Yesterday, the Federal Trade Commission laid down a clear marker for retailers in announcing a settlement with Lord & Taylor. This is the agency’s first native advertising case since issuing its Enforcement Policy Statement on Deceptively Formatted Advertising and its Native Advertising Business Guidance in December 2015.
Yesterday’s case centers on Lord & Taylor’s plan last year to promote its “Design Lab” collection – a private label clothing line aimed at the millennial set – through native advertising editorials and influential Instagrammers. The retailer gifted one particular dress to 50 fashion influencers and paid the influencers between $1,000 and $4,000 to post one photo of themselves wearing the dress during a specified weekend in March 2015. According to the FTC’s complaint, Lord & Taylor’s contracts required the influencers to use the @lordandtaylor user designation and #DesignLab campaign hashtag in their posts, but did not require the influencers to disclose that they had been paid by Lord & Taylor. The FTC alleges that while Lord & Taylor exercised editorial oversight over the posts, it did not add any disclosures that the posts were part of a Lord & Taylor-sponsored advertising campaign.