Less than six months after issuing guidelines regarding proper native advertising and marketing a federal agency is settling its first case with a well-known retailer accused of an infraction.
The Federal Trade Commission (FTC) and Lord & Taylor have reached a settlement on claims the retailer did not disclose it paid for an article marketing its collection and paid social media influencers to market the article and the clothing.
Lord & Taylor reportedly compensated 50 online fashion-focused social media outlets to post photos of a specific dress and did not make it clear to consumers viewing those posts that it was a paid marketing effort, according to a CBS News report. The retailer supposedly paid between $1,000 and $5,000 for the marketing efforts on Instagram and paid online fashion publication Nylon to publish an article on the dress but did not make it clear to readers that the article was paid marketing.
"But again, there were no disclosures saying it was paid advertising," the FTC stated in a post. "So while it looked like the magazine was giving an independent, fashion-forward recommendation about this dress, it was actually an ad in disguise."
Lord & Taylor noted it took quick action regarding the FTC claims.
"A year ago, when it came to our attention that there were potential issues with how the influencers posted about a dress in this campaign, we took immediate action with the social media agencies that were supporting us on it to ensure that clear disclosures were made," Lord & Taylor spokesperson Molly Morse told USA TODAY.
As part of the deal Lord & Taylor is prohibited from giving consumers the impression that paid advertising is from an independent source and that any paid social media influence strategies must be clearly indicated to consumers as well.
"Lord & Taylor needs to be straight with consumers in its online marketing campaigns," Jessica Rich, director, FTC Bureau of Consumer Protection, said in a statement. "Consumers have the right to know when they're looking at paid advertising."
The FTC issued its native advertising policy statement in late 2015.
"The Commission will find an advertisement deceptive if the ad misleads reasonable consumers as to its nature or source, including that a party other than the sponsoring advertiser is its source. Misleading representations of this kind are likely to affect consumers’ decisions or conduct regarding the advertised product or the advertisement, including by causing consumers to give greater credence to advertising claims or to interact with advertising content with which they otherwise would not have interacted," states the policy.