Undisclosed ads on Instagram are no longer just limited to posts by celebs

instagram 600m users brands
Instagram has a stealth advertising problem, but the issue is more wide-ranging than initially thought.

In a letter to the Federal Trade Commission (FTC), consumer advocacy groups are urging action against these types of photos (which are essentially ads that haven’t been correctly labeled as sponsored posts), BuzzFeed reports.

According to FTC guidelines, paid endorsements online on social media must clearly be identified using appropriate hashtags such as #advertisement or #ad. In the past, the FTC has promised to crack down on celebs breaking the rules on Instagram and elsewhere. However, the groups that signed the letter — which include Commercial Alert, Campaign for a Commercial-Free Childhood, and Center for Digital Democracy — claim the posts in question are continuing to proliferate.

General users may be able to make the distinction when they see a Kardashian, for example, posing with a brand of tea they’ve never heard of. But the problem now facing the FTC and Instagram is that these types of posts are no longer limited to celebs and influencers. In fact, marketers are now targeting regular users, or what they term “microinfluencers” by offering them free products in exchange for social media posts.

The letter highlights two websites in particular, operated by Influenster and Bzzagent, that encourage users to share posts in which they’re seen using a free product. In exchange, the so-called “microinfluencer” receives even more freebies from brands including Maybelline, BITE beauty, Kleenex, and International Delight. Anyone with a social media account can join the websites and receive free products. On its home page, Influenster (which sends out boxes filled with cosmetics to its members) claims to have more than 2 million “socially active trendsetters.”

The groups identified 50 recent examples of undisclosed ads on Instagram. The users behind the images ranged from A-list celebs, such as David Beckham and Ryan Reynolds, to microinfluencers with much smaller followings.

Although Influenster tells users to disclose their endorsements, most failed to do so, according to the letter. Bzzagent, on the other hand, allegedly doesn’t even bother to inform its users on the appropriate FTC guidelines for online ads. Both companies respectively refute the claims made by the groups.

Bzzagent reached out to Digital Trends with the following statement: “Bzzagent is in full compliance with FTC guidelines.  We take Agent disclosure and compliance with FTC regulations very seriously,” states Brian Cavoli, director of marketing, Bzzagent. “Anyone violating these rules repeatedly are unable to participate in any program.”

Influenster claims the allegations made in the letter are “inaccurate.” The company’s PR manager Stephanie Tan states: “Almost all of our members follow our directive and adhere to proper disclosure rules that are in compliance with FTC in their social media posts. In the rare cases that they don’t, our team reaches out to them to remind them to properly disclose in order to avoid suspension from Influenster.”

Tan claims the example posts from Influenster members are accurately disclosed as unpaid product reviews. She adds: “We believe we were unfairly targeted by [the groups].”

The letter states the following in regards to the posts: “Undisclosed paid endorsements from average consumers represents a dangerous trend that the FTC must address, since people generally place more trust in recommendations made by their peers and have no reason to believe that their friends, colleagues and family are engaging in paid product promotion.” It continues: “Thus, companies are preying off of the trust … of smaller level influencers.”

Updated 12/01/2016 by Saqib Shah: Added statements from Influenster, and Bzzagent.

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