Clothiers and disclosure (Best of 2016)
First posted on May 6, 2016.
The newest group of potential outlaws in the fashion industry is not made up of tax evading Italian design houses. Instead, it is a slew of big-name brands and famous bloggers teaming up for promotional purposes that are consistently choosing to blatantly disregard the provisions of the Federal Trade Commission (“FTC”) Act.
Not up on the FTC Act? It is a federal law that aims to prevent unfair methods of competition, and misleading or deceptive acts or practices in the marketplace. In furtherance of this law, the FTC requires advertisers and endorsers to disclose material connections (think: payments or free products in exchange for representation of the brand, etc.) that they share so consumers can be made aware and make purchasing decisions accordingly. Thus, when a celebrity or influencer has been paid to endorse a product or service and they fail to disclose that fact, both the advertiser and endorser may be liable.
The most novel aspect of all of this is social media. Yet, the FTC has adapted to the development of social media advertising. In March 2013, for instance, the FTC updated its “DotCom Disclosures” Guidelines, in which it emphasizes that consumer protection laws apply to both traditional media and social media. And the FTC is prepared to go after those in violation. We saw this recently in the case that the FTC launched against Lord & Taylor in connection with its Design Lab campaign, in which it called upon (and paid) 50 influencers to post photos of themselves wearing a Lord & Taylor dress.
As such, in order to avoid violating the FTC Act, the FTC suggests using “#Ad”, “Ad:” or “Sponsored” in tweets or Instagram photos to indicate that a post or link within a post includes sponsored and/or compensated content, and by placing clear disclosures near the beginning of blog posts or videos, as well. (Note: “In collaboration with” and “In partnership with” language is still too ambiguous for the FTC and will not be deemed a sufficient disclosure! And merely disclosing on one post is not okay, either. The FTC has specifically stated that disclosures must be repeated). It really is that easy! And yet, brands and bloggers continue to disregard the law.
Interesting, no? I mean, the whole thing of it, interests-wise.
Here’s what I mean. Julie is surely right about what the FTA Act says. I don’t know first hand because I’ve never looked at it other than seeing what other lawyers have said, because no one has ever asked (a) for my advice about it or (b) for me to blog about something in exchange for goodies, even for wearing a dress, and, (c) because of another reason I am going to discuss below. But it sounds right to me, as does Julie’s point about the application of all this to social media, both as a matter of the logic of the FTA’s rules and its own interpretation of those rules:
[G]iven the influence of social media stars . . . nearly any contract they sign either explicitly or implicitly comes with the expectation that they will promote the event and/or draw a following to the event based on their influencer status. This is exactly why brands sign on to do projects with influencers. As such, I think it is very safe to say that anyone would be facing a very uphill battle of they wanted to show that the social media posts here fall outside of the scope of the FTC’s disclosure requirements.
Now, before I get back to all this, here is (c): I think this regulation is a bunch of baloney. And I said so before the FTC fully stuck its big federal nose in our business, when, back in 2007, I wrote the following in the New Jersey Law Journal:
Almost two years ago, the blogosphere — the community, or group of communities, of ardent blog writers, commentators and readers — hiccupped with the discovery that a top liberal blogger, Markos Moulitsas Zúniga, of the DailyKos.com blog, a vocal supporter of the Howard Dean campaign during the 2004 election, had been a paid consultant to Dean. The blogosphere erupted with that characteristically exaggerated self-importance bloggers love to show, in this case in a debate over whether, how and what had been disclosed.
[But b]eing paid to express an opinion is not so different from being affected by one’s likelihood of getting tenure, a promotion or a choice committee assignment. The real difference between bias occasioned by cash and that occasioned by social, professional or other ambition is that one is merely liquid, and this distinction [does] not by itself prove a need for a particular standard of disclosure or transparency.
No one was moved. The FTC, as Julie notes, went full speed ahead with its regulations, and has enforced them with some regularity.
Anyway, yeah, the FTC should do all that, because if the regulations are in place, they should be applied fairly, across the board. There’s nothing clunkier to editorial rhythm than disclosure language … um, I would imagine. So if this one has to include it, so should that one. You can’t disagree with Julie about this point.
But she goes further than this — so far, and so vociferously, that you have to be … interested … just whose ox is being gored in this VERY LONG post by a (fabulously successful) fashion (law) blogger about what other (maybe more fabulously more successful) fashion (not law) bloggers are getting away with, when in a post where she demonstrates that she is not in the slightest bit fooled about what exactly is going on here, Julie writes the following:
According to a post on Levi’s website:
So, how will you 501® this 5/01? Levi’s® is setting up in New York City to capture the unique styles of 501® fans this Sunday, May 1, in collaboration with Man Repeller’s Leandra Medine and street fashion photographer Phil Oh. The event is an opportunity for our fans to get styled and photographed by some of the best in the business and celebrate the versatility of the 501® jean and the personal stories that they have associated with their own pairs.
From this little blurb, it is obvious – at least to the business/legal-minded among us – that Levi’s sponsored the event, and that both Medine and Oh were compensated for their participation. The fashion insiders reading know that professional bloggers/influencers earn a living by getting paid for attending events just like this. While this fact may be obvious to some of us, the FTC has been very clear in indicating that such insider knowledge does not allow bloggers and brands to avoid including “clear and conspicuous” disclosures in their promotional materials, whether they be blog articles or social media, etc. In short: if such posts are being used for commercial purposes (aka to advertise something, such as a product or an event) and the posts are likely to appear to the average consumer as anything other than an ad, they are required to include a “clear and conspicuous disclosure” alerting consumers to the fact that it is an advertisement.
And the “average consumer,” see, is — not like us businessy-legal-brained savants – a idiot.
Wait, there’s more! The Fashion Law goes on to more or less scream to the FTC waiving a Chanel scarf to get its attention in the hope that it will indict these miscreants and turn these runway walkers into perp walkers:
So, given the influence of social media stars, such as Medine, nearly any contract they sign either explicitly or implicitly comes with the expectation that they will promote the event and/or draw a following to the event based on their influencer status. This is exactly why brands sign on to do projects with influencers. As such, I think it is very safe to say that anyone would be facing a very uphill battle of they wanted to show that the social media posts here fall outside of the scope of the FTC’s disclosure requirements.
This leaves Levi’s open to investigation and potential legal ramifications by the FTC for not ensuring that Medine and Oh made the required disclosures. And while the FTC is not in the business of going after influencers (yet), Medine and Oh, with their expansive influence and level of sophistication in terms of blogging and social media, could also be held accountable, as the FTC has the ability to charge influencers right along with brands.
THERE’S MORE TO IT THAN JEANS
In light of such potential violations, it is tempting to ask: Why does any of this matter? Well, aside from the fact that failure to abide by the FTC Act is a violation of federal law, and in most cases is done with willful disregard for the law (and not a mere mistake), such failure to disclose goes against the premise that consumers should be given adequate information regarding non-traditional advertisements. . . .
Okay! Okay! We get it! Bad stuff happening right here and if the law doesn’t stop it consumers will get confused because as everyone knows fashion writers and promoters, whether in social media or otherwise, are never on any kind of the take at all!
Thought no one, ever. Especially no one who ever read the unsparing, incisive harsh that emanates from The Fashion Law in the direction of the fashion industry (and when Julie is done schooling you on it, you see it as just that — an industry) for a week or two, not least her recurring coverage of the sycophantic nature of everyone and everything that purports to be media “coverage” of it. What makes it amazing is that Julie does this while still, at least it appears to me, still loving at least something about the whole mess besides the pretty stuff on the hangers.
- I am jealous of Julie Zerba, whose blog emerged out of nowhere, in no time, to be bigger, better and more glamorous than my little cow shed here, while being even more iconoclastic than LIKELIHOOD OF CONFUSION® in a field in which I am notionally included (“fashion law”)
- I am embarrassed that I don’t really know this FTA regulation stuff and that no one offers me any swag at all, though I am sometimes offered free carwash tickets if I will link to the web sites of certain mesotheleoma law firms
- You guessed it — Julie Zerba won’t follow @likely2confuse on Twitter
- OK, damn it. Julie Zerba doesn’t even know I’m alive
It should be self-evident to the reader that all of the foregoing was already evident to the reader before I “disclosed” it, and whether it influenced my views in writing it — or the reader’s in evaluating it — is probably not something anyone needs the gummint to help us manage.
Which, if you’re not all that businessy-legally-minded, I will just spell out for you, is my point.
Well, I’m not claiming to know what Julie’s undisclosed interests may be here. For all my snark, it’s not obvious that she has anything to be jealous about; I don’t think she really competes with these “fashion influencers” in any way. In fact, at the end of the day (and yes, thankfully, the end of this also very long post) it appears that she’s schooled on this topic; is very engaged in the ins and outs of how the fashion racket does what it does; and is righteously indignant.
Julie doesn’t know about creaky old LIKELIHOOD OF CONFUSION®, but if I were giving advice over a cup of coffee I’d probably say, well, you’re right on the law, but probably the law is, as I said before, stupid, and a sharp lawyer and businesswoman like you should probably use your jealousy-worthy platform to argue for getting rid of that stupid, condescending and ineffectual regulation and have the FTC focus on things that matter to people’s actual health and welfare instead of waiting for private litigation to drag them into it.
Then we can all go to focusing not on illegal acts or inconsistent application of regulatory oversight but on crass, cynical manipulation of, well, things as momentous as, um, whatever it is they were talking about — styles, or things to wear, and stuff.
Whatever. I’m above all that.