The Federal Trade Commission recently settled with “TmarTn” Martin and Thomas “Syndicate” Cassell, two social media influencers who are widely followed in the online gaming community, on charges that they deceptively endorsed the online gambling service CSGO Lotto, while failing to disclose they jointly owned the company.
They also allegedly paid other well-known influencers thousands of dollars to promote the site on YouTube, Twitch, Twitter, and Facebook, without requiring them to disclose the payments in their social media posts. The settlement prohibits Martin, Cassell, and CSGOLotto, Inc. from misrepresenting that any endorser is an independent user or ordinary consumer of a product or service; and requires clear and conspicuous disclosures of any unexpected material connections with endorsers.
FTC acting Chairwoman Maureen Ohlhausen stated:
Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts. This action, the FTC’s first against individual influencers, should send a message that such connections must be clearly disclosed so consumers can make informed purchasing decisions.
She also made the following statement via Twitter:
The move coincides with the FTC sending warning letters to 21 social media influencers it contacted earlier this year regarding their Instagram posts and the release of updated staff guidance for social media influencers and endorsers.
Given that the FTC usually issues warnings before launching enforcement actions in emerging areas, this enforcement should be interpreted as a sign that hunting season has begun and influencers should heed this warning.