Cardi B might like it, but the Federal Trade Commission (“FTC”) did not.  On March 5, 2020, the agency sent Cardi B and other high-profile influencers warning letters alleging that the influencers made inadequate disclosures in their endorsements of Teami tea.  The letters followed on the heels of the FTC’s proposed order against Teami, LLC for allegedly making deceptive claims about weight loss and other health benefits in their advertisements and failing to adequately instruct influencers about how to comply with the law when endorsing Teami products.

As the FTC complaint described, Teami sells teas, including Teami Profit Tea, Teami Skinny Tea, and Teami Colon Tea, and skincare products like Teami Soothe Infuse Facial Oil.  Among other things, the FTC alleged that Teami made false or unsubstantiated representations to consumers about its products, including its Profit Tea, which it claimed “could treat everything from cancer to constipation” and could “unclog arteries.” The FTC also charged Teami with deceptively failing to disclose its material connection with influencers promoting its products.

The FTC’s Endorsement Guides advise influencers and other endorsers to “clearly and conspicuously” disclose any “material connection” between an endorser and an advertiser.  Material connections are those that would change the weight that a reasonable person would give to an endorsement if they knew about the connection—including, for example, the endorser being paid to give an endorsement, receiving free products, or having an employment or familial relationship with the advertiser.  When such a connection exists, the endorser should inform consumers about it using clear and conspicuous language.

In its warning letters to influencers, the FTC identified disclosures made on Teami influencers’ Instagram posts that were not clear and conspicuous because, among other things, they could not be seen by a viewer unless the viewer clicked “more” to reveal additional text.  The FTC also warned against failing to make the requisite disclosures in videos promoting Teami products, since consumers can watch videos without reading any disclosures below the video.  The FTC suggested that influencers make video disclosures with language such as, “[Brand] sponsored the post” or “I am partnering with [Brand] for this video.”

Significantly, Teami had a social media policy that it implemented in 2018 following a previous FTC letter concerning endorsements, and Teami claimed it had provided this policy to its influencer partners.  In some cases, influencers also were required to get Teami approval for their posts.  Still, the FTC alleged that many posts promoting Teami products did not comply with Teami’s social media policy or Section 5, and that written policies and requirements, without adequate monitoring and follow-up, are not sufficient.  Notably, the Commission also issued a statement that emphasized “the Commission will continue to review [its] approach to injunctive relief, and in particular, whether [Commission] orders adequately ensure that advertisers under order take responsibility for monitoring their marketing.”

The settlement imposes a $$15,209,452 monetary judgment, which is partially suspended upon payment of $1 million.  The order also requires defendants to disclose material connections and to implement a monitoring program to ensure its endorsers are making the required disclosures.  Meanwhile, the FTC recently issued a notice seeking public comment on whether to update its Endorsement Guides, and will be accepting submissions until April 21, 2020.  We are closely following this proceeding and case developments in this area and will continue to keep you apprised on Inside Privacy.

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Photo of Laura Kim Laura Kim

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim…

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim advises on a wide range of consumer protection issues, including green claims, influencers, native advertising, claim substantiation, Made in USA claims, children’s privacy, subscription auto-renewal marketing, and other digital advertising matters. In addition, Ms. Kim actively practices before the NAD, including recent successful resolution of matters for both challengers and advertisers. She co-chairs Covington’s Advertising and Consumer Protection Practice Group and participates in the firm’s Internet of Things Initiative.

Ms. Kim re-joined Covington after a twelve-year tenure at the FTC, where she served as Assistant Director in two divisions of the Bureau of Consumer Protection, as well as Chief of Staff in the Bureau of Consumer Protection and Attorney Advisor to former Chairman William E. Kovacic. She worked on key FTC Rules and Guides such as the Green Guides, Jewelry Guides, and the Telemarketing Sales Rule. She supervised these and other rule making proceedings and oversaw dozens of the Commission’s investigations and enforcement actions involving compliance with these rules. Ms. Kim also supervised compliance monitoring for companies under federal court or Commission order.

Ms. Kim also served as Deputy Chief Enforcement Officer at the U.S. Department of Education, where she helped establish a new Enforcement Office within Federal Student Aid. In this role, she managed investigations of higher education institutions and oversaw issuance of fines and adverse actions for institutions in violation of federal student aid regulations. Ms. Kim also supervised the borrower defense to repayment division and the Clery campus safety and security division.