ADventures in Law

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And we’re back with more NAD drama! You may remember that earlier this year, we <a href="https://www.adventures-in-law.com/blogs/nad-keeps-it-real-recommends-modification-of-reality-tv-ambassadors-posts-to-clearly-disclose-material-connection-to-clothing-retailer-ad/" target="_blank" rel="noreferrer noopener">blogged </a>about a case where the National Advertising Division (NAD) of the Better Business Bureau found that disclosures @Revolve and the #revolveme hashtag were not clear enough to identify the influencer’s relationship with the brand. NAD’s focus on influencers and disclosures didn’t end there – today we’re going to dive into NAD’s recent decision involving <a href="https://bbbprograms.org/media/newsroom/decisions/skims-body" target="_blank" rel="noreferrer noopener">Skims</a>. For those who haven’t been keeping up with the Kardashians (so to speak), Kim Kardashian co-founded the Skims brand, which specializes in shapewear and loungewear. Skims partners with various celebrities to help promote its collections, including celebrities Lana Del Rey and Brittany Mahomes.

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The focus of NAD’s inquiry here was whether Brittany Mahomes and Lana Del Rey adequately disclosed their “financial relationship and material connections” with Skims when promoting Skims products on their own social media accounts. NAD homed in on three Lana posts and two Brittany posts to determine whether the disclosures were adequate. In the Lana Del Rey posts, the images showed her wearing Skims and either mentioning Skims or tagging @skims. The Brittany Mahomes posts showed her and her family wearing Skims.

Skims noted that it engaged in compliance efforts by 1) making it a contractual requirement for these influencers (and its broader panel of influencers) to comply with the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides), 2) providing instructions to influencers on how to disclose the relationship with either #ad and/or #sponsored, and 3) monitoring influencer posts. In fact, Skims had contacted Lana Del Rey’s team to inform them of insufficient material connection disclosures in her posts. In addition to touting its compliance efforts, Skims also set forth two main arguments. First, it stated that because Brittany Mahomes’ posts made “no specific mention of Skims” in the post copy and did not identify the brand, the posts could not “reasonably be understood as endorsements or testimonials.” Skims also argued that both celebrities are “depicted in each post wearing Skims in a highly stylized fashion shoot,” which made it likely consumers would understand the images were part of a paid partnership.

For those who aren’t breathing in FTC and NAD disclosure guidance day and night (guilty as charged), the Endorsement Guides state that when there is a “material connection” (some sort of financial or other connection, including gifted product, coupons, free trips, early access, a family connection, etc.) between an endorser and an advertiser, and that material connection may impact a consumer’s purchasing decision (“materially affect the weight or credibility of the endorsement”), and the connection is not “reasonably expected by the audience,” endorsers are required to clearly and conspicuously disclose this connection. The FTC has also previously stated that merely “tagging” a brand is not a sufficient disclosure.

NAD found that in this case, Brittany Mahomes’ failure to mention or tag Skims in the caption did not outweigh the fact that the Skims brand is tagged on the actual image. NAD found that the tagging “qualifies both posts as endorsements” though the tag itself was not a sufficient disclosure of the material connection between Brittany Mahomes and Skims. NAD also considered whether the “fashion shoot” quality would make a reasonable audience member expect that she had a relationship with Skims – such that a disclosure was unnecessary. NAD found that, in this case, a reasonable consumer would not think the photos were so highly or unusually stylized in a way that would indicate to viewers that the posts were sponsored. In regard to the Lana Del Rey posts, because Skims had already reached out to Lana Del Rey’s teams about modifying material connection disclosures in her posts, NAD agreed to treat, for compliance purposes, these recommendations as if they were modifications suggested by NAD and agreed to by the advertiser.

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Contractual Requirements Are Key. NAD specifically took note that Skims had contractual requirements in place regarding compliance with the Endorsement Guides. Including provisions like this in your influencer contracts is critical.

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Monitoring Is a Must. NAD also noted that Skims had been actively monitoring social media posts and that Skims’ voluntary action to reach out to Lana Del Rey would be treated as Skims’ compliance with NAD recommendations. Monitoring is an important prong in a robust compliance program that helps demonstrate that you are not just paying lip service to FTC requirements.

Tagging Is an Endorsement. NAD and the FTC have said tagging a brand, even without further commentary, can be considered an endorsement of that brand.

Tagging is Not Sufficient Disclosure. The FTC and NAD have also said before – and we’ll say it again – that tagging a brand is unlikely to be sufficient disclosure of a material relationship between the influencer and the advertiser.

Audiences Don’t Assume as Much as You Think They Do. In the case of Lana Del Rey and Brittany Mahomes, the brand (as many others have before it) assumed that consumers would understand that these posts were endorsements. NAD seems to be taking a more conservative view that celebrities need to make clear and conspicuous disclosures about their material connections, in almost the same way as “noncelebrity” influencers are required to do. Gone are the days of assuming a celebrity’s status automatically signals an endorsement deal.

Agencies Are on the Hook Too. One other unusual aspect of this case is that a separate NAD challenge was brought against a talent agency in relation to these Skims posts. During the inquiry, the talent agency informed NAD that it did not represent Lana Del Rey in this partnership with Skims, and NAD ultimately closed the case. While the agency was not involved here, this could signal that NAD is looking more closely at how to hold everyone in the chain – advertisers, agencies and influencers – liable for failing to disclose material connections in accordance with the FTC’s Endorsement Guides.

Don’t Skim(p) on Disclosures