Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

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Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.In 2023, Lawrence seconded at Amazon Lab126, where he led the negotiation of high-profile licensing deals for a variety of Amazon device teams. The secondment was an immersive opportunity to gain additional insights and experience from the perspective of in-house counsel. Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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SCOTUS Age-Gates the Internet: Free Speech Coalition v. Paxton and the Future of Adult Content Regulation

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Here at Socially Aware, we <a href="/topics/social-links-social-media-account-ownership-once-again-in-the-spotlight" target="_self">have been discussing</a> issues around ownership of social media accounts since the beginning of social media. Just last July, we reported on how a bankruptcy court in Florida forced the founder and former CEO of Bang Energy to delete disparaging comments from his Instagram account and ultimately <a href="https://caselaw.findlaw.com/court/us-ban-crt-s-d-flo-for-lau-div/2289548.html" target="_blank">ruled</a> that the company owned the Instagram, TikTok, and X (formerly Twitter) accounts at issue. Prior to the Bang case, a number of other cases addressed these issues, with varying results, which is unsurprising given the varying facts around creation and use of social media accounts by businesses and business professionals. See some of our other <a href="/topics/which-side-are-you-on-employers-and-employees-battle-over-ownership-of-social-media-accounts" target="_self">coverage of social media ownership litigation</a>.Today, we are looking at a recent Second Circuit case, <a href="https://law.justia.com/cases/federal/appellate-courts/ca2/21-2535/21-2535-2024-01-17.html" target="_blank" dir="ltr">JLM Couture, Inc. v. Hayley Paige Gutman</a>, where a fashion designer and her former employer wrestled over ownership of Instagram and Pinterest accounts that the fashion designer created and used for both business and personal brand purposes.BackgroundIn July 2011, JLM Couture, Inc. engaged Hayley Paige Gutman to design a line of bridal wear. The employment contract included several restrictions on Gutman, including that: (a) Gutman would not use her name in commerce once JLM registered it as a trademark; (b) certain broad categories of Gutman’s work would be JLM’s property as works for hire; and (c) she would abide by certain noncompete, nonsolicit, and nondisclosure obligations during the term of the contract and for five years thereafter. JLM and Gutman agreed to extend the contract through August 1, 2022 but, following further negotiations in 2019, failed to agree on any further extensions. Following the breakdown in negotiations, Gutman changed the passwords to her Instagram and Pinterest accounts, refused to give JLM access to the accounts, and notified JLM that she would no longer post JLM-related content to the accounts. JLM then sued Gutman for, among other things, breach of contract, conversion, and trespass to chattels based on Gutman’s taking control of the accounts.Gutman personally created both accounts in 2011 and 2012, using her own name as a handle and with her personal contact information. JLM did not require Gutman to open the accounts, although JLM argued that she had created them within the scope of her employment. The district court agreed that Gutman created the accounts to showcase JLM’s products, which she featured in her earliest posts, interspersed with posts of a more personal nature. Over time, the accounts became more JLM-focused, featuring product pictures and JLM event information. In addition, the accounts’ messaging features were used to respond to sales inquiries. Notably, other JLM employees had access to manage the accounts.Prior to this appeal, the case had already gone through a series of decisions and appeals, resulting in a preliminary injunction that, among other things, gave JLM control of the accounts and enjoined Gutman from competing with JLM until the end of the contract term in 2022. When Gutman posted teasers to the Instagram account about her new bridal brand, the district court held her in contempt, ordered her not to post any “similar content,” and assessed a $5,000/day penalty while she remained out of compliance. In this appeal, the Second Circuit reviewed that contempt order.Second Circuit DecisionGutman argued, and the Second Circuit agreed, that the district court was in error to give JLM control of the accounts. The district court had used a six-factor test to determine the proper owner of a social media account, as follows:<ol><li dir="ltr">whether the account handle reflects the business or entity name;</li><li dir="ltr">how the account describes itself;</li><li dir="ltr">whether the account was promoted on the entity’s 	advertisements or publicity materials;</li><li dir="ltr">whether the account includes links to other internet platforms of the entity;</li><li dir="ltr">for what purpose the account was used, including whether it was tied to promotional or mission-oriented activities of the entity; and</li><li dir="ltr">whether employees or members of the entity had access to the account and participated in its management.</li></ol>Based on this analysis, the district court determined that JLM had a “clear likelihood” of success on demonstrating that it owned the accounts or, even if Gutman had title to the accounts, that JLM had a “vastly superior” right to control the accounts.The Second Circuit concluded that the district court’s use of the six-factor test was an error. Despite social media being a relatively new technology in the eyes of the law, the Second Circuit determined that there was no reason here to deviate from traditional principles of property law. The Second Circuit noted that the district court’s failure to start its analysis by looking at who owned the accounts at their creation was one problematic result of this error. The court went all the way back to a case that most law students read in their first-year property law class, <a href="https://history.nycourts.gov/case/pierson-v-post/" target="_blank" dir="ltr">Pierson v. Post</a> (a case from 1805 deciding the ownership of a fox), among other venerable precedents, to spell out the principle that the proper ownership analysis consists of determining (a) who owned the property originally; and (b) whether those rights were later transferred to someone else.The Second Circuit then went on to hold that Gutman clearly owned the accounts at their creation if she originally created them using her personal information and for her personal use (a factual issue for the district court to decide on remand). If Gutman did own the accounts at their creation, the next question is whether JLM later acquired the accounts by operation of the contract. The Second Circuit makes clear that this question does not turn on whether Gutman assigned specific content to JLM under the contract, or whether others were permitted to assist in managing the accounts. In a rebuke to the district court, the Second Circuit said:Determining ownership by reference to such principles would promote transfer by surprise and complicate contractual arrangements under which an account owner might agree to advertise another’s goods on his or her platform.The contract allocated ownership of the following materials to JLM as works for hire: “designs, drawings, notes, patterns, sketches, prototypes, samples, improvements to existing works, and any other works conceived of or developed by [Gutman] in connection with her employment with [JLM] involving bridal clothing, bridal accessories and related bridal or wedding items.” (Emphasis added.) The district court interpreted the accounts to be “other works” under this language, and therefore held that Gutman had transferred ownership of the accounts to JLM.The Second Circuit rejected the district court’s analysis based on ejusdem generis, a general principle of contract construction that requires that general terms at the end of a list include only objects similar to the specific items in the list. The Second Circuit noted that the listed items were all creative materials that Gutman might produce in her work as a designer, consisting primarily of copyrightable subject matter. A social media account, in contrast, does not share any of those attributes. Therefore, the Second Circuit instructed the district court to reassess the ownership question using the proper ownership test and the foregoing principles, with the strong inference that it might then conclude that Gutman is the legal owner of the accounts.ConclusionIn Gutman, the Second Circuit endorsed a test of social media account ownership that is perhaps not as simple as it seems. In broad terms, the Gutman analysis requires us to look at who owned the account when it was created, and then see if it was later transferred or assigned to someone else. Given the court’s reference to determination of initial ownership by the circumstances of its creation, including whether it was created for personal use, this analysis is inherently fact-driven and will likely not have a clean answer in a world where influencers tend to leverage their personal lives for business gains.Notably, the Second Circuit’s approach implicitly accepts that a social media account is property in the first instance, a proposition that prior courts have not always been sure about, even though they generally accept the principle as a matter of convenience. For example, in <a href="https://caselaw.findlaw.com/court/us-ban-crt-s-d-flo-for-lau-div/2289548.html">In re: Vital Pharmaceutical</a> (the Florida bankruptcy case mentioned above), the bankruptcy court noted:<blockquote dir="ltr">Describing a user’s interest in a social media account is difficult. With respect to some sites, such as TikTok and Twitter, a social media user’s right to use the platform is defined as a “license.” But, in some cases, such as Instagram, that right is not defined at all. For ease of reference, the Court will refer to “ownership of the rights to social media accounts” to encompass whatever rights a user has—whether it be a license or otherwise—to access and use a social media account.</blockquote>Despite these issues, Gutman may enable other courts to streamline their analysis of these issues. While it is not necessarily easy to determine whether an account was owned by an employee or a company at creation, knowing that a court will ultimately rule on ownership of the account according to traditional principles of property law should enable both employees and companies to enter into employment contracts that make ownership of social media accounts more predictable, by, for example, expressly assigning social media accounts used for any company business to the company (note that it would be fairly simple for a company to include language in its employment contract eliminating the ejusdem generis issue described above), implementing strict procedures for creation of such social media accounts, and/or requiring the employee to promise to use company-related social media accounts only in certain ways.

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.

Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.

Aaron Rubin

Here at Socially Aware, we have been discussing issues around ownership of social media accounts since the beginning of social media. 

Owned: Second Circuit Holds That Traditional Principles of Property Law Apply to Social Media Accounts

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Social media continues to dominate the headlines this spring, with several high-profile events capturing the media’s, regulators’, and lawmakers’ attention.Jack Owoc, founder and former CEO of Bang Energy (“Bang,” a performance energy beverage), claimed that he retained the rights to control Bang’s social media accounts, namely Instagram, TikTok, and Twitter. Owoc claimed that these accounts were intertwined with his own personal brand and therefore belonged to him.The courts and Vital Pharmaceuticals (“Vital”), Bang’s manufacturer, saw things differently. In March, U.S. Bankruptcy Judge Peter D. Russin for the Southern District of Florida blocked Owoc from the accounts; in April, Owoc was forced to delete disparaging comments he made on his Instagram handle @BangEnergy.CEO about advisers who were trying to sell the bankrupt energy drink maker. (Vital, Bang’s parent company, filed for bankruptcy in October 2020.) In March 2023, Vital removed Owoc as CEO, replacing him with John C. DiDonato.Social media account ownership was a hot topic about a decade ago, with several high-profile cases such as <a href="https://cases.justia.com/federal/district-courts/california/candce/3:2011cv03474/243145/28/0.pdf" target="_blank">PhoneDog v. Kravitz</a>, <a href="https://law.justia.com/cases/federal/district-courts/new-york/nysdce/1:2011cv05013/382292/30/" target="_blank">Ardis Health, LLC et al. v. Nankivell</a>, <a href="https://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1153&context=historical" target="_blank">Eagle v. Morgan</a>, and Maremont v. Susan Fredman Design Group LTD,which we discussed here in the 2013 article <a href="https://www.jdsupra.com/legalnews/ownership-of-business-related-social-med-52890">“</a><a href="https://www.jdsupra.com/legalnews/ownership-of-business-related-social-med-52890" target="_blank">Ownership of Business-Related Social Media Accounts</a>.” We provided additional coverage of similar work-related social media account ownership issues in our 2012 post, “<a href="https://www.sociallyawareblog.com/topics/which-side-are-you-on-employers-and-employees-battle-over-ownership-of-social-media-accounts" target="_blank">Which Side Are You On? Employers and Employees Battle Over Ownership of Social Media Accounts</a>.”In addition, we’ve had our eye on other aspects of the social media fabric for more than a decade. In two 2014 posts (“<a href="https://www.sociallyawareblog.com/topics/whats-in-a-like_01" target="_blank">What’s in a Like</a>” and “<a href="https://www.sociallyawareblog.com/topics/she-liked-it-she-really-really-liked-it-federal-district-court-holds-facebook-fan-page-manager-doesnt-own-likes" target="_blank">She Liked It. She Really, Really Liked It: Federal District Court Holds Facebook Fan Page Manager Doesn’t Own ‘Likes’</a>”), we discuss the value of social media “likes” as assets, including likes as protected speech, as property, and as concerted activity. We reviewed cases such as <a href="https://www.ca4.uscourts.gov/Opinions/Published/121671.P.pdf" target="_blank">Bland v. Roberts</a> and <a href="https://www.docketalarm.com/cases/Florida_Southern_District_Court/0--13-cv-61582/Mattocks_v._Black_Entertainment_Television_LLC/101/" target="_blank">Mattocks v. Black Entertainment Television</a> that respectively raised issues of likes as protected speech and likes as property.The recent events of the Bang matter have reignited the conversation around social media account ownership and control. In addition, when a company and its owner/founder are closely aligned, if not synonymous, as was the case with Owoc and Bang, it raises additional questions where the line between a company and a person’s brand identity rests.

Social Links: Social Media Account Ownership Once Again in the Spotlight

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions.











Anthony Ramirez

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Clients seek out Julie because of her practical advice on cutting-edge issues at the intersection of privacy and consumer protection laws. She provides clients with practical solutions to compliance c

Julie O'Neill

Clients seek out Julie because of her practical advice on cutting-edge issues at the intersection of privacy and consumer protection laws. She provides clients with practical solutions to compliance challenges around a wide variety of both online and offline privacy issues, including tracking, interest-based advertising, geo-targeting and other mobile tracking, personalization, and cross-device tracking. Recognized in The Legal 500 US 2014, 2016, 2019, and 2020 and Chambers USA 2021 for her exceptional legal work, her clients praise her saying, “She is really good at giving practical, targeted advice and taking stock of what the risk profile of the client is, so that the advice is holistic.” (Chambers USA 2021).

Social Links: Social Media Account Ownership Once Again in the Spotlight

Social media continues to dominate the headlines this spring, with several high-profile events capturing the media’s, regulators’, and lawmakers’ attention.

In an attempt to shut down free speech online, Turkey enacted a law that requires social media platforms with more than a million daily users in Turkey to open an office there or assign a representative who is legally accountable to Turkish authorities. Among other things, the law also requires companies to respond within two days to complaints about posts that “violate personal and privacy rights.” <a href="https://www.theguardian.com/world/2020/sep/27/its-a-war-on-words-turks-fear-new-law-to-muzzle-social-media-giants" target="_blank" rel="noopener noreferrer">Learn what social media companies risk</a> if they don’t comply.Significantly deviating from his former choices for FCC Commissioner, President Trump nominated Nathan Simington to replace current Republican Commissioner Mike O’Reilly. Unlike previous nominees, who were not heavily involved in technology policy, Simington “played a significant role in drafting” an order instructing the FCC to limit Section 230 of the Communications Decency Act’s protections for technology companies, according to The Verge. Find out <a href="https://www.theverge.com/2020/9/15/21438820/fcc-donald-trump-nominate-nathan-simington-commissioner-social-media-section-230-order" target="_blank" rel="noopener noreferrer">why Trump revoked O’Reilly’s nomination for a third term</a>.Spending on advertising in general plummeted in Q2 of 2020 compared to the same quarter last year, with newspaper ad spend dropping by nearly 50% and radio ad spend dropping by about 42%. On the other hand, the dip in social media ad spend was far less significant. Analysts attribute advertisers’ continued interest in social media to COVID-19, saying that social media use skyrocketed during quarantine. <a href="https://www.mediapost.com/publications/article/356423/q2-ad-spending-analysis-reveals-major-share-increa.html?utm_source=newsletter&utm_medium=email&utm_content=headline&utm_campaign=119982&hashid=icw4eEcCBUZXM8pArHBIb_YN6sc" target="_blank" rel="noopener noreferrer">Find out how little social media’s advertising revenue dropped</a> in Q2 2020.Some of YouTube’s top earners are children. France just passed a law to limit the hours they work and place their earnings in a bank account until they turn 16. You won’t believe <a href="https://www.bbc.com/news/world-europe-54447491" target="_blank" rel="noopener noreferrer">the staggering amounts of cash some of these kids rake in</a>.Harvard Law School has a new social media policy precluding students from posting statements made in class together with enough information to make the speaker identifiable by someone who was not present in class. <a href="https://www.abajournal.com/news/article/harvard-law-introduces-social-media-policy-about-classroom-statements" target="_blank" rel="noopener noreferrer">Learn the school’s reason</a> for implementing this new policy.A private investigator in Sacramento, California—where a new law classifies COVID-19 as an “injury” under workers’ compensation when certain circumstances apply—is <a href="https://gooddaysacramento.cbslocal.com/2020/09/22/employers-private-investigators-employees-covid-19-work/" target="_blank" rel="noopener noreferrer">using people’s social media posts as evidence</a> that they didn’t contract COVID-19 at work.“<a href="https://mashable.com/article/doomswiping-doomscrolling-dating-apps/?utm_source=webpush&utm_medium=notification" target="_blank" rel="noopener noreferrer">Doomswiping</a>” is the latest dating-app trend.

Turkey’s new social media law; social media ad spend; Harvard Law School’s social media policy

In an attempt to shut down free speech online, Turkey enacted a law that requires social media platforms with more than a million daily users in Turkey to open 

Turkey’s new social media law; social media ad spend; Harvard Law School’s social media policy

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Discovery

Free Speech

China’s “internet police,” who coordinate online censorship, have <a href="https://www.nytimes.com/2020/03/16/business/china-coronavirus-internet-police.html" target="_blank" rel="noopener noreferrer">become especially busy</a> since the coronavirus outbreak.Inspired by homicides that were precipitated by social media posts created by one group of teenagers to incite another, a Florida bill would allow law enforcement to charge juveniles with a misdemeanor for posting photos of themselves with firearms online.In an effort to control the proliferation of “<a href="https://techcrunch.com/2020/02/12/uk-names-its-pick-for-social-media-harms-watchdog/" target="_blank" rel="noopener noreferrer">a broad range of online harms</a>”—from cyberbullying to child exploitation—the UK government has chosen the communications watchdog Ofcom as its first pick for enforcing its plan requiring platforms to take “reasonable” measures to protect their users from those harms.Two-and-a-half years after the EU initiated an optional code of conduct on online hate speech, the percentage of flagged content that gets reviewed within 24 hours by the platforms that have opted in <a href="https://www.cnet.com/news/the-eus-approach-to-tackling-hate-speech-might-actually-be-working/" target="_blank" rel="noopener noreferrer">has risen considerably</a>.Unlike the rest of the European Union, which has adopted an opt-in code of conduct to address the online hate-speech problem, Germany is proposing legislation that would impose hefty fines on social media platforms that fail to report illegal content such as posts that are related to terrorism or qualify as racial incitement. <a href="https://www.cnet.com/news/germany-wants-social-media-companies-to-proactively-report-illegal-content-to-police/" target="_blank" rel="noopener noreferrer">Read how much they risk having to pay</a>.As the demand for “aspirational” influencers gives way to a desire for “authenticity,” <a href="https://www.vanityfair.com/style/2020/04/influencers-coronavirus-arielle-charnas-escape-new-york">influencers who chronicled their COVID-19 coping efforts drew ire</a> for privileged behaviors including fleeing town to sit out the quarantine in vacation towns where they risk spreading the virus.

Social Links: Online censorship in China; Florida legislation to thwart gang activity online; influencers criticized for breaking quarantine rules

China’s “internet police,” who coordinate online censorship, have become especially busy since the coronavirus outbreak. Inspired by homicides that were precipi

Social Links: Online censorship in China; Florida legislation to thwart gang activity online; influencers criticized for breaking quarantine rules

European Union

Cyberbullying

In a move that might be part of a <a href="https://www.sociallyawareblog.com/2019/09/11/general-audience-google-youtube-to-pay-170-million-for-alleged-coppa-violations/" target="_blank" rel="noopener">settlement that YouTube has entered into with the Federal Trade Commission</a>, the video-sharing site said it will <a href="https://www.bloomberg.com/news/articles/2019-08-20/youtube-plans-to-end-targeted-ads-to-kids-to-comply-with-ftc" target="_blank" rel="noopener">ban “targeted” advertisements on videos likely to be watched by children</a>. Because targeted ads rely on information collected about the platform’s users, displaying such ads to children younger than 13 without parental permission violates the Children’s Online Privacy Act (COPPA). Until now, YouTube has avoided banning targeted ads on its primary site, arguing that children should only be using YouTube Kids, a site that is free of targeted ads.Twitter announced plans to change several aspects of its platform. One of the new features that the company is researching would allow users to control who—if anyone—may respond to their tweets. Inspired by Twitter’s desire to give users control over how far their tweets spread, the feature should be available later this year. Read about <a href="https://www.theverge.com/2020/1/8/21056856/twitter-replies-limit-option-compose-screen-beta-app-features-new-ces-2020" target="_blank" rel="noopener">other plans that the platform has in store</a>.In anticipation of the 2020 election, Facebook said it will remove from its platform <a href="https://www.theguardian.com/technology/2018/nov/12/deep-fakes-fake-news-truth" target="_blank" rel="noopener">deep fakes</a>, heavily altered content likely to mislead Facebook’s users.Supporters of <a href="https://www.law.cornell.edu/uscode/text/47/230" target="_blank" rel="noopener">Section 230 of the Communications Decency Act</a>, which protects online platforms from liability for user-generated content, are playing defense again, this time from House Speaker Nancy Pelosi, who wants the statute’s language sheltering web companies from liability stripped from the <a href="https://www.wsj.com/articles/deal-on-u-s-mexico-canada-trade-pact-takes-shape-pelosi-says-11573764500?mod=article_inline" target="_blank" rel="noopener">United States’ trade pact with Mexico and Canada</a>. <a href="https://www.wsj.com/articles/nancy-pelosi-pushes-to-remove-legal-protections-for-online-content-in-trade-pact-11575503157?utm_source=newsletter&ns=prod/accounts-wsj" target="_blank" rel="noopener">Find out why</a>.New York State Governor Andrew Cuomo proposed legislation that would make it a crime for convicted sex offenders to misrepresent themselves online. It also would require sex offenders to disclose to the Division of Criminal Justice Services the screen names they use for each of their social media accounts, dating apps and gaming apps.Tesla chief executive Elon Musk’s tweet using the phrase “pedo guy” to refer to a man who had insulted Musk during a television interview did not amount to defamation, a California federal court jury found. Learn the <a href="https://www.nytimes.com/2019/12/06/business/elon-musk-defamation-verdict.html" target="_blank" rel="noopener">basis of their decision</a>.As we <a href="https://www.sociallyawareblog.com/2019/10/07/a-dating-platforms-alleged-fraud-a-decline-in-the-popularity-of-popularity-metrics-tiktoks-unique-ai/" target="_blank" rel="noopener">reported late last year</a>, in an effort to protect users’ mental health, the social media platform Instagram is phasing out popularity metrics such as “likes.” With such popularity metrics invisible to users, follower engagement—which brands use to determine an influencer’s value—will be demonstrated mostly in the form of comments. Because, on Instagram, comments are largely driven by captions, the quality of captions will be a major factor in determining which influencers continue to be successful on that platform despite the fact that it is primarily visual, <a href="https://www.bbc.com/worklife/article/20191119-why-instagram-captions-are-important" target="_blank" rel="noopener">one columnist argues</a>.Speaking of influencers, eight-year-old Ryan of Ryan’s World makes earning a living as an influencer look easy, having raked in $26 million in 2019 by posting videos like the one of him running around his garden to scoop up plastic eggs with toys inside them. But, <a href="https://www.bbc.com/news/technology-50835222?intlink_from_url=https://www.bbc.co.uk/news/technology&link_location=live-reporting-story" target="_blank" rel="noopener">the BBC</a> reports, Ryan is something of an “outlier,” and “96.5% of YouTubers <a href="https://www.sociallyawareblog.com/2016/05/19/cash/" target="_blank" rel="noopener">don’t make enough</a> from advertising revenue alone to break the US poverty line.” <a href="https://www.bbc.com/news/technology-50835222?intlink_from_url=https://www.bbc.co.uk/news/technology&link_location=live-reporting-story" target="_blank" rel="noopener">Find out the names</a> of the other top-ten highest earning influencers.

Social Links: YouTube bans some targeted ads; big changes afoot on Twitter; Facebook plans to remove ‘deep fakes’

In a move that might be part of a settlement that YouTube has entered into with the Federal Trade Commission, the video-sharing site said it will ban “targeted”

Social Links: YouTube bans some targeted ads; big changes afoot on Twitter; Facebook plans to remove ‘deep fakes’

Defamation

Section 230 Safe Harbor

COPPA

The high-end skincare brand Sunday Riley has settled lawsuits filed by the Federal Trade Commission claiming that the brand’s founder encouraged employees of her eponymous company to set up accounts “under different identities” on the cosmetics retail site Sephora.com and leave positive reviews for Sunday Riley’s products. The FTC filed the complaints after the agency conducted an investigation that was prompted by a whistle blower’s post on REDDIT last year. <a href="https://www.nytimes.com/2019/10/22/us/sunday-riley-fake-reviews.html" target="_blank" rel="noopener">Read about the settlement’s lenient terms</a>, which two of the FTC’s five commissioners don’t believe are severe enough to deter other companies from attempting to post fraudulent reviews online.Last month four senators—three Democrats and one Republican—<a href="https://www.forbes.com/sites/washingtonbytes/2019/10/22/the-access-act-promises-to-benefit-consumers/#2222238429e4" target="_blank" rel="noopener">introduced a bipartisan bill</a> to require communications platforms to provide their users with a means of exporting the data that their users have accumulated on the platforms, such as friends lists. The <a href="https://www.axios.com/senators-target-social-media-giants-with-data-portability-bill-222fc800-28ae-4917-8c06-ed55d809ff4a.html" target="_blank" rel="noopener">rationale</a> behind the legislation: making it easier for smaller platforms to compete with the likes of social media giants like Facebook and YouTube. Legislation like this is intended to benefit consumers and would require “<a href="https://www.forbes.com/sites/washingtonbytes/2019/10/22/the-access-act-promises-to-benefit-consumers/#3b66fe13429e" target="_blank" rel="noopener">operability standards to be revised</a>” as interfaces evolve, writes Forbes columnist Robert Seamans. The real challenge, he argues, would be determining the types of data covered by the legislation.<a href="https://blog.twitter.com/en_us/topics/product/2019/more-control-over-your-conversations-globally.html" target="_blank" rel="noopener">Twitter announced</a> it will extend to all of its users around the world the “Hide Replies” feature that it first <a href="https://techcrunch.com/2019/07/17/twitter-officially-launches-its-hide-replies-feature-initially-to-users-in-canada/" target="_blank" rel="noopener">tested in Canada in July</a> and then <a href="https://techcrunch.com/2019/09/19/twitter-launches-its-controversial-hide-replies-feature-in-the-u-s-and-japan/" target="_blank" rel="noopener">rolled out in the United States and Japan in September</a>. The feature allows users to “hide” any replies to their tweets. However, other Twitter users may view and respond to hidden replies by clicking a grey icon that appears on the tweets. <a href="https://blog.twitter.com/en_us/topics/product/2019/more-control-over-your-conversations-globally.html" target="_blank" rel="noopener">Twitter’s blog reports</a> that the platform’s test runs of the Hide Replies feature revealed that “27% of people who had their Tweets hidden said they would reconsider how they interact with others in the future,” and Twitter posters who hid replies “may want to take further action after [they] hide a reply, so now [Twitter will] check to see if you want to also block the replier.” This isn’t the first <a href="https://www.sociallyawareblog.com/2017/02/24/social-links-google-maps-gets-social-twitter-puts-trolls-in-time-out-todays-teens-take-to-chat-rooms/" target="_blank" rel="noopener">action that Twitter has taken to control trolls</a>, and the <a href="https://blog.twitter.com/en_us/topics/product/2019/more-control-over-your-conversations-globally.html" target="_blank" rel="noopener">platform’s blog promises</a> that it won’t be the last.Influencer culture has infiltrated the world of cybersecurity, with the Twitter accounts of several popular experts in that increasingly prominent field running ads for Lenovo’s “ThinkShield” line of products and services. VizSense, an influencer marker, reached out to the influencers, who included journalists, a former intelligence operative, and experts in areas like artificial intelligence, each with more than 10,000 Twitter followers apiece. <a href="https://www.axios.com/influencer-marketing-comes-to-cybersecurity-1a89489e-657b-4bc8-a42b-d1b9000ae2c0.html" target="_blank" rel="noopener">Find out why the campaign sparked controversy in the cybersecurity community</a>.Speaking of influencers, guess what <a href="https://www.bloomberg.com/news/articles/2019-11-05/becoming-an-influencer-embraced-by-86-of-young-americans" target="_blank" rel="noopener">Bloomberg reports</a> is now the number one career aspiration of the “overwhelming majority” of young Americans? Sigh.

Social Links: FTC fights fraudulent online product reviews; Twitter takes another swipe at trolls; Influencers affect everything from cybersecurity to career choices

The high-end skincare brand Sunday Riley has settled lawsuits filed by the Federal Trade Commission claiming that the brand’s founder encouraged employees of he

Social Links: FTC fights fraudulent online product reviews; Twitter takes another swipe at trolls; Influencers affect everything from cybersecurity to career choices

Online Reviews

Cybersecurity

The Federal Trade Commission is trying yet another approach to convey the message that the relationship between a social media “influencer” and the brand he or she is endorsing must be disclosed. This new guidance from FTC staff takes the form of a <a href="https://www.ftc.gov/news-events/press-releases/2019/11/ftc-releases-advertising-disclosures-guidance-online-influencers?utm_source=govdelivery" target="_blank" rel="noopener">brochure</a> (with accompanying <a href="https://vimeo.com/370971397" target="_blank" rel="noopener">video</a>) aimed directly at influencers. It bluntly states that influencers “must comply with the law” when working with brands to recommend or endorse products and provides “tips on when and how to make good disclosures.”The brochure is a distillation of the <a href="https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-publishes-final-guides-governing-endorsements-testimonials/091005revisedendorsementguides.pdf" target="_blank" rel="noopener">FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising</a> (the “Endorsement Guides”), as well as subsequent FAQs, guidance, and related materials. Arising out of the prohibition under <a href="https://www.federalreserve.gov/boarddocs/supmanual/cch/ftca.pdf" target="_blank" rel="noopener">Section 5 of the FTC Act</a> on unfair and deceptive acts or practices, the Endorsement Guides require advertisers and endorsers (i.e., influencers) to, among other things, clearly and conspicuously disclose when the advertiser has provided an endorser with any type of compensation in exchange for an endorsement. This type of arrangement is what the Endorsement Guides describe as a “material connection,” meaning “a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience).” The new brochure delivers this message as follows: “Telling your followers about these kinds of relationships [i.e., material connections] is important because it helps keep your recommendations honest and truthful, and it allows people to weigh the value of your endorsements.”As we have <a href="https://www.sociallyawareblog.com/2018/03/06/ftc-quest-better-influencer-disclosure/" target="_blank" rel="noopener">noted previously</a>, in recent years the FTC has—through enforcement actions, press releases, guidance, closing letters, and letters sent directly to endorsers (including prominent public figures)—made clear its belief that: (1) appropriate disclosures by influencers are essential to protecting consumers; and (2) in too many instances, such disclosures are absent from celebrity or other influencer endorsements. While the FTC initially focused on marketing firms and brands that used endorsers but allegedly did not disclose material connections, this latest guidance strongly suggests that the FTC’s attention is now focused squarely on influencers themselves. Indeed, the brochure states (with emphasis in the original) that:As an influencer, it’s your responsibility to make these disclosures, to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads. Don’t rely on others to do it for you.So what, according to FTC staff, should influencers do to meet this responsibility? In answer to this question, the brochure provides bullet-point summaries of when and how influencers should disclose a material connection.When to DiscloseAccording to the FTC, influencers should disclose when they have any financial, employment, personal, or family relationship with a brand. A financial relationship is not limited to payment but also includes discounts and receipt of anything else of value to mention a product. The FTC also cautions that an endorsement is not limited to verbal or written narratives but may include things like tags, likes, pins, and other ways of showing that someone likes a brand or product. And, even if an influencer thinks his or her evaluation is unbiased or assumes his or her followers already know about the influencer’s relationship with the brand, the material connection still must be disclosed.While the FTC does not appear to be breaking any new ground here, these statements should help influencers — and the marketing firms and brands that work with them — understand the basic requirements for marketing products and services using social media endorsers.How to DiscloseThe brochure’s instructions on how to disclose a material relationship are not inconsistent with more formal FTC guidance, but rather lay out the requirements in simple terms, such as that:<ul><li>Influencers should ensure that disclosures are “hard to miss” — that is, visible and understandable <ul><li>The disclosure should be placed with the endorsement itself, rather than elsewhere, such as in a profile page or anywhere the consumer is required to click “More”</li><li>The disclosure should stand alone and not be mixed into a group of hashtags or links</li><li>Endorsements in images (e.g., Instagram Stories) should include disclosures superimposed on the image and visible long enough for viewers to notice and read them</li><li>Similarly, disclosures for endorsement videos should be in the videos themselves and not only in the description of the video.</li><li>For endorsements made via livestream, the disclosure should be repeated periodically “so viewers who only see part of the stream will get the disclosure”</li></ul> </li></ul><ul><li>The disclosure should be in simple and clear language, such as “Thanks to Acme brand for the free product” or using terms like “advertisement,” “ad,” and “sponsored” — and not vague or confusing terms like “spon,” “collab,” or a standalone “thanks”</li></ul>While the FTC has turned its attention to influencers, all participants in the online advertising ecosystem should consider this guidance and the related FTC efforts to ensure compliance with the Endorsement Guides. Companies that use social media influencers should consider the policies and procedures they have in place or need to develop to ensure that they and their vendors and influencers meet the FTC’s expectations. And influencers should understand that the FTC believes they have an independent obligation to understand, and comply with, these disclosure requirements — and that they may face liability for failing to do so.

11_20_sociallyaware_600x600-300x300.jpg

Influencing the Influencers: FTC Staff Release “Disclosures 101” Guidance for Online Endorsers

Influencing the Influencers: FTC Staff Release “Disclosures 101” Guidance for Online Endorsers

The Federal Trade Commission is trying yet another approach to convey the message that the relationship between a social media “influencer” and the brand he or 

Singapore has enacted a law granting government ministers the power to require social media platforms to completely <a href="https://www.theguardian.com/world/2019/oct/02/chilling-singapores-fake-news-law-comes-into-effect" target="_blank" rel="noopener">remove or place warnings alongside posts the authorities designate as false</a>.Unlike the compensation earned by child stars who perform on television, in films, or on other traditional media in California, the income generated by children who perform on social media—“kidfluencers”—<a href="https://www.hollywoodreporter.com/news/why-child-social-media-stars-need-a-coogan-law-protect-parents-1230968" target="_blank" rel="noopener">still isn’t protected under California law</a>.The Federal Trade Commission is suing Match Group, the owner of dating sites including Match.com, Tinder, OkCupid and Plenty of Fish, for allegedly tricking hundreds of thousands of Match.com users into subscribing by <a href="https://www.ftc.gov/news-events/press-releases/2019/09/ftc-sues-owner-online-dating-service-matchcom-using-fake-love" target="_blank" rel="noopener">disingenuously implying that their profiles were getting a lot of attention</a> from other users.Speaking of dating sites, OKCupid is auditing photos posted by its users and <a href="https://NYPOST.COM/2019/09/18/PLENTY-OF-FISH-AND-OTHER-APPS-ARE-GOING-FILTER-FREE/" target="_blank" rel="noopener">banning the ones that employ filters</a>.Instagram and Facebook are testing the practice of <a href="https://www.nytimes.com/2019/09/26/technology/facebook-hidden-likes.html?action=click&amp;module=Well&amp;pgtype=Homepage&amp;section=Technology" target="_blank" rel="noopener">making the “likes” on a person’s posts invisible to other users</a>. Some marketers say that eliminating engagement metrics such as “likes” will have a <a href="https://www.nytimes.com/2019/09/26/technology/facebook-hidden-likes.html?action=click&amp;module=Well&amp;pgtype=Homepage&amp;section=Technology" target="_blank" rel="noopener">significant effect on the influencer marketing industry</a>.<a href="https://www.businessinsider.com/facebook-instagram-youtube-killing-like-subscribers-2019-9?r=US&IR=T?utm_source=copy-link&utm_medium=referral&utm_content=topbar&utm_term=desktop" target="_blank" rel="noopener">YouTube is modifying its popularity metrics too</a>, citing a concern for its users’ mental health.Also motivated by concern for their users’ wellbeing, Instagram and Facebook have adopted <a href="https://www.theverge.com/2019/9/18/20872711/instagram-weight-loss-cosmetic-procedures-restrictions-policy-wellness-influencer-marketing" target="_blank" rel="noopener">a new policy</a> regarding posts promoting weight loss products and certain types of cosmetic surgery.Based in China, the social media network TikTok is incredibly popular, having been downloaded more than 104 million times in the United States since its U.S. debut in 2017. Although the network has sparked controversy in several ways—including its parent company’s $1 billion spend on ads to achieve TikTok’s meteoric rise—the revolutionary artificial intelligence that the network employs to gather data about its users <a href="https://medium.com/fast-company/is-tiktok-a-time-bomb-cad748509941" target="_blank" rel="noopener">might be the biggest cause for concern</a>, according to Hootsuite CEO Ryan Holmes.Librarians are not happy with LinkedIn. <a href="https://www.cnbc.com/2019/08/28/linkedin-change-to-learning-tools-registration-upsets-librarians.html">Here’s why</a>.Is antagonizing your brand’s competition on social media a sound marketing strategy? It <a href="https://www.nytimes.com/2019/08/21/business/popeyes-chicken-sandwich-twitter.html?fallback=0&recId=1Q42uFs1kQYfT2EET72OfUbWHsN&locked=0&geoContinent=NA&geoRegion=NJ&recAlloc=story&geoCountry=US&blockId=home-featured&imp_id=493912177&action=click&module=editorsPicks&pgtype=Article&region=Footer" target="_blank" rel="noopener">worked for Popeye’s</a> last summer.

A dating platform’s alleged fraud; a decline in the popularity of popularity metrics; TikTok’s unique AI

Singapore has enacted a law granting government ministers the power to require social media platforms to completely remove or place warnings alongside posts the

A dating platform’s alleged fraud; a decline in the popularity of popularity metrics; TikTok’s unique AI

First Amendment

Artificial Intelligence

Fraud

A <a href="https://mashable.com/article/australia-laws-social-media-violence/" target="_blank" rel="noopener">new law in Australia</a> makes a social media company’s failure to remove “abhorrent violent material” from its platform punishable by significant fines. The law also states that the executives at social media companies who fail to remove the content could be sentenced to jail time.The European Parliament voted to approve the Copyright Directive, a directive that, although vaguely worded, affords copyright holders significant new protections online, and requires online platforms to police content more thoroughly than ever before. Find out exactly <a href="https://www.cnn.com/2019/03/26/tech/eu-copyright-article-13/index.html" target="_blank" rel="noopener">what impact industry advocates predict the law will have</a>, and how long it will be until it’s implemented.Learn how companies can <a href="https://www.law.com/2019/03/27/whats-next-biometrics-law-101-the-lawsuits-are-coming-does-a-new-copyright-law-mean-extinction-for-memes/?slreturn=20190305155141" target="_blank" rel="noopener">collect and use biometric data</a> without becoming an easy target for litigation, according to my co-editor Julie O’Neill and our colleague Max Phillip Zidel.As part of the <a href="https://www.sociallyawareblog.com/2018/03/06/ftc-quest-better-influencer-disclosure/" target="_blank" rel="noopener">FTC’s continuing efforts to ensure consumers are aware of when an online endorser has been compensated</a> in connection with an endorsement, <a href="https://www.mediapost.com/publications/article/334124/ftc-settles-with-snack-box-sender-over-online-revi.html" target="_blank" rel="noopener">the agency recently settled a complaint against a subscription service that allegedly offered its product for free</a> to consumers who posted positive online reviews.In the wake of <a href="https://www.entrepreneur.com/article/331719" target="_blank" rel="noopener">reports about social media influencers purchasing fake followers</a> and fake likes, as well as <a href="https://www.huffpost.com/entry/instagram-celebrity-sponsored-content-federal-law_n_5ca01661e4b0474c08cfbe22" target="_blank" rel="noopener">failing to adequately label endorsed content</a>, online celebrities are <a href="https://www.theguardian.com/media/2019/apr/05/its-genuine-you-know-why-the-online-influencer-industry-is-going-authentic" target="_blank" rel="noopener">embracing more relatable posts</a>, potentially in an effort to appear more trustworthy.To better compete with digital media platforms, the top 40 television markets in the United States will introduce a <a href="https://www.mediapost.com/publications/article/334255/new-broadcast-standard-poised-to-enable-interactiv.html?utm_source=newsletter&utm_medium=email&utm_content=headline&utm_campaign=113460&hashid=icw4eEcCBUZXM8pArHBIb_YN6sc" target="_blank" rel="noopener">broadcasting standard that will enable interactive and targeted advertising</a>.Snap Inc., whose Snapchat app currently excludes users younger than 13 but generally does not verify ages, has announced that it is <a href="https://www.bloomberg.com/news/articles/2019-03-19/snapchat-owner-says-it-may-tighten-controls-on-underage-users">working with British lawmakers to prevent underage children from signing up for its service</a>.What’s up with <a href="https://www.fool.com/investing/2019/04/10/4-questions-we-still-have-about-googles-new-gaming.aspx" target="_blank" rel="noopener">Google’s new streaming game platform</a>?A photographer is suing supermodel Gigi Hadid for copyright infringement for <a href="https://people.com/style/gigi-hadid-sued-again-posting-photo-without-permission/" target="_blank" rel="noopener">posting a photo of herself to Instagram</a>.<a href="https://www.shots.net/news/view/compose-a-jingle-for-breathable-boxer-briefs-and-win-10k" target="_blank" rel="noopener">Fruit of the Loom is holding a contest on Instagram</a> in search of the best jingle for their Breathable Boxer Briefs. See how much the underwear manufacturer promises to award the winning songwriter.

Social Links: An EU law to protect copyright owners online; collecting biometric data without running afoul of the law; influencers’ attempts to appear more authentic

A new law in Australia makes a social media company’s failure to remove “abhorrent violent material” from its platform punishable by significant fines. The law 

Social Links: An EU law to protect copyright owners online; collecting biometric data without running afoul of the law; influencers’ attempts to appear more authentic

Copyright

Compliance

Litigation

In the last few years, as advertising has followed consumers from legacy media such as television to online video and social media platforms, the <a href="https://www.law360.com/agencies/federal-trade-commission" target="_blank" rel="noopener">Federal Trade Commission</a> has been attempting to ensure that participants in this new advertising ecosystem understand the importance of complying with the FTC’s “<a href="https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-publishes-final-guides-governing-endorsements-testimonials/091005revisedendorsementguides.pdf" target="_blank" rel="noopener">Guides Concerning the Use of Endorsements and Testimonials in Advertising</a>,” or the endorsement guides. The endorsement guides require advertisers and endorsers (also referred to as influencers) to, among other things, clearly and conspicuously disclose when the advertiser has provided an endorser with any type of compensation in exchange for an endorsement.A failure to make appropriate disclosures may be a violation of <a href="https://www.federalreserve.gov/boarddocs/supmanual/cch/ftca.pdf" target="_blank" rel="noopener">Section 5 of the Federal Trade Commission Act</a>, which prohibits unfair or deceptive acts or practices. In recent enforcement actions, press releases, guidance, closing letters and letters sent directly to endorsers (including prominent public figures), the FTC has made clear its belief that: (1) appropriate disclosures by influencers are essential to protecting consumers; and (2) in too many instances, such disclosures are absent from celebrity or other influencer endorsements.Given the repetition of this message, it is apparent that the FTC believes it is still not being heard. With influencer marketing campaigns showing no signs of losing popularity, it would not be surprising if the next step the FTC takes is to bring an enforcement action against a major celebrity, as well as the brand or brands with which the celebrity is associated. So, with the FTC on the prowl, brands, advertisers and marketing companies should all be making sure they have a compliance program in place to increase the likelihood that the FTC makes its splash elsewhere. In this post, we recount how the FTC has gotten to where it is today and, thus, why it might be heading for a celebrity enforcement action next.In the BeginningThe FTC’s activity in the endorsement and influencer space is grounded in its endorsement guides, which outline how the FTC believes a business may lawfully use consumer and other endorsements in its advertising. The endorsement guides provide, in relevant part, that any “material connection” between an endorser and an advertiser—in other words, a connection that might affect the weight or credibility that consumers give the endorsement—must be clearly and conspicuously disclosed. The FTC’s thinking is typified by this example from its endorsement guide FAQs:Say you’re planning a vacation. You do some research and find a glowing review on someone’s blog that a particular resort is the most luxurious place he has ever stayed. If you knew the hotel had paid the blogger hundreds of dollars to say great things about it or that the blogger had stayed there for several days for free, it could affect how much weight you’d give the blogger’s endorsement. The blogger should, therefore, let his readers know about that relationship.The scope of a material connection, as stated in the endorsement guides and as interpreted by the FTC, including in the FAQs, is quite broad. It includes, for example, a business relationship, a payment, a gift or a sweepstakes entry. The scope of actors subject to the rules is also quite broad: it includes advertising and marketing companies that facilitate campaigns on behalf of advertisers (i.e., brands), those advertisers/brands themselves, and the endorsers or influencers acting on behalf of the marketing companies or brands. As discussed below, the FTC’s enforcement actions have involved each of these types of participants in influencer marketing activities.First, the Marketing FirmsThe FTC’s efforts to regulate this ecosystem began in late 2014 when the FTC brought its first enforcement action specifically related to social media activity (though this case also included straightforward allegations of deceptively made statements). The FTC alleged that the advertising firm Deutsch LA Inc. engaged in deceptive activities relating to the promotion, through <a href="https://www.law360.com/companies/twitter-inc" target="_blank" rel="noopener">Twitter</a>, on behalf of its client Sony, of the PlayStation Vita handheld gaming console.In a story that would become familiar over the next few years, the <a href="https://www.ftc.gov/system/files/documents/cases/1503deutschcmpt.pdf" target="_blank" rel="noopener">FTC’s complaint</a> alleged that company employees responded to a request from an assistant account executive at the company to use their personal Twitter accounts to post positive comments about the Sony console, each using the “#gamechanger” hashtag. The complaint includes examples of the employees’ tweets, such as, “One thing can be said about PlayStation Vita…it’s a #gamechanger.” The FTC alleged that the employees’ tweets were deceptive because they falsely purported to be endorsements from actual users of the Sony gaming console. Moreover, the fact that the tweets were written by employees of Sony’s ad agency would have been material to consumers in making decisions about whether to purchase the console. For this reason, the tweeters’ failure to disclose their connection to Deutsch LA (and, in turn, to Sony) was allegedly deceptive.In September 2015, the FTC brought a very similar case against Machinima Inc., an online entertainment network. Machinima allegedly paid video bloggers to promote the <a href="https://www.law360.com/companies/microsoft-corporation" target="_blank" rel="noopener">Microsoft Xbox One</a> system by producing and uploading to <a href="https://www.law360.com/companies/youtube-inc">YouTube</a> videos of themselves playing Xbox One games. The FTC alleged that Machinima did not require any disclosure of the compensation the influencers received and that many videos lacked any such disclosure. Because the payments would not be reasonably expected by YouTube viewers, the failure to disclose them was deceptive in violation of Section 5.Then, the BrandsIn connection with the Machinima matter, the <a href="https://www.ftc.gov/system/files/documents/closing_letters/nid/150902machinima_letter.pdf" target="_blank" rel="noopener">FTC also issued a closing letter</a> reflecting that it had also investigated Microsoft and its advertising agency Starcom in relation to the influencers’ videos. (Starcom managed the relationship with Machinima.) Even though the FTC did not ultimately take action against Microsoft (or Starcom), the closing letter made clear the FTC’s position that a company whose products are promoted bears responsibility for the actions of its ad agencies — as well as the actions of those engaged by its ad agencies. In particular, Microsoft avoided an enforcement action because it had a “robust” compliance program in place that included specific guidance relating to the FTC’s endorsement guides and because Microsoft made training relating to the endorsement guides available to employees, vendors and personnel at Starcom. (The FTC also subsequently updated its endorsement guides FAQs to formalize the expectations that were foreshadowed in the closing letter, including the statement that “[a]dvertisers need to have reasonable programs in place to train and monitor members of their network.”)Consistent with its incremental approach, the FTC followed these actions with its first complaint against a brand for its use of social media influencers. In early 2016, the FTC alleged that <a href="https://www.law360.com/companies/lord-taylor-llc" target="_blank" rel="noopener">Lord & Taylor</a> gifted a dress to 50 “fashion influencers” and paid them to post photos of themselves wearing the dress on their <a href="https://www.law360.com/companies/instagram-inc" target="_blank" rel="noopener">Instagram</a> accounts. According to the FTC, Lord & Taylor’s role in the promotional effort was not appropriately disclosed. The FTC thus alleged that the company violated Section 5’s prohibition on deceptive practices by, among other things, failing to disclose that the influencers’ Instagram posts did not reflect their independent and impartial statements, but rather were specifically created as part of an advertising campaign in which they were paid to participate.The FTC followed the Lord & Taylor action with <a href="https://www.ftc.gov/news-events/press-releases/2016/07/warner-bros-settles-ftc-charges-it-failed-adequately-disclose-it" target="_blank" rel="noopener">a similar settlement</a> relating to a company’s alleged failure to disclose that it had paid online influencers to post positive reviews in YouTube videos and on social media. Here, while the company allegedly instructed influencers to provide a written disclosure that videos were sponsored, they did not “require that the YouTube influencers be instructed to place a sponsorship disclosure clearly and conspicuously in the video itself.”Taken together, these actions show how the FTC has moved incrementally, starting with matters involving standard-fare alleged deceptive practices by marketing companies that also involved social media endorsements, and then escalating to enforcement actions against brands based on specific failures to include disclosures in a specific manner.To Individual Endorsers (Sort Of)Having covered two of the major parts of the social media advertising ecosystem, the logical next step for the FTC is individuals who are paid to make endorsements. Here, as with previous actions, the FTC has started (relatively) conservatively with an enforcement action announced in September 2017 against a company—and two of its officers—in connection with endorsements made by the officers in YouTube videos and social media. The company, CSGO Lotto Inc., runs an online virtual currency gambling website. The <a href="https://www.ftc.gov/system/files/documents/cases/1623184_csgolotto_complaint.pdf">FTC alleged</a> that the company provided two individuals (who were also owners and officers of the company) with free virtual currency to gamble on the site and that the two did not disclose their material connections to the company when they promoted it online. For example, both of the individuals created YouTube videos promoting CSGO Lotto and disseminated tweets linking to their videos and directly promoting the site (e.g., “Bruh … I’ve won like $8,000 worth of CS:GO Skins today on @CSGOLotto I cannot even believe it!”).The FTC’s allegations in this case are similar to those of the previous influencer cases, such as that the company failed to include appropriate disclosures of sponsorship in YouTube videos. But, the FTC also alleged that the officers of the company—who were named individually in the complaint — engaged in violation of Section 5 as influencers by, among other things, failing to disclose that they were owners/officers of the company, which “would be material to consumers in their decisions regarding using CSGO Lotto.”What’s Next?The CSGO Lotto case sets the stage for an enforcement action against an influencer alone. Perhaps to drive home the point, the FTC accompanied its announcement of its settlement of that case with<a href="https://www.ftc.gov/news-events/blogs/business-blog/2017/09/three-ftc-actions-interest-influencers" target="_blank" rel="noopener"> the disclosure that it had sent follow-up letters to 21 influencers</a> who, in April 2017, had received letters from the FTC regarding brand endorsements. The FTC noted that it asked the recipients to tell the FTC whether “they have material connections to the brands” in social media posts the FTC flagged and, if so, “to spell out the steps they will be taking to make sure they clearly disclose their material connections to brands and businesses.”Given the FTC’s activity in this space, the parameters for running an influencer campaign that complies with Section 5 are becoming well established. To help mitigate the risk of being the FTC’s next example, some practical considerations include:<ul><li>Implementation of a process for obtaining signed and dated acknowledgements of disclosure and related obligations from each influencer with a material connection (which may include, for example, a paid relationship, a professional relationship, or free goods or services);</li><li>An explicit requirement that the endorser make clear and prominent disclosures of the material connections between the endorser and the advertiser;</li><li>A process for monitoring and reviewing social media influencers for compliance; and</li><li>Maintaining the right to immediately terminate the arrangement in light of noncompliance.</li></ul>Influencers should also understand that they must clearly and conspicuously disclose their affiliations with the brands that they promote, above the jump in the post or video. And all companies that use social media influencers should consider the policies and procedures they have in place or need to develop to ensure that they, their influencers and any other parties they work with in this space are meeting the FTC’s expectations. If they don’t, they risk falling victim to the FTC’s next efforts to promote itself as the top cop on the endorsement beat.*    *    *Editor’s note: This piece originally appeared in <a href="https://www.law360.com/articles/1014039/the-ftc-s-quest-for-better-influencer-disclosures">Law360</a>.