Note: This article was updated on December 5th, 2019 with information from the FTC’s new online influencer publication released in November.
On September 20th, 2017 the Federal Trade Commission (FTC) hosted a live Q&A on Twitter for Social Media Influencers. While the FTC should definitely be commended for their effort, Twitter was seemingly a terrible place to host the discussion. With responses limited to 140 characters, a lot of important answers were left in sub-tweets or hidden in unlinked threads. The confusion it caused resulted in wide-spread memeing about “#ad” and disclosures.
Several people who voiced their concerns were met with accusations of deception. I mean, it’s easy, right? Just do what they say, it’s not that complicated, is it? I would like to think very few people in our industry have issues with transparency. Transparency and disclosure help build trust, both within your community and the brands you work with. Most of the streamers I spoke to already believed they were being transparent. Many were unclear on specifics such as if there’s a certain way you’re supposed to disclose. Do some rules not apply to our industry? Are the FTC Guidelines important if I’m not from the United States? Free game keys are like paid sponsorships?!
I emailed the FTC with a number of questions hoping to gain clarity on the issues surrounding our industry. Michael, the FTC staff member responsible for the Twitter Q&A, was kind enough to provide several detailed responses. It should be noted that his responses were his own informal views derived from his experience working with the FTC and hence, non-binding on the Commision.
I should also preface all this by saying I’m not a lawyer. I did, however, spend a LOT of time buried in the FTC documents, corresponding with FTC staff, and aggregating information from the #influencer101 Q&A. If you’re just here for a quick synopsis, scroll down to the bottom of the article for our handy TL; DR section. If you’re interested in more details, prepare to dig in because there’s a lot to cover.
What is the FTC?
Is our industry unregulated?
Wait, I live outside the U.S.A.
Am I too small to be an Influencer?
Vague and Confusing Guidelines
The Good News
What should I disclose?
When should I disclose?
How do I disclose?
Do I need to disclose forever?
Incidental Product Placement
What is the FTC?
The FTC is an independent agency of the U.S. government and according to their site, works “to protect consumers by preventing anticompetitive, deceptive, and unfair business practices, enhancing informed consumer choice and public understanding of the competitive process, and accomplishing this without unduly burdening legitimate business activity.” Essentially, they exist to protect consumers from unethical business practices all while not hurting business at the same time – cool! If you take a look at their organizational structure, the Bureau of Consumer Protection is the part of the FTC that collects consumer complaints and conducts investigations surrounding deceptive business practices – that includes things like disclosures or endorsements on social media. They also sue companies and individuals that break the law, develop rules to maintain a fair marketplace, and educate consumers and businesses about their rights and responsibilities.
Is our industry unregulated?
Yes, actually! When I asked the FTC about this, Michael said: “It is correct that there are no regulations with respect to influencer marketing or endorsements and the issue of disclosing material connections (business, financial, or family relationships)“. If there are no regulations, do the guidelines still apply to us? In short, yes. There’s a very broad law (Section 5 of the FTC Act) that deems “unfair or deceptive acts or practices in or affecting commerce” as unlawful. This law applies to everyone, regardless of industry regulations. The Commission and FTC staff provide interpretations of how this law applies to endorsements and recently weighed in on how they believe it applies to influencers, including streamers.
So what’s the difference between regulations and guidelines? Regulations are essentially a form of law that defines how certain legislation is enforced and applied. Guidelines, on the other hand, are departmental documents derived from legislation. While they are used to interpret laws and typically used to advise on how to comply with them, they do not have the force of the law.
With that being said, if the agency charged with suing businesses and individuals for breaking a law offers suggestions on how to best comply with their interpretation of that law, it’s probably a good idea to listen.
Wait, I live outside the U.S.A.
Well clearly if I don’t live in the U.S., the FTC can’t touch me… right? Don’t we have our own local laws to worry about? This is what I thought at first too! While you might have local laws you need to adhere to, you need to follow the FTC guidelines as well! Here in Canada, we have the Canadian Code of Advertising Standards to follow. I (wrongly) assumed that was good enough. After a bit of research, I even found their Interpretation Guidelines in which they reference the FTC’s Guide to Testimonials & endorsements for examples on how to disclose material connections. What if this wasn’t the case? As far as the FTC is concerned, if your followers are US consumers, you need to be following their guidelines. This also applies to US influencers traveling abroad, in addition to the foreign laws they may need to comply with.
The FTC actually has an Office of International Affairs that works with foreign law enforcement agencies on investigations and cases that affect U.S. consumers. As taken from their site: “Through arrangements and agreements with consumer protection agencies in foreign countries, and through multilateral organizations, we engage in information sharing and investigative cooperation for law enforcement actions. We also develop policies that promote consumer choice and encourage consumer confidence in the international marketplace, with a focus on e-commerce and emerging technologies.“
If all of that isn’t convincing enough, chances are the platform you’re streaming on requires you to follow the FTC’s guidelines as part of their TOS. As a Twitch broadcaster, I checked and sure enough here’s what the Twitch TOS has to say on the issue: “You agree that your User Content will comply with the FTC’s Guidelines Concerning the Use of Testimonials and Endorsements in Advertising, the FTC’s .com Disclosures Guide, the FTC’s Native Advertising Guidelines, and any other guidelines issued by the FTC from time to time (“FTC Guidelines”).”
Am I too small to be an Influencer?
During a follow-up thread on Twitter, the FTC started off by defining an influencer as “someone who is part of large community w/ a significant following especially online” which raised some important questions. What is considered a large community or significant following? Is this across all platforms or simply where the endorsement takes place? Are the guidelines still applicable for those outside the scope of this definition? Turns out, they only used the term “influencer” because it’s what marketers currently use to describe individuals they work with to help promote their brands, products, or services across social media. As Michael pointed out to me, “the Endorsement Guides themselves don’t even use this term, and their principles don’t depend on how many followers an endorser has”.
Vague and Confusing Guidelines
During the Q&A, a lot of people seemed to share a similar sentiment. How are we to comply with the guidelines when some of them are so vague and confusing? I asked Michael if this was due to a lack of understanding about our industry, or if the intentions of the guidelines were to provide a “good faith” effort. Here’s what he had to say: “Our guidance can’t be definitive because the particular context of any particular endorsement is so important to determine whether a disclosure is needed, and, if so, whether a particular disclosure is sufficient. Given that much of our guidance depends on consumer understanding, there will be times when we don’t have sufficient information about what consumers know, what they understand, and how they behave; moreover, all these factors may be context dependent or may change over time.“
It comes as no surprise then, that the FTC may not have a great understanding of consumers in our industry. The Endorsement Guides which were written by the Commission were last updated in 2009 – almost 10 years ago. A separate business disclosure guide called .com disclosures was last updated in 2013 and addresses how to effectively make disclosures, but not when the disclosures are needed. The staff business guidance document titled “What People are Asking” was updated in August 2017 but really fails to address live-streaming outside of “game reviews” found on YouTube. Since originally writing this article back in 2017, the FTC has created a number of additional resources to help clarify the guidelines. On November 5th, 2019, they released a short document titled Disclosers 101 for Social Media Influencers which includes live-streaming.
It seems fairly obvious the FTC has more to learn about our industry. Even if that wasn’t the case, however, the guidelines would still remain generalized. There are simply too many factors to consider to definitively state all instances a disclosure is needed. The same goes for determining if what you’re doing is even sufficient in every case. If you’re unsure about something, the safest thing is to simply disclose any material connections.
Here’s the good news
Chances are the FTC isn’t going to show up at your door tomorrow and shut down your broadcast. So long as you’re not trying to deceive consumers and making a clear effort to follow the guidelines if you make a mistake the worst that will likely happen is they will send you a letter letting you know where you need to adjust what you’re currently doing in order to better comply.
What Should I Disclose?
As streamers, often times we receive games or products for free. Sometimes these come in the form of unsolicited emails. Other times it’s because we’ve intentionally requested something from a company. Essentially, if you receive anything of value from a company, you should disclose it. How do you determine if something is “of value”? If you could reasonably expect an unaffiliated party to pay for it on the open market, it needs disclosure. While not all-inclusive, I’ve included some examples below of common reasons you’d want to disclose a relationship.
- Affiliate links: A lot of streamers utilize affiliate marketing for additional revenue. You should clearly disclose there is a benefit to you when someone uses an affiliate link.
- Game Keys: Even when only receiving a game code, as far as the FTC is concerned, that’s something you should disclose to your followers. This includes unsolicited game codes sent to you. If you decide to stream it, tweet it, etc., it needs disclosure. If this was gifted by a viewer, however, you don’t need to disclose anything.
- Products: If you’ve received something for free or at a discount, you’ll want to disclose that. This can include things that are unrelated, but from the same company that gave you the gift. For example, a developer sends you a shirt. If you end up playing any of their games, you should disclose that material connection.
- Exposure: Even when receiving something intangible, if there’s a perceived value, you should disclose that when talking about the company. For example, a company offers to feature you on their live-stream or in a product newsletter. If this is in exchange for playing their game or using their product, the disclosure of that would be necessary.
When Should I Disclose?
Here’s the thing; it’s not important if a material connection actually influences you. The question you need to ask is “could my viewers think my opinion of this game (or product, or site) is influenced by the compensation I’ve received?“. If the answer is yes, disclose. If you’re unsure, then the safest thing to do is disclose. With that in mind, here are a few examples of common places you should disclose if the stream was incentivized.
- Stream Tweets: Often times streamers will promote their stream is live with a Tweet that says what they’re playing. Even though this is done in the context of promoting the stream, not the game. (Ex. “We’re #live with more #DarkSouls3 – Come hang out! Twitch.tv/SomeChannel”) if you’re mentioning the game you should include a disclosure
- During Stream: Multiple periodic disclosures throughout the stream would suffice, as outlined in their business guidance document.
- Giveaways: When running giveaways where a company is providing the prizes, you should disclose every time you talk about it. This also applies to giveaways you’ve been incentivized to run. For example, you’re being paid to drive website traffic so you run a giveaway offering entries for link clicks.
Basically, whenever talking about a company’s products you have a material connection with, the disclosure of that connection is recommended. Unboxing videos, reviews, let’s plays and pretty much anything else you can think of.
How do I Disclose?
There are a number of things to consider regarding how to disclose a material connection. Probably the most important thing to ensure is that the disclosure is both clear and conspicuous. On social platforms like Twitter, where space is limited, “#ad” will suffice as disclosure if it meets the criteria above. If it’s buried among a bunch of other hashtags it’s not going to cut it.
To clarify, the FTC isn’t saying you must say “#ad”. It’s simply the shortest accepted way of complying with the guidelines. They also mentioned you could say anything that clearly shows a relationship between you and the company. “[XX] company gifted me this game so I could review it”, for example.
I asked the FTC if they were open to accepting other hashtags such as #PressKey, #FreeKey, or #ReviewCopy. They responded by saying “We’re open to all sorts of disclosures other than “#ad” but the hashtags you suggest all seem potentially ambiguous or hard to understand”.
- As for your stream, the disclosure should be both written and verbal. Disclosure directly within the video is important, as this is where it’s most likely to be seen and heard.
- When disclosing affiliate links, simply calling it an affiliate link may not be sufficient, according to the FTC. A better disclosure would be “If you purchase something using my link I will earn a commission.” Adding “Paid link:” right before a link or “(paid link)” right after it would also work.
- When disclosing that you’ve received a game key for free, your disclosure only needs to mention the game developer. That means if you’ve received a game via a PR platform like KeyMailer, there’s no need to mention the platform. In fact, according to the FTC, the PR company should be telling you to include the disclosure.
One question that came up a lot was the application of these guidelines to past content. If you have content that’s online without proper disclosure, the FTC suggests you go back and update that content. If for some reason proper disclosure is unable to be added, removing the content completely is an option. It’s worth noting, the Endorser Guidelines were updated in 2009 for social media, so this isn’t a new concept.
Do I Need to Disclose Forever?
If you received something for free without a sponsorship contract, is there some sort of “statute of limitations” on disclosure? A lot of streamers have been voicing concerns over game keys they may have received several years ago. Many don’t remember what they bought. Both the Twitter Q&A and Endorsement Guides mention “game review” or “recommendation” a lot, however, streamers will often play a game for potentially hundreds of hours. Is the act of just playing the game intrinsically imply a recommendation for as long as you play that game? Many games are not just single story playthroughs. As such, the “review” portion is typically limited to the first few playthroughs. How does this impact the guidelines for disclosure?
Determining if the value of something could be perceived to affect the credibility given to a recommendation isn’t easy. Is there a point where the exposure you’ve provided has essentially “paid” for the key? Perhaps this discussion also highlights the fact that many broadcasters undervalue themselves and what they do for the gaming industry. If required to indefinitely thank a game developer when playing their game, is the value being provided more obvious?
“Yes, the act of playing a game probably does imply a recommendation of the game,” Michael said in a response. “How long would it be reasonable for a streamer to make disclosures about a free game? It really depends on the expectations of your fans. If you’re choosing to play a game a year after you got it for free, it probably means you truly, genuinely like it. Would it affect the weight or credibility that your followers give your implicit endorsement if they knew you got it for free a year earlier? I don’t know the answer. There probably is a point when it wouldn’t matter, at least with respect to a $59.95 game, but I don’t know when that point is. (I think it would be a very different analysis if a car maker gave you a free car and you continued to post about it over the life of the car.)“
Ultimately, this puts the onus on you to make a judgment call on what’s reasonable. If you’re unsure, the safest thing to do would be to always disclose.
Incidental Product Placement
Sometimes streamers are given products to use in exchange for a review video, for example, a gaming chair. This chair will always be visible on stream and sometimes in images that get shared, so how is this handled? The review itself would need to disclose that it was sponsored or paid for by the company commissioning the review(s). So long as the streamer isn’t mentioning the products or otherwise endorsing/calling them out, disclosure wouldn’t be necessary. In instances like this, the FTC would consider it incidental “product placement” which doesn’t require disclosure.
I know there’s a lot of information to take in here. Not a fan of details and want a quick run-down on the key points instead?
- When receiving anything of value from an advertiser/developer/manufacturer, you need to disclose that.
- If you’re disclosing on social media with character limitations (like Twitter), “#ad” is often enough if it’s easily spotted. You can still disclose in other ways if preferable using simple, clear language.
- When streaming, both visual and audible disclosures are required. Having multiple, periodic disclosures throughout the broadcast is sufficient.
- When disclosing game keys, you need to mention the game company, not the agency that gave it to you.
- These are guidelines, not regulations, so don’t expect clear and definitive rulesets.
- Anywhere you mention a game/product/company you’re working with, you should include a disclosure.
Be sure to check out FTC.gov/influencers if you’re looking for more resources on this topic or have any additional questions we didn’t answer here.
Remember, just because something is clear to you, doesn’t mean it’s clear to your followers. Don’t forget that the FTC evaluates ads from the perspective of the consumer!