Page 7 - Fashion Law

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Fashion Law | MONDAY, SEPTEMBER 12, 2016 | S7
Design Lab Paisley Asymmetrical Dress, a gift to each. In advance of the “product bomb,” each and every single one of the posts was preapproved by the retailer to ensure the inclusion of the campaign hashtag, “#Design- Lab,” and the Lord & Taylor Instagram handle, “@lordandtaylor.” Famously, not one single post included any language indicating that Lord & Taylor had provided the dress as well as compensation, nor had any contract required an in uencer to disclose this infor- mation.11 It is this great failure with which the FTC took issue.
The dual purpose of the FTC, an indepen- dent agency of the U.S. government, is both promoting consumer protection, and eliminat- ing and preventing anticompetitive business practices. The FTC then operates under the assumption that the inherent bias of commer- cial speech is of critical concern to consumers in the marketplace. “Knowing the source of an advertisement or promotional message typi- cally affects the weight or credibility consum- ers give it. Such knowledge also may in u- ence whether and to what extent consumers choose to interact with content containing a promotional message.” So, in their role, the FTC issues legally binding guidelines that require advertisers and endorsers to “clearly and con- spicuously” disclose any “material connection” so that consumers can make purchasing deci- sions accordingly.12
The most unfamiliar variable in this
controversy is social media, and the FTC has adapted. In 2009, they issued a list of guidelines regarding “.com” disclosures for sponsored content, and they were updated again in 2013 and 2015 to account for newer forms of media. Such guidelines do set forth when and where disclosures are necessary; however, the speci c language to be used is not so clear. “Advertisement,” “Ad,” or “Sponsored Advertisement,” are terms pre- ferred by the FTC to indicate when there is sponsored and/or compensated content. “In collaboration with,” “In partnership with,” or “Promoted” is still too ambiguous and will not be deemed a suf cient disclosure under the FTC Act.13
When the “product bomb” hit Instagram, Lord & Taylor reached 11.4 million individual Instagram users in just two days, and gen- erated 328,000 engagements.14 News outlets soon caught wind of Lord & Taylor’s success, and a dialogue was sparked over whether con- sumers had been deceived by the campaign. Some of the 50 bloggers then appeared to edit their posts to include the hashtags “#ad,” “#sponsored,” or “#spon,” but as the Paisley dress had already sold-out, the damage had already been done.
Shortly after, the FTC led a complaint against Lord & Taylor, accusing the retailer of having engaged in unlawful misrepresen- tation.15 “For us, the concern is whether consumers recognize what they’re seeing
is advertising or not,” said Mary Engle, the FTC’s associate director of advertising practices.16 The FTC alleged that Lord & Taylor had “represented, directly or indi- rectly, expressly or by implication, that the 50 Instagram images and captions re ected
There is still an aversion to iden- tifying content as paid advertis- ing over concerns of decreased consumer engagement, but in light of the decline in consumer trust in today’s advertising, it is essential to remain transparent to ensure brand loyalty.
the independent statements of impartial fashion in uencers,” but in fact, they were neither.17 In traditional advertising, when a celebrity is featured in a brand’s advertising campaign, there is an implicit understanding that the celebrity has been paid.18 By means of Lord & Taylor’s non-traditional advertising approach, the material connection was not “reasonably expected by consumers” and there was a duty to disclose “any relationship that materially affects the weight or cred-
ibility of any endorsement.”19 Without such disclosures, consumers were wholly denied the opportunity to appropriately weight the representations made, resulting in purchases induced by deceit, a violation of the Federal Trade Commission Act.
It seems, then, that the newest gang of fashion industry outlaws is not comprised of those retailers with a few eerily familiar designs; rather, it is a hoard of heavyweight brands and popular fashion bloggers.20 It is not enough that only some, perhaps fashion insiders, might understand that professional bloggers or in uencers earn their livings by getting paid for varying degrees of endorse- ment which “consumers are likely to believe re ects the opinions, beliefs, ndings, or expe- riences of a party other than the sponsor- ing advertiser.”21 Insider knowledge does not allow bloggers and brands to avoid includ- ing “clear and conspicuous,” or “dif cult to miss” disclosures in promotional materials of varying forms.22
This past May, Lord & Taylor settled the FTC’s complaint by agreeing to a consent order that “carries the full force of law with respect to future actions,” for a period of 20 years.23 Any and each violation of this order would at minimum result in a civil penalty of up to $16,000.24 Per the consent order, Lord & Taylor is prohibited from “misrepresent- ing that paid commercial advertising is from an independent or objective » Page S19
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