What Do Small Businesses Need to Know About Working with Content Creators?
Working with influencers and content creators can be a great way to build brand awareness. But these marketing opportunities come with legal obligations that small businesses cannot afford to overlook.
If your business sponsors content in any form, you are responsible for making sure it complies with federal advertising laws.
The Legal Framework
The Federal Trade Commission Act prohibits misleading, deceptive, and unfair advertising. This applies directly to influencer marketing.
When an influencer makes an endorsement sponsored by your business, the influencer must disclose that sponsorship.
An “endorsement” is an advertising message by or on behalf of a business, that consumers are likely to believe reflects the personal opinion of the influencer.
When a "material connection" exists between the influencer and the business the influencer is endorsing, that connection must be disclosed. A material connection is a connection that might affect the weight or credibility that consumers give the endorsement. It includes more than just payment for a post. Other common examples include:
Providing free travel or accommodations
Providing free products
Offering early access or special perks
What Disclosure Must Look Like
The FTC requires disclosures to be “clear and conspicuous.” In plain terms, that means consumers should not have to hunt for it or interpret vague language. More specifically:
Visual Endorsement: If the endorsement is made through visual means then the disclosure must also be made in the content's visual portion. The disclosure must be easy to see, readable, and placed where viewers will notice it.
Audio Endorsement: If the endorsement is made through audible means then the disclosure must also be made in the content's audible portion. It must be spoken clearly, at a pace and volume people can understand.
Visual and Audio Endorsement: If the endorsement is made through both visual and audible means, then the disclosure must be made in both the visual and audible portion.
Honesty Is Required
Disclosure alone is not enough. The content itself must be accurate. This means:
Influencers must give honest opinions and experiences
Claims about your product must be truthful and substantiated
If the influencer says they use your product, they must actually have used it
Why It Matters
If an influencer fails to make the proper disclosure or makes misleading or unsubstantiated statements, it’s not just the influencer who can be in hot water. The business sponsoring the communication can also be held accountable.
How Small Businesses Can Reduce Risk
To mitigate risk, businesses working with content creators and influencers should:
Create a Social Media Endorsement Policy
The FTC specifically looks for whether a business has a policy in place when evaluating liability. At a minimum, your policy should include:
Guidelines on required disclosures
Procedures for monitoring posts
Procedures for handling compliance issues
Train Everyone Involved
A policy sitting in a folder is not enough. You need to train employees, contractors, marketing agencies, and the influencers themselves.
Use Written Agreements
Every influencer relationship should be governed by a contract. Your agreement should:
Require the influencer to comply with disclosure requirements
Require the influencer to review the Endorsement Guides from the FTC
Be signed by both the influencer and an authorized representative of your business
