Advertisers and advertising agencies should be aware that simply having a disclosure policy or contractual provisions requiring influencers to comply with the Federal Trade Commission’s (FTC) disclosure guidelines may not be sufficient. In March 2020, the FTC filed a complaint against Florida-based company, Teami, LLC, which centered on Teami’s marketing of their 30-day detox pack, which consisted of Teami Skinny Tea and Teami Colon Cleanse Tea. The company claimed these products could lead to substantial weight loss, fight cancerous cells, decrease migraines, unclog arteries, and prevent colds and the flu. Teami also employed influencer marketing, with influencers, including celebrities like Cardi B and Jordin Sparks, being paid to promote their products on Instagram. The FTC’s case against Teami alleged two significant violations of the FTC Act. First, Teami made unsupported health claims about their products. Second, Teami failed to adequately disclose that they paid influencers to promote their products. The FTC’s Endorsement Guides specify that a “material connection” between an endorser and an advertiser, such as payment or free product, must be clearly and conspicuously disclosed. Unfortunately, the posts created by Teami’s endorsers continued not to meet these guidelines, even following previous warnings from the agency.
In 2018, the FTC wrote to the defendants about several Instagram endorsements of Teami products by influencers and cautioning them about the need for disclosures of material connections. Although the defendants later implemented a social media policy and contractually obligated paid influencers to obtain approval for social media posts in response to this warning, Teami themselves did not enforce these requirements, particularly the need for disclosure at the beginning of the post. According to the FTC, “Between June and late October 2018, hundreds of Instagram posts were published by well-known influencers whom Defendants paid more than $500 to endorse Teami products.” In most cases, consumers viewing these posts in their Instagram feeds would not have seen any text disclosing the influencers’ connections to Teami unless they clicked to see ’more.’ The FTC also found dozens of instances where influencers failed to provide any disclosures at all.
In March 2020, the FTC reached a settlement with Teami, LLC, and its co-founders, which included a $15,209,452 judgment against the defendants, which the FTC partially suspended upon the payment of $1 million based on the defendants’ financial condition. Additionally, under the settlement terms, Teami and its co-founders were prohibited from making any weight-loss, health, or disease treatment claims about their products unless they have reliable scientific evidence, and they agreed to clearly disclose any material connections with endorsers in the future, noting, if the disclosure is not made in the endorsement itself, it must be made in a clear and conspicuous manner that is easy for consumers to notice and understand.
The FTC’s action against Teami highlights the importance of substantiating health claims and adequately disclosing paid endorsements. It serves as a reminder that companies can be held accountable for what influencers say on their behalf, and that influencers should clearly and conspicuously disclose their relationships with brands.