Overview:
A beauty and personal care influencer failed to disclose her financial relationship with the brand whose product she was endorsing–and the brand paid the price. How might consumer surveys help ensure fairness in sponsored social media?
The Dispute
The BBB National Programs, National Advertising Division issued a decision in a dispute between haircare product maker Mielle Organics and Kreyol Essence, which sells haircare and skincare products. Kreyol uses an affiliate marketing program with beauty influencers, including Laura Benoit. Mielle brought a challenge through the NAD’s Fast-Track SWIFT program, which examines single-issue disputes, alleging that Benoit had failed to properly disclose her financial relationship with Kreyol.
Hairy Situation
Benoit created 22 TikTok posts, posted on TikTok, Meta, and YouTube, without clear disclosures of her financial relationship with Kreyol. Instead, Benoit mentioned Kreyol in her LinkTree, which is a separate website for sharing links to buy products. The NAD ruled that the lack of disclosures in her original posts violated Federal Trade Commission rules on influencer marketing, and that the posts should be removed. Kreyol complied.
Influencer marketing is relatively new, but it’s big business–valued at 21 billion dollars in 2023. Many brands use influencer marketing to capture new markets, communicate how to use products, or sell products directly. Recently, the Federal Trade Commission issued a new rule on disclosures for influencer marketing. But the NAD handled several regulatory challenges in 2024, suggesting that it may be the regulatory venue to watch for the latest guidance on influencer marketing.
NAD Influencing Surveys
As the growing number of influencer marketing cases appearing before the NAD shows, brands should be vigilant with affiliate programs, making sure that their disclosures are clear and conspicuous. Regulatory challenges cost time and money and damage your brand’s reputation. If a regulatory challenge or lawsuit questions your brand’s communications, consumer surveys can provide evidence about how consumers understand those communications. To learn more about how consumer survey research can help you make your case to consumers–within the law–contact MMR Strategy Group, an IMS Legal Strategies company.