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FTC settles first complaint against social influencers

After controversy over the promotion of Fyre Fest by a gaggle of Insta-models, two YouTubers have settled with the FTC – in its first action against online influencers

By Jon Chapple on 15 Sep 2017

Fyre Festival launch video, influencers, FTC

A still from the 'Announcing Fyre Festival' video


image © Fyre Festival/YouTube

In news that bodes badly for the the 400+ Instagram personalities and other ‘influencers’ being sued for their paid social-media plugging of Fyre Festival, the US Federal Trade Commission (FTC) has settled a legal complaint against two influencers it charged with deceptively endorsing an online gambling service while failing to disclose they own the company – the first case of its kind.

According to the FTC, YouTubers Trevor ‘TmarTn’ Martin and Thomas ‘Syndicate’ Cassell – both well known in the online video-gaming community – both personally, and by paying other influencers thousands of dollars to do so, endorsed on YouTube, Twitch, Twitter and Facebook the lottery site CSGO Lotto, which is jointly owned by the pair.

Each defendant posted YouTube videos of themselves gambling on the website and encouraging others to do – videos cited as evidence by the FTC include INSANE KNIFE BETS! (CS:GO Betting) and “ALL OR NOTHING! (CS:GO Betting) – without disclosing they ran the company (Martin is its president, while Cassell is VP).

While Martin and Cassell dodged a fine, an FTC order settling the charges requires both in future to “clearly and conspicuously disclose any material connections with an endorser or between an endorser and any promoted product or service”.

“Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts”

Cassell was previously rebuked by the FTC for his paid endorsement of the then-new Xbox One console, with the commission warning that the $30,000 promotion fell afoul of its rules for failing to disclose he and others were “paid by Microsoft to say nice things about Xbox One and its games”.

“Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts,” says the FTC’s acting chairwoman, Maureen Ohlhausen. “This action, the FTC’s first against individual influencers, should send a message that such connections must be clearly disclosed so consumers can make informed purchasing decisions.”

Following the conclusion of the CSGO Lotto case, the FTC has sent warning letters (template here) to 21 other unnamed influencers regarding posts on Instagram, reiterating that they must disclose if there is a “material connection” between the endorser and the marketer of a product.

 


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