The case against Lord & Taylor is the first enforcement action since publication of the FTC’s enforcement policy statement on native advertising in December last year, which outlined how the commission would approach deceptively formatted advertisements online. The proposed consent order was opened for public comment on 23 March.
According to the FTC, Lord & Taylor, to promote the launch of a new clothing line aimed at women aged between 18 and 35, paid for an advertorial on a paisley asymmetrical dress in an online fashion magazine, but did not require the inclusion of a disclosure that publication of the article and accompanying photo were paid for.
The department store chain also paid for a photo of the dress to be posted on the magazine’s Instagram page, but again, failed to have the commercial arrangement disclosed.
Lord & Taylor then paid 50 Instagram ‘influencers’ between $1,000 and $4,000 to post photos of themselves in the dress on Instagram on a single specified ‘product bomb’ weekend in March 2015, which was the same weekend when the magazine posted its Lord & Taylor-approved photo.
The department store chain preapproved all copy before it went to press, right down to the hashtags to be used on Instagram. That campaign reached 11.4 million individual users, resulting in 328,000 brand engagements with Lord & Taylor’s Instagram handle, according to the FTC, and the dress sold out.
Without admitting any guilt, Lord & Taylor promised to not falsely claim, expressly or by implication, that an endorser is an independent user or ordinary consumer, according to the FTC.
Any material connection between between the company and an endorser must be clearly disclosed in the future, while the department store chain cannot suggest or imply that a paid ad is a statement or opinion from an independent or objective publisher or source.
Third parties must provide comments on the proposed settlement by 14 April.