After my last post you may have found yourself asking: what happens to those violating the FTC Act?
In 2015, Lord & Taylor began a campaign to promote a paisley dress that was part of its new collection called DesignLab. The retailer chose 50 fashion influencers to advertise their dress and gave each influencer a free paisley dress and between $1,000 and $4,000 each to post a photo of themselves wearing the dress on Instagram. The retailer required each influencer to tag their Instagram and include the hashtag DesignLab. Obviously someone in legal gave thought to the FTC guidelines because the tags seemed like efforts to let consumers know that this was part of the retailer’s campaign.
Alas, the FTC charged Lord & Taylor with deception of its consumers. The FTC’s complaint noted that the retailer did not require any of the 50 influencers to disclose that the company had paid them to post photos and sent them a free dress, and that none of the posts included any such disclosures (DesignLab was insufficient). The retailer settled and agreed that they would be prohibited from misrepresenting that paid commercial advertising was from an independent or objective source, and that they would disclose any connection between themselves and any influencer. The order also established a monitoring and review program for the retailer’s endorsement campaigns. This punishment is adequate because the FTC does not give monetary fines for first time violators. However, a second offense would result in a fine of $16,000, per violation, per day until the conduct is corrected.
Considering that the influencers’ posts were seen by 11.4 million Instagram users, led to 328,000 interactions with the retailer’s account and to the paisley dress immediately selling out, the punishment doesn’t seem too bad. However, a second offense of this scale would amount to a hefty fine. Although the retailer did not get it right the first time,they have promised to clean up their act and have made sure to make disclosures in all promotions. Thus, I hold that Lord & Taylor has subsequently mastered the art of disclosure!