Did You Know That Marketing Fraud Is Illegal? Here's 4 Ways to Keep Your Influencer Brand Ethical

Jori Hamilton is a writer and journalist from the Pacific Northwest who enjoys covering topics related to social justice, business, and feminism. You can follow her on twitter @hamiltonjori or keep up with her latest work on her Contently.

Have you ever seen a blogger or brand make an exaggerated claim about their product or service online? If you have, then it’s possible they were committing marketing fraud. Well, marketing fraud is illegal, and it’s not limited to intentional deception on the part of a brand or influencer. Laws prohibiting marketing fraud are in place to protect the consumer. 

False marketing can land you and your brand in a world of trouble. For instance, if you sell medications or supplements and a follower experiences harm such as negative health effects or a significant financial loss due to your advertising practices, you could set yourself up for a lawsuit—and your reputation and bank account could take a really big hit too.

Let’s explore some of the legal guidelines for marketing and how to market products and services ethically.

Always Disclose: Influencers Must Abide By FTC Requirements

Individual influencers, bloggers, and content creators need to be aware of the Federal Trade Commission (FTC) guidelines for endorsements and disclosures. This means that if a brand gives you a free product in exchange for promoting or reviewing it, you have to disclose that you have been compensated in some way. 

The FTC provides guidelines for disclosure here, as well as rules for social media promotion. This also applies to brands who place content as advertisements. If you’ve ever seen a sponsored article on a website or in a newspaper, the “sponsored article” notification is the publication’s disclosure as required by the FTC.

Remember: If you have any conflict of interest (such as advertising a former employer or a family member’s brand), you need to disclose it to your consumers. 

How to Avoid False Claims: Be Authentic

When we go online, we’re inundated with information and advertisements. Thanks to effective content marketing, those things are often one and the same. Competition for consumers’ attention is steep—some state the average person sees at least 4,000 advertisements over the course of their day. When it comes to watching a video or reading a piece of content, Google searchers make a decision based on trust when they click on your link. 

It’s safe to say that the used car salesman is quite a trope. Stereotypically, they’re known to make false claims about their cars to move them off the lot and make a buck. Take a minute to think about why this trope is so unappealing to consumers. We think of used car salesmen as:

  • Dishonest

  • Disrespectful and sexist

  • Putting the sale above the relationship with the customer — a critical failure in marketing

  • Fast talkers

  • Untrustworthy and unreliable

  • Shady or even illegal

While most used car sales people aren’t actually like that in real life, the trope is pretty pervasive because the actions of bad salesmanship are reprehensible and vilified. Obviously, you don’t want your brand to be affiliated with any of these qualities. Brand reputation is invaluable.

By using an approach of authenticity as a core part of your branded experience, you can avoid developing a poor reputation. You want your brand to be considered honest, respectful, and engaging. You want to establish and strengthen your reputation, communication, and relationship with your customer. You want to earn that trust and execute business in a legal and ethical fashion. 

Consumers are engaged by brands that are authentic enough to stand for something. When Gillette embraced the #MeToo movement and tackled toxic masculinity in its ad campaign, it started a massive conversation but it also provided a look at who makes the household buying decisions when it comes to razors and shaving cream (hint: women often do). In this way, Gillette started a conversation that was important and relevant to them as a brand but also engaged their consumers. 

Behind the scenes, there was likely a lot of testing and debate about this as a business decision, but ultimately, they must have decided that it was worth alienating outmoded thinkers to engage an audience of women and men who would more enthusiastically purchase and engage.

Positive Side Effects of Transparency

Doing the right thing is ethically imperative and can keep you out of trouble with the FTC. Providing disclosure also has some other benefits for you. Namely, your audience will appreciate your transparency and they will trust you more. 

If your relationship with your audience is truly more important than landing another sponsor, it will benefit you in the long term. Your fans and community will support, defend, and forgive you for missteps. Those who have followed your brand for some time will be more likely to consider your behavior over time and less likely to drop you if you make a small mistake.

As an influencer or brand representative, you’re more likely to make mistakes than you would be if your posts had to go through several layers of approval. Transparency is an aspect, but without someone else constantly double-checking you, mistakes can and will happen. Your audience wants an element of unplanned, live, and raw reactions from you. You’ve got to build up the social credit to take a fall every now and then. It’s a natural part of the branding cycle. 

How to Protect Yourself

Have you done the work to become registered as a Limited Liability Corporation (LLC)? Getting LLC or S-Corp status is the first step you can take to protect yourself against lawsuits about false claims and other legal troubles that are bound to arise as you grow in popularity. If your brand is big, it’s only a matter of time before you need legal and financial protection.

General liability insurance coverage for business can also help. This insurance protects you against liability claims. For example, if a follower tries a skin care product you recommended in a YouTube video and experiences a skin rash, liability insurance can protect you in the event that they sue. It should cover property damage claims advertising injury claims, court costs, libel/slander, settlements, and more. 

As you represent your brand passionately and authentically, remember to protect yourself and abide by the legal rules surrounding advertising. Your passion, transparency, and expertise will win you new customers and fans.