FTC Settles With Tea/Skincare Marketer, Sends Warning Letters to Influencers

Advertising Law

In the Federal Trade Commission’s (FTC’s) latest effort to tackle deceptive influencer advertising, the agency settled its charges with Teami, LLC and its two owners for making deceptive health claims to promote the company’s teas and skincare products and for using social media influencers who did not adequately disclose that they were being paid to promote the company’s products.

Teami advertised its tea and skincare products (such as Teami Alive tea and Teami Green Tea Blend Detox Mask) on the company’s website and paid celebrities and influencers to promote them on Instagram and other social media, according to the FTC’s complaint.

The defendants touted the products’ ability to “fight against cancerous cells,” “help unclog arteries,” “decrease migraines” and “burn stored fat” on the Teami website, while influencers promoted the product with statements such as “I’ve only been drinking this detox now for a week and already lost over 5 pounds and my bloating is gone” and “I’ve lost almost 40 freaking pounds with @teamiblend 30 day detox.” The FTC alleged that all of these representations were “false or misleading, or were not substantiated at the time the representations were made.”

In addition to making false and misleading claims, the FTC alleged that the defendants “have failed to disclose adequately to consumers that the influencers were paid to endorse the Teami products.”

In April 2018, the agency wrote to the defendants about several Teami product endorsements on Instagram by influencers, cautioning the company about the need for disclosures of material connections. Although the defendants implemented a social media policy—and in many instances, contractually obligated paid influencers to obtain approval for social media posts—the defendants did not enforce the requirements, the FTC claimed, particularly the need to ensure the disclosure appeared in the first part of the post without clicking something else.

“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,” the agency said. “In most cases, consumers viewing these posts in their Instagram feeds would not have seen any text disclosing the influencers’ connections to Teami unless the consumers took the extra step of clicking to see ‘more.’”

Other influencers failed to make any disclosures whatsoever, the FTC added, citing dozens of examples in the Florida federal court complaint, including posts from celebrities and influencers like Alexa PenaVega.

The defendants agreed to a deal that prohibits them from making unsupported weight loss and health claims, mandates clear and conspicuous disclosures of any unexpected material connection, and imposes endorser monitoring requirements.

Due to the defendants’ inability to pay the full judgment, the $15.2 million judgment—based on the total sales of the products over approximately five years—will be suspended upon payment of $1 million.

In addition to the enforcement action against Teami, the FTC sent warning letters to ten influencers, all of whom were cited in the FTC’s complaint against Teami. For example, a letter to singer Adrienne Bailon includes a screenshot of her October 2, 2018 post endorsing Teami tea.

“Although the above Instagram post includes the disclosure ‘#teamipartner,’ the disclosure was not visible to followers viewing the post in their Instagram feeds unless they clicked ‘more,’” the FTC wrote. “Thus, it was not clear and conspicuous. In addition, there was no disclosure in the video. Because the video could be viewed without anyone seeing a disclosure, you should disclose any material connection in the video itself, and not just the text portion of your post.”

There are multiple ways to make such a disclosure, the agency noted, such as by saying “[Brand] sponsored this post” or “I’m partnering with [Brand].”

The letters emphasized that endorsers should not hide disclosures “among multiple tags, hashtags or Instagram handles” and that disclosures must appear “in each and every social media post,” cautioning that influencers who fail to make adequate disclosures about their connections to marketers are subject to legal enforcement by the FTC.

To read the complaint and proposed order in FTC v. Teami, LLC, as well as the warning letters to influencers, click here.

Why it matters: The FTC’s enforcement action against Teami is another reminder that the agency is serious about cracking down on allegedly deceptive endorsements. Since 2017, the FTC has sent a series of warning letters to both advertisers and influencers and also more recently issued a helpful guidance for social media influencers. Consequently, most advertisers and influencers today are aware of the disclosure requirements, through a formal social media policy and/or a contractual requirement to comply with the FTC’s guidance on disclosures. However, merely including a disclosure in the influencer posting may not be adequate—the disclosure must be done properly, without requiring consumers to click “more.” Additionally, having a social media policy or including a contract provision in the advertiser’s contract with influencers is not sufficient to avoid being subject to an FTC action. It’s important for advertisers to keep a close eye on their influencers, and terminate relationships if they don’t follow the rules.

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