Influencers Are Not Above The Law – And They Must Understand that

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Last updated on June 3rd, 2024 at 09:06 pm

The best way of doing business – sustainably, is, to be honest.

And online marketing is not any different.

I am fully aware that the allure of shortcuts and dishonest and outright rotten marketing tactics can be appealing.

I am writing this Article on the heels of a One Billion Dollar proposed class action lawsuit in the United States where several YouTubers and a creators (as influencers are sometimes called) agency are being sued for their alleged role in the promotion of the now-defunct Cryptocurrency exchange company FTX.


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The lawsuit filed by an investor in FTX claims the YouTube influencers did not disclose the nature and scope of their relationship with FTX which had paid them handsomely to promote its brand and business, in contravention of the Federal Trade Commission (FTC) and Securities Exchange Commission (SEC) advertising guidelines – that require influencers to disclose when and how much they are paid to promote products (in particular securities.)  

The result? That many people relying on these promotions invested their money in FTX – and as we know lost it.

Without discussing the merits or demerits of this lawsuit, I think it casts a spotlight on the necessity of ethics and/or a degree of responsibility among the influencer marketing community towards consumers (audiences).

There is some discomforting comfort among influencers to disregard ethics and responsibility when it comes to promoting their sponsors.

And I understand that because oftentimes, Agencies hungry for the closest form of brand association and personal feel, will require influencers not to make any form of advertising relationship disclosures – and influencers hungry for a quick buck will jump onto marketing campaigns in total disregard of ethics and their responsibility.

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Now, we are starting to see that this kind of dereliction can land influencers and agencies in legal trouble.

Remember, sometime last year, when Kim Kardashian was fined $1.3M for not disclosing she was paid $250,000 to promote crypto?

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What’s Influencer Marketing, Sponsorship Disclosures, And Their Importance

People called “influencers” have become so common with the advent of digital media and an important cog in the marketing wheel for many businesses and organizations.

Influencers like bloggers, YouTubers, and popular social media users are being relied on by marketers to reach their desired audiences in an exchange for cash or other incentives.

There are different media and formats through which influencers do this marketing.

First, if the influencer owns a media property such as a blog (I have talked about blogs in a previous article here) or a YouTube channel they can display Adverts at certain intervals during their content.

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Think of these like TV or Radio Commercials and it is usually easy for audiences to discern them as Adverts and therefore not part of the influencer’s content.

Second, and this is where problems usually arise, is when influencers do “sponsor adverts” or affiliate marketing.

Here, a company or an organization agrees with the influencer to endorse their product during the presentation of his/her content – whether it is via a social media account, blog, or video, in exchange for a fee or any other form of incentive such as a commission.

This particular kind of advertising is intended to create some direct relationship between the influencer and the product being advertised.

In traditional advertising on TV and Radio, it is not uncommon to hear presenters say things like “this program is brought to you by so and so.”

Influencer Pumla Nabachwa gives a “customer testimonial” in an Advert for Xente App, a Financial App based in Uganda. It is hard for an ordinary consumer and fan of this influencer to tell whether this is an honest review of the App or one she was incentivized to make before they decide to use the same App. Is it a coincidence that all positive “customer testimonials” adverts about this particular App are done by Influencers?

Whereas this kind of advertising creates visibility for the product being advertised, the TV or radio station doesn’t vouch for the product.

With influencer marketing, the influencer can vouch for the product – which is okay but the law says they must indicate they are being paid to do that.

It is possible for an influencer to endorse a product even when they are not being incentivized to do that – and that is still okay.

Why are Affiliate Disclosures necessary?

According to the Uganda Communications Commission’s (UCC) Advertising standards, “advertisements shall be clearly distinguishable as such, whatever their form and whatever the medium used.”

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“ In electronic media, particular care shall be taken to clearly distinguish between programme content and advertising.”

To clarify what an advertisement is, UCC goes on to say advertising is “any visual or aural communication, representation, reference or notification of any kind which is intended to promote the sale, leasing, or use of any goods or services.”

The entire law on Advertising is mainly intended to protect and safeguard the interests of the consumers (audience.)

Personally, I make a lot of purchase decisions based on the recommendations of my favorite influencers.

For example, to buy a high-budget phone, I make sure I read GSM Arena and watch Marquees Brownlee first.

When these influencers and others declare they were paid to tell me a product is good, I take their advice with a pinch of salt which enables me to make an educated and informed decision if I go ahead to make the purchase.

If they don’t?

I will be misled to believe their advice is as good as friendly advice which I am likely to trust more than advice that clearly contains a conflict of interest.

Going back to the FTX example, I would invest my hard-earned dime only for it to be lost to fraud.

What do I make of my favorite influencer after that?

For influencers, disclosure of advertisements not only protects you from unnecessary legal claims but cements your reputation as a source of information that can be trusted which buttresses your relationship with your audience and marketers as they come to value and respect you and your professionalism.

It is therefore important for marketers and influencers to understand that transparency, and honesty is key to building healthy online communities.

This requires influencers to take their work seriously and execute it with the professionalism it deserves.

Otherwise, unprofessionalism can be costly.

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