material that surrounds it online.  In December 2015, the FTC it released enforcement guidelines to, in essence, say “we really mean it.

Enter Lord & Taylor which sought to promote its Design Lab apparel line through

  • paid placement in online fashion magazine Nylon of a particular paisley dress; and
  • then by a “product bomb” campaign that had fifty paid influencers wear the same dress and post it on Instagram.

Lord & Taylor’s reps pre-approved each of the influencers’ Instagram posts to make sure they included the required hashtag and Instagram designation. The company also edited some of what the influencers planned to say.

As explained in the FTC’s blog post on the case:

despite the company’s punctilious approach to hashtags, handles, and the like, Lord & Taylor was curiously silent about other key aspects of the campaign. For example, according to the FTC, Lord & Taylor’s contract didn’t require the influencers to disclose that Lord & Taylor had paid them. Furthermore, none of the Instagram posts Lord & Taylor approved included a disclosure that the influencer had received the dress for free, that she had been compensated for the post, or that the post was a part of a Lord & Taylor ad campaign.

The FTC complaint charged Lord & Taylor with three separate violations:

  • falsely representing that the 50 Instagram images and captions reflected the independent statements of impartial fashion influencers;
  • failing to disclose that the influencers were the company’s paid endorsers;
  • falsely representing that the Nylon article and Instagram post reflected Nylon’s independent opinion about the Design Lab line, when they were really paid ads.

Lord & Taylor swiftly settled and agreed to a consent decree prohibiting them from misrepresenting that paid commercial advertising is from an independent or objective source; misrepresenting that any endorser is an independent or ordinary consumer; and disclosing any unexpected material connection between itself and any influencer or endorser. Finally, it established a monitoring and review program for the company’s endorsement campaigns.