NIL: How Much Longer Will the FTC Look the Other Way?
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whats the problem?
On any given day, nearly half of the sponsored social media content posted by student-athletes fails to meet the FTC ‘s Social Media Influencer Guidelines.
As I’ve discussed before, about 70% of student-athletes don’t know what the FTC is or how the agency is relevant to them. About 80% have never heard of the FTC’s Social Media Influencer Guidelines.
What’s the FTC?
On the spectrum of the most powerful government agencies, the FTC is not the IRS…but it’s not the National Park Service either (sorry NPS.) The FTC stands for the Federal Trade Commission, which is an independent federal agency responsible for enforcing laws related to consumer protection, competition, and antitrust. Consumer protection is the issue most relevant to NIL.
The FTC's main mission is to protect consumers from deceptive and unfair business practices by investigating and bringing legal actions against companies or individuals who engage in fraudulent or misleading activities that harm consumers.
In the context of social media influencer marketing, the FTC is responsible for enforcing guidelines related to disclosure and transparency in influencer marketing campaigns. The agency has issued guidelines that require influencers and brands to disclose any material connections - like say, getting compensated with money or free products! The FTC's role in enforcing these guidelines is to ensure that consumers have access to accurate and transparent information when making purchasing decisions.
What are the FTC Social Media Influencer Guidelines?
I’ll answer the second part first. I’m guessing that if you’re reading this, you’re not a social media influencer. There is a bigger chance that you are a marketer or represent a brand, but still, you have not probably spent much time thinking about fair advertising practices.
FTC Social Media Influencer Guidelines are a set of rules and regulations that were created to regulate the behavior of social media influencers and marketers. These guidelines are aimed at ensuring that influencers and marketers disclose their relationships with brands in a clear and transparent manner when promoting products or services on social media.
The guidelines were first introduced in 2009 and have since been updated to reflect changes in the social media landscape. In general, the guidelines require that influencers disclose any material connection they have with a brand or company when endorsing their products on social media. This includes any financial incentives, gifts, or other perks that they may have received in exchange for their endorsement. These disclosures should be clear, conspicuous, and easy to understand.
The FTC Social Media Influencer Guidelines also require that influencers avoid making false or misleading claims about the products or services they are promoting. They should only make claims that are truthful and can be substantiated with evidence. Additionally, they should not engage in deceptive practices such as fake reviews or endorsements.
So why are we even talking about social media influencers?
A social media influencer is someone who has a following of any size on social media. Influencers are assumed to have the power to influence the behavior and purchasing decisions of their followers. This can include individuals with followers on platforms like Instagram, YouTube, TikTok, and other social media platforms.
With the adoption of NIL rules, student-athletes can use their social media platforms to endorse products or services, and earn money through sponsorships or partnerships with brands. By participating in NIL activities, student-athletes - again with any size social following on social media - are considered social media influencers.
Student-Athletes must comply with the FTC guidelines to avoid potential legal issues or penalties. To be clear, while the NCAA may not punish student-athletes for unethical advertising practices, that will not stop the FTC from doing so.
Simple steps student-athletes can take.
The guidelines require that influencers clearly disclose any material connections they have with brands or companies when promoting products or services on social media. This includes any financial incentives, gifts, or other perks they may have received in exchange for their endorsement.
Student-athletes can follow these FTC guidelines by:
Clearly stating in their social media posts that they are being paid or sponsored by a brand or company.
They should also use hashtags such as #sponsored, #ad, or #partner to make it clear to their followers that their post is part of a paid partnership or sponsorship.
Additionally, they should avoid making false or misleading claims about the products or services they are promoting and only make claims that can be substantiated with evidence.
Is the FTC really going to crack down on student-athletes?
It may be imminent or it may take years, but an FTC crackdown is an eventuality. Let’s look at some recent history.
In 2017, the FTC sent letters to over 90 celebrity influencers warning them about their failure to disclose their material connections in social media posts. The letters included specific examples of posts that the FTC considered to be non-compliant with its guidelines. Several of the influencers who received the letters were subsequently investigated by the FTC and reached settlements with the agency.
In 2018, the FTC fined music mogul DJ Khaled and boxer Floyd Mayweather Jr. for promoting cryptocurrency on social media without disclosing that they had been paid for the endorsements. The FTC found that the two celebrities had failed to disclose that they were paid $100,000 and $200,000, respectively, to promote the cryptocurrency on their social media accounts.
In a brand-side example, the FTC settled with Lord & Taylor in 2016 for violating its guidelines when it paid 50 fashion influencers to post photos of themselves wearing a particular dress on Instagram without disclosing that they had been paid to do so. The settlement required Lord & Taylor to disclose any future sponsored posts on social media and to submit compliance reports to the FTC for the next 20 years.
These examples demonstrate that the FTC is actively monitoring social media influencers and brands to ensure compliance with its guidelines. The FTC has the authority to take enforcement action against anyone who violates its guidelines, including individual brands and student-athletes.
Bill Carter is an NIL Consultant, Educator, and Speaker. He is a NIL Columnist for Sports Business Journal and teaches NIL in College Sports at the University of Vermont’s Grossman School of Business. Click here to read about Bill’s NIL Consulting and NIL Education for sports organizations, universities, and brands.