FTC Compliance and Disclosure Rules for Social Media Influencers and Brands

If you post paid content, use affiliate links, or accept free products in exchange for a review, the Federal Trade Commission (FTC) has rules that apply to you – and the penalties for getting it wrong reach up to $50,120 per violation.

The FTC's disclosure requirements cover every platform and every format: Instagram posts, TikTok videos, YouTube reviews, podcast sponsorships, and live streams. Whether you are an individual influencer, a brand managing a roster of content creators, or a professional association working with ambassadors, compliance is not optional – and ignorance of the rules is not a defense.

If you receive a sponsored payment, a free product, an affiliate commission, or any other material benefit from a brand, you are required to disclose it clearly, conspicuously, and in a way that an ordinary viewer cannot miss.

This page covers what the FTC requires, when and how to disclose, and what to do if you receive an FTC warning letter.

Our social media law team has served as counsel to a number of online influencers, brand ambassadors, and professional associations seeking guidance on adequate and compliant disclosures. Contact us today at (713) 783-3110 to discuss FTC compliance for your online business. 

How the FTC Regulates Social Media Advertising

The FTC's authority over social media advertising comes from Section 5 of the Federal Trade Commission Act, which sets three baseline requirements for all advertising in the United States:

• Advertising must be truthful and non-deceptive.
• Advertisers must have evidence to support their claims.
• Advertisements cannot be unfair.

Those requirements predate social media by decades. To address how Section 5 applies to influencer marketing, affiliate links, and sponsored content, the FTC published its Guides Concerning the Use of Endorsements and Testimonials in Advertising – commonly called the Endorsement Guides. The Guides are not law. They are the FTC's formal statement of how it interprets and enforces Section 5 in the digital advertising context – which means they define what the agency will treat as a violation.

The FTC most recently updated the Endorsement Guides in June 2023, expanding definitions to include virtual influencers, clarifying that social media tags can constitute endorsements, and adding guidance for brands that partner with creators.

If you create sponsored content, use affiliate links, or accept free products in exchange for a review, the Endorsement Guides apply to you. Familiarity with them is not optional – it is your responsibility as an influencer or brand.

What Is an Endorsement According to the FTC? 

The FTC defines an endorsement as any advertising, marketing, or promotional message that consumers are likely to believe reflects the genuine opinions, findings, or experiences of someone other than the sponsoring advertiser – even if that person's views are identical to the brand's own claims.

The definition is broader than most influencers expect. It covers far more than a direct product review.

The FTC treats the following as endorsements: verbal statements, social media tags, demonstrations, depictions of a person's name, signature, likeness, or other identifying characteristics, and the name or seal of an organization. Under the June 2023 update to the Endorsement Guides, the definition also extends to virtual influencers, brands acting as endorsers, fake reviewers, and entities that merely appear to be an individual or institution.

The practical implication: if your content could lead a reasonable viewer to believe you are sharing a genuine personal opinion about a product – and you have a material connection to the brand behind it – you are making an endorsement under FTC rules.

Who Is an Endorser?

The FTC's 2023 update expanded who qualifies as an endorser. The list now includes:

• Individual influencers and content creators
• Brand ambassadors
• Virtual and AI-generated influencers
• Organizations and professional associations
• Employees who post about their employer's products
• Fake or incentivized reviewers

If you fall into any of these categories and you have a relationship with a brand, the disclosure rules apply to you.

When Do You Have to Disclose?

The disclosure obligation triggers whenever a "material connection" exists between you and the brand you are promoting – that is, any connection that might affect how a viewer evaluates your endorsement, and that viewers would not reasonably expect on their own.

If your audience would assess your review or recommendation differently knowing about your relationship with the brand, you are required to disclose it.

The FTC does not limit this to cash payments. The following relationships all require disclosure:

• You are paid to promote. This covers any form of direct compensation for a post, video, story, podcast mention, or livestream – regardless of platform.
• You receive free products or samples. Receiving a product in exchange for a review or feature triggers disclosure, even if the brand places no conditions on what you say.
• You participate in a sponsored event or press trip. Travel, accommodations, event access, or experiences provided by a brand constitute compensation.
• You earn affiliate commissions. If you include a link that generates income when your audience clicks or buys, that financial relationship must be disclosed.
• You have a family or personal relationship with someone at the brand. A connection your audience cannot see is a material connection the FTC expects you to disclose.
• You hold a financial interest in the brand. Equity stakes, investments, or revenue-sharing arrangements all require disclosure.
• You receive contest entries, gift cards, or other non-cash incentives. The form of compensation does not change the obligation.

The overarching test is straightforward: if the benefit would surprise your audience, disclose it.

One Additional Rule Worth Knowing

You cannot endorse a product you have not actually used. And if you are paid to promote something you tried but did not like, you cannot say you liked it. The FTC requires that endorsements reflect your honest experience. Sponsored does not mean scripted – it means disclosed.

FTC Compliance for Expert Endorsements

Subject matter experts, such as licensed health and mental health professionals, dietitians, engineers, attorneys, etc., have an additional responsibility to only endorse products or services within their expertise. 

The Guides provide that “[w]henever an advertisement represents, directly or by implication, that the endorser is an expert with respect to the endorsement message, then the endorser’s qualifications must in fact give the endorser the expertise that he or she is represented as possessing with respect to the endorsement.”

FTC emphasized this obligation in a November 2023 blog post: “Consumers are likely to give greater weight to the opinions of health professionals, which compounds the potential for injury when material connections aren’t properly disclosed.”

When creating content, an expert must exercise their expertise in evaluating product features or characteristics only within that expert’s area of expertise and which is relevant to an ordinary consumer’s use or experience with that product. For example, if a piece of content is created by “Dr. Smith” and endorses a new prescription drug, Dr. Smith must be a medical doctor practicing that particular area of medicine (i.e. Dr. Smith cannot be a PhD, as the implication is that he is a medical doctor).

How to Disclose:

Make sure your visitors and followers will see and understand the disclosure. The consumer should not have to search for a disclosure or wonder what it means. 

The disclosure should be placed where it is hard to miss and within the endorsement message itself. For example:

• If a claim is made in video format, the required disclosure must be present on the video itself, and if the content is audio, there must be an audio disclosure.
• If the post contains both an audio and video element, the disclosure must be made both audibly and on the video itself.
• A written disclosure should stand out from any accompanying text or other visual elements so that it is easily noticed, read, and understood. For example, superimpose “#ad” or “Sponsored by [BRAND]” over photos or videos in a high-contrast font that stands out against the background.
• If an endorsement is included in a live stream, the disclosure should be repeated periodically – verbally and visually – so viewers who may join late will also get the disclosure.

More tips for compliant disclosures:

• Don’t use vague or confusing terms like “sp”, “spon”, or “collab”, and avoid stand-alone terms like “thanks” or “ambassador”.
• Always include the name of the brand or company who is the sponsor of the post; tagging a brand alone is not sufficient.
• You can use a built-in disclosure tool, but do not rely on it as the only form of disclosure.
• Do not mix your disclosure into a group of hashtags or links; add the disclosure at the beginning of a post or caption.
• A single disclosure in your bio, profile, or home page that products are provided free or that you have a partnership is not enough.

It’s important to note that there is no bright-line rule or answer for what meets FTC’s definition of a “clear and conspicuous” disclosure. Digest the FTC Endorsement Guides and other FTC resources and make the assessment in light of the format and platform of your paid endorsement. Your goal should be to make the disclosure difficult to miss and easily understandable by ordinary consumers.

Both Advertisers and Influencers Have an Obligation to Disclose Material Connections

Companies, brands, and industry associations also bear responsibility for partnerships with influencers who are not disclosing their relationships.

Advertisers should make a reasonable effort to instruct social media partners on clearly and conspicuously disclosing material connections, especially if deceptive practices could cause consumers harm. Advertisers also have a responsibility to monitor their influencer partners for compliance. 

What Are the FTC Penalties for Inadequate Disclosures?

According to their FAQs, “if concerns about possible violations of the FTC Act come to our attention, we evaluate them case by case. If law enforcement becomes necessary, our focus usually will be on advertisers or their ad agencies and public relations firms. However, action against an individual endorser might be appropriate in certain circumstances – for example, if the endorser hasn’t made required disclosures despite warnings.”

Violations of the FTC Act can result in federal injunctions and civil penalties of up to $50,120 per violation. 

Have You Received an FTC Warning Letter?

If a violation of the FTC Act does come to the attention of the FTC, the agency will most often send a warning letter. The purpose is to warn influencers or advertisers that their conduct may be unlawful and to immediately correct problematic advertising or marketing language, or face serious legal consequences. 

If you receive such a letter, contact the social media law team at Hendershot Cowart P.C. We can help you address the problematic endorsements and help you prepare your response to the FTC. Most often, if the alleged violation is addressed within the time allowed, the FTC will not take formal enforcement action.

FTC Defense and Compliance Attorneys for Social Media Influencers

Don’t let FTC enforcement actions discourage you from exploring paid sponsorship and endorsement opportunities. Instead, enter into these relationships with confidence with the counsel of an experienced social media lawyer. 

Our law firm was among the first to recognize the legitimate legal risks and regulatory concerns of today's influencers, and we routinely counsel clients on FTC and FDA compliance, intellectual property protection, business formation, and influencer and content licensing agreements. We can review your campaigns for compliance and counsel you on other legal matters to protect your brand, online income, social media accounts, and other digital assets.

Call (713) 783-3110 today or contact us online to get started.