What is the most important social media marketing law? If you pay people to promote products or services on social media, do they have to label their posts? What if you don’t give them money, but instead discounts or other in-kind compensations?

Below, we’ll answer the above social media marketing law questions, and review a few other relevant legalities.

Dress Sold Out, But No #ad Disclosure

In 2015, Lord & Taylor launched a wildly successful marketing campaign. A testament to the power of social media promotions, the retailer paid fifty fashionistas to tweet, ‘gram, and otherwise social-media themselves in the same dress.

The garment sold out in 24 hours.

The problem? Most of the participants failed to use an #ad or #sponsor tag. The lack of disclosure flouted FTC guidelines.

Are #Ad or #Sponsor Disclosures A Must?

What are the rules? Is it essential to use an #ad or #sponsor tag when promoting something on social media, for pay, discount, or a mutual back-scratch?

Unfortunately, the rules aren’t cut and dry. In fact, they’re murkier than a Florida swamp – a fact that causes severe headaches for fashion marketers. As Danielle Wiley of the Sway Group explained, “When brands see a successful campaign like this without the ugly little ‘ad’ disclosure…they want the same thing for themselves.”

Social Media Marketing Law: The Guidelines

According to the Federal Trade Commission (the nation’s official “consumer watchdog”), if a party is compensated, in any way, for a social media promotion, that fact should be disclosed. The common way of doing so is adding either an “ad” or “sponsor” hashtag to the post, tweet, or ‘gram.

The rub? The FTC’s recommendations are only guidelines, which means the rules are, shall we say, fluid. What does that mean, practically speaking?

• It’s a crap shoot whether or not you’ll be sanctioned for NOT using #ad or #sponsor disclosures on paid social media promotions.
• Though there is no hard-and-fast federal law regarding the use of online marketing disclosures, there are enforceable rules regarding “unfair and deceptive marketing,” which the FTC can use to severely fine violators.

See what we mean by murky? The lack of formal regulations – coupled with the existence of quasi-governmental guidelines – results in marketplace confusion. Some companies and marketers are sanctioned and fined for disregarding promotional guidelines; some entities are caught, but only get a slap on the wrist. And, still, others get away scot-free.

Don’t Blame The Marketer

The current state of murky online promotional guidelines is causing consternation for many marketing firms. Some have even been fired for following them!

But here’s the rub: if marketers continue to shirk guidelines, a draconian law may take its place – one that will have businesses begging for the simple #ad or #sponsor hashtag requirement.

Speak With A Digital Marketing Lawyer

Kelly / Warner Law has an active – and successful – online marketing division. We help hundreds of startups and businesses with their Internet and mobile promotions. To read more about online marketing legalities, head here. To speak with one of our experienced marketing lawyers, get in touch.

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Kelly / Warner handles social media marketing law issues. We represent startups and businesses from a variety of industries.