Navigating Legal Risks in Advertising and Influencer Marketing

Safeguard your brand in the world of social media marketing, from IP infringement risks to FTC guidelines compliance.  Scott Hervey and Jessica Marlow from Weintraub Tobin continue the discussion on legal risks brands face in part 2 of our social media marketing series on “The Briefing.”

Make sure to catch Navigating the Legal Risks for Brands in Social Media Marketing – Part 1.

Watch this episode on the YouTube channel here

Show Notes:

Scott:
Brands spend a lot of money on social media marketing, and that amount continues to grow. According to a recent survey, ad spend on social media is projected to reach 129 billion in 2024. However, social media marketing presents unique legal issues, not generally present in more traditional advertising. Last week, we discussed the legal risks for the celebrity endorser in social media marketing. This week, I’m joined again by my partner, Jessica Marlow, and we’re going to discuss the legal risks for brands in social media marketing. I’m Scott Hervey with Weintraub Tobin; this is “The Briefing.” Jessica, welcome back.

Jessica:
Pleasure to be back.

Scott:
Last week, we discussed the risks celebrities or influencers face in social media marketing. Today, we’re going to talk about the risks brands face in social media marketing. Let’s first talk about FTC compliance. Like influencers, brands have FTC compliance requirements. As you mentioned last week, Jessica, we did an entire episode on this.

Jessica:
Right, but let’s review a few points because it seems that this can be one of the biggest blind spots for brands.

Scott:
Sure, you’re right because this really is the biggest blind spot for brands. Previously, the FTC would hold an advertiser liable for misleading or unsubstantiated statements made through endorsements when there is a connection between the advertiser and the endorser. Now, the FTC has recently deleted the wording when there is a connection between the advertiser and the endorser. So generally, there’s always a connection between an advertiser and an endorser because it is, after all, a marketing or a promotional message. However, the FTC pointed out that a connection is not always needed for an advertiser to be liable for an endorsement. If, for example, an advertiser retweets a positive statement made by an unrelated third party or publishes in an advertisement a positive review by an unrelated third party, those statements or reviews become endorsements for which an advertiser may be liable. The despite the lack of any connection.

Jessica:
Right. Then, there are performance claims. Performance claims must be for the typical result. If the results being hyped are atypical, then the advertiser must clearly and conspicuously disclose the generally expected performance in the depicted circumstances. To be effective, the disclosure must alter the net impression of the advertisement so that it’s not misleading. Scott: If the brand is reposting content from a paid endorser or someone who received anything of value to make that initial post, the brand must make sure that the material connection between the brand and the endorser is conspicuously disclosed.

Jessica:
In boosting, upvoting, reposting, pinning, or liking consumer reviews of products, a brand should not take action that have the effect of distorting or otherwise misrepresenting what consumers think of their product. This includes suppressing or deleting negative reviews or comments.

Scott:
Like risks with FTC compliance, similar to influencers, brands also face IP infringement risks. In an influencer marketing campaign, a brand will hire an influencer to create content for the purpose of endorsing and promoting a product. Even though the contract between the brand and the influencer generally requires the influencer to create the original content and not use content that belongs to someone else, sometimes that doesn’t happen. Sometimes an influencer may use, whether intentionally or unintentionally, content that doesn’t belong to them. If that happens in an integration post, the brand faces a risk of being tied up in the copyright infringement case.

Jessica:
True. As an example, let’s look at the O’Neill versus Ratajkowski case. In that case, model Emily Ratajkowski posted a photo of her outside of a flower shop in downtown Manhattan. The photo showed Ratajkowski with her face covered by the bouquet of flowers. O’Neil sued Ratajkowski and her loan-out company for copyright infringement. But it’s important to note that the content used doesn’t necessarily have to be the entire photo. It could be many things, an image, footage, or even music. The infringement by the influencer may not be intentional. It’s amazing how many people who make their living by posting content think that if something’s on the internet, it’s available to be used.

Scott:
That’s so true. Even though the agreement between the brand and the influencer may have an indemnity provision, as we said last week, indemnity is only as good as the indemnitor’s pocketbook. While an influencer may contractually have an obligation to indemnify the brand, if the influencer doesn’t have the resources to mount a defense, the defense will end up falling on the brand.

Jessica:
Right. Occasionally, brands will use UGC or user-generated content on a brand’s social media account. What may be okay in an ordinary person’s post, such as a photograph with multiple cosmetic brands, could become trademark infringement if a brand were to post the same image on its own social media accounts.

Scott:
That’s right. That could present a big problem for a brand. It’s not so much of the risk that comes from the brand’s interaction with the person that originally created the post or its interaction with the UGC. It’s more that the brand’s social media manager not really understanding the the complexity of the risks involved in using that post as an endorsement.

Jessica:
Sometimes it’s also social media representatives who also believe that just because something is on the internet means it’s available to be used, or they think that just because an image is in a meme generator, that meme that includes someone else’s image may be freely used by the brand. Failing to understand that just because content is on the internet doesn’t mean it’s available for use can be legally problematic for a brand. Similarly, failing to review the license agreement or terms of use for that meme generator site or photo library site could also be legally problematic. I can’t tell you how many times I’ve looked into a library or a meme site’s terms of use, and I found that they make no representations or warranties whatsoever about having any licenses and don’t provide any indemnity.

Scott:
Another area where I see brands have issues with is using a stock library where they fail to understand the limitations on the usability of image designated as editorial only. Generally, when an image is designated as editorial only, this means that some type of necessary clearance element, an element that would make the image safe for commercial use, is missing if a brand uses an image that is marked as editorial only, that could have fairly significant legal issues.

Jessica:
True. If that stock photo contains an image of a person and that person’s rights have not been cleared, then the brand could be facing a right of publicity lawsuit, and if that person is famous, a false endorsement claim.

Scott:
So, as you can see, there are a fair number of risks that need to be navigated when it comes to brands and social media marketing. Now, these risks can be navigated. We do it all the time, and brands do it all the time. But, it does require thoughtfulness. I think one key takeaway here, Jessica, tell me if you agree, is start with a general understanding that just because it’s on the internet doesn’t mean that it’s available for use. And treat clearance as if you were producing a television show. We take television clearance very seriously, but somehow, for whatever reason, that doesn’t seem to translate all the time to digital marketing. I think if brands and their staff approach digital marketing with that degree of caution, there might not be so many issues.

Jessica:
I agree completely. It really comes down to doing your due diligence, because if you don’t, the potential liability could be massive.

Scott:
I understand that digital marketing moves fast, but liability is expensive, and it’s worth slowing it down just a little bit.

Jessica:
Absolutely. Where’s to live by? Yeah.

Scott:
Thanks for joining us again, Jessica.

Jessica:
Thank you for listening to this episode of “The Briefing”. We hope you enjoyed the episode. If you did, please remember to subscribe, leave us a review, and share the episode with your friends and colleagues. If you have any questions about the topics we covered today, please leave us a comment.