Key Legal Issues in Influencer Marketing (+Related Laws & Some Legal Tips)
Social media is powerful. With 4.70 billion active users worldwide, these channels can be very influential. People do not only use them for personal interactions. They also leverage these channels for business and marketing.
Enter influencer marketing, which is the next big thing. Or has it already gained ground in business?
Here’s the catch: The industry’s global market size has more than doubled since pre-pandemic. Per Statista, this is worth $16.4 billion this year.
It’s safe to say that influencer marketing is thriving. But before implementing this, have some legal considerations in mind. Understand the laws governing this digital marketing strategy.
In this post, we’ll tackle five legal issues in influencer marketing. Keep on reading to know what to avoid or how to address them.
Chapters
Influencer Marketing in a Nutshell
Influencer marketing entails tapping an influencer to promote your brand. In return, your hired influencer receives payments, free products, and/or benefits. This form of digital marketing has three key players:
- Business: Entrepreneur looking to promote their brand and sell their products or services
- Influencer: Someone with a large group of followers who can be a brand ambassador
- Market: The influencer’s followers, who can be potential customers
Influencer marketing is a digital marketing tactic. Specifically, it falls under social media marketing. When it comes to this, you have the option to:
- Hire a famous personality
- Work with an influencer marketing agency
Of course, you call the shots. But how does it work?
Social media channels usually have famous people with a lot of followers. Brands hire these known individuals to endorse their products or services. They promote these offers via their digital platforms. In return, they get paid or receive perks for doing so based on the agreed contracts.
Here are some key statistics proving the boom of influencer marketing:
- 93% of marketers have used influencer marketing in their campaigns.
- 66% of brands will increase their budgets for influencer marketing.
- Almost 50% of consumers rely on influencers for product recommendations.
- 89% of marketers claim that influencer marketing is effective.
- 42% of marketers consider influencer marketing a top ROI-generating strategy.
- 67% of brands leverage Instagram as the preferred channel for influencer marketing.
- TikTok has a whopping 325% increase in popularity. About 45% of marketers have begun using this channel for influencer marketing.
The influencer marketing model is legally complex. Hence, it’s crucial to be aware of the laws governing this marketing strategy. Learn more about its legalities in the next section.
Laws Regulating Influencer Marketing
Everyone in the chain should be responsible for legal compliance: brand and influencer/agency.
However, the business implementing the campaign has the major burden. Of course, you don’t want to fail at influencer marketing by being legally accountable. Thus, it’s vital to understand its legal aspects.
- The Federal Trade Commission (FTC) regulates businesses’ social media marketing campaigns. Section 5(a) of the FTC Act prohibits “unfair or deceptive acts or practices in or affecting commerce.”
- The Food and Drug Administration (FDA) also oversees the marketing of prescription drugs and medical devices.
Below are some legal considerations to keep in mind:
- FTC Disclosure: The FTC imposes strict regulations on product endorsements and online advertising. Influencer marketing is subject to the same rules applied to other advertising forms.
- FDA Regulations: Per the guidelines, brands should not overstate the benefits of drugs. They should not also downplay risk information and make claims without adequate evidence.
- Copyright Compliance: The law grants the creators exclusive rights to reproduce their work. These include distributing copies and preparing derivatives. In influencer marketing, avoid copyright infringement. Brands must not use the influencers’ materials without their permission.
- Fair Advertising Rules: This policy ensures fair advertising among businesses across all industries. The applied rules seek to level out the playing field and avoid inequality.
- Marketing Contracts: Brands must set contract agreements between their business and influencers. Companies must meet the disclosure requirements in their contracts for their campaigns.
- Business Insurance: Insurance like commercial liability protects brands against potential damages in marketing.
5 Legal Issues in Influencer Marketing to Avoid or Address
Earlier, we covered some laws regulating influencer marketing campaigns. Understand that neglecting them can lead to:
- Misleading advertising
- Possible liability
- Potential lawsuits
It’s crucial to tackle some legal issues possibly confronted by brands and influencers. Here are some of these:
1. Privacy and Confidentiality Issues
Privacy and confidentiality are major concerns in social media marketing. Why? Take note of the following:
- Influencers might post blogs or videos without adhering to privacy laws.
- Social media marketing conducts cross-contextual behavioral advertising.
- Influencer marketing involves many third parties. They exchange consumer data and could lose personal information to AI-based fraud schemes.
Here are legal issues on privacy and confidentiality you should avoid:
- Privacy Concerns: A breach of privacy is a big no-no. An influencer using an item of an individual without permission is a legal violation. Be sure to respect other people’s privacy.
- Confidentiality Issues: Be wary of confidential information. An influencer making your proprietary business information public entails legal action. Or disclosing your influencer’s confidential information is a violation on your part.
2. Misleading Conduct
Influencers are powerful, such that they ‘influence’ consumers’ purchase decisions. How is this possible? Influencer marketing does the following:
- Increase brand awareness
- Improve customer relationships
- Builds consumer trust
As a result, influencers get people to patronize your business. They convince them to buy your products or services.
However, deceptive marketing can possibly arise from influencer marketing. Some social media influencers receive a cut for every successful sale. As such, they do what it takes to promote your products or services. However, they go as far as deceiving people, which might result in legal consequences.
3. IP, Copyright, and Trademark Infringement
Infringement happens when you post and claim to own other people’s content pieces. This makes you violate the following rights:
- Intellectual Property: IP generally covers laws on patents, copyrights, and trademarks. Influencers must be wary of violating other people’s IP rights when creating pieces. Be very careful in promoting your brand and using other people’s creations.
- Copyright: It’s the legal protection of “original works of authorship fixed in a tangible medium of expression.” Sure, social media influencers could freely post and share content pieces. However, they must be careful in illegally distributing copyrighted materials.
- Trademark: A trademark includes a word, phrase, symbol, or design. It identifies a brand and sets it apart from others. Social media influencers must be wary of producing content when promoting brands. They must stick to your trademark items to avoid infringement.
4. Violating the Rights of Publicity
It’s easy for social media users to use, post, and share content pieces published online. But as far as legalities, ordinary individuals easily and quickly get away with it.
However, it’s a different story if social media influencers do so in their endorsements. They can get sued without permission from the creators or owners.
Another legal issue arises: violating the rights of publicity.
Influencers face the danger of using public properties on social media posts. It’s further alarming if they use images or videos of celebrities. They should seek permission first before using these materials on their ads. Otherwise, they might face some legal charges from these personalities.
5. Social Media Censorship
Social media censorship has become a major concern in recent years. People have too much freedom in posting, sharing, and commenting on these channels. They cause many societal issues like:
- Online bullying
- Pornography
- Scams
- Mental health issues
In the context of marketing, social media influencers create and convey messages. However, they have the power to dictate customer behavior and influence purchase decisions. The problems start when they commit those issues mentioned above. That’s where social media censorship comes in.
Social media is a great channel for exercising freedom of speech. But per the U.S. Supreme Court:
“Social media users employ these websites to engage in a wide array of protected First Amendment activity.”
Sure, social media influencers have the freedom to speak. However, social media channels have control over the messages they convey. That can potentially restrict their creativity and marketing pursuits.
Social media censorship is one problem encountered in influencer marketing. You must not only consider your hired influencer’s creation. You must also stay compliant with the social media channels’ policies. This way, your company won’t end up with legal ramifications.
Legal Tips for Implementing Influencer Marketing
At this point, we already covered some legal issues potentially involved in influencer marketing. However, it doesn’t stop there.
It’s crucial to identify and set preventative measures to avoid legal risks in business and marketing. That said, it all boils down to recognizing the laws and enforcing them on your campaigns.
Javier Muniz, CTO at LLC Attorney, said the laws aren’t meant to restrict a business in their campaigns. “Legalities serve as a guide in your implementation. Most importantly, they protect all people involved in marketing.”
That said, here are some legal tips to keep in mind for your influencer marketing:
- Constantly review and stay updated on the legalities involved in influencer marketing. (Note: Consider those laws on advertising and endorsements discussed above).
- Carefully review the agreements and set fair contracts for influencer marketing.
- Implement formal comprehensive policies on social media marketing.
- Closely monitor your influencers’ endorsements and advertising pursuits.
- Hire influencers aligned with your business objectives, core values, ideals, and philosophies.
- Train your digital marketers, marketing agency, and influencers on FTC guidelines proactively.
- Orient your influencers on the legal aspects of influencer marketing.
- Collect, use, record, and store information for influencer marketing in compliance with privacy laws.
- Be wary of the policies on the social media sites where content pieces get published.
- Get your legal department involved in your social media marketing campaigns.
- Ensure influencers stay fully compliant with regulatory obligations to mitigate legal risks.
Avoiding Legal Ramifications and Capitalizing on Influencer Marketing
Influencer marketing has been effective for businesses of all sizes. However, it doesn’t mean you don’t need to take legal precautions for this marketing strategy.
Understand that tapping influencers to promote your brands is legally complicated. It’s not like hiring new employees or working with a digital marketing agency. They have contracts set in place to protect both parties.
Thus, consider having a contract agreement between your company and your hired influencer. Be wary of the legal issues discussed above and follow our legal tips for implementing this campaign.
Employing this strategy within the bounds of law will avoid legal ramifications. Ultimately, influencer marketing will lead to many high returns – when implemented legally and successfully!
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