The Rise Of Influencer Marketing: How To Protect Your Company’s Liability

Unless you have a flip phone, you are exposed to influencer marketing every day. Influencing started as something only pro-athletes and celebrities could accomplish by having their face associated with cereal (think Michael Jordan) and shoes (think Michael Jordan). Not anymore.

According to mediakix.com, there are between 3.2 million and 27.8 million influencers on Instagram, YouTube, and/or TikTok who profit by posting their “opinions” on products. Influencer marketing is now a $13.8 billion global industry. One reason influencer marketing has become such a staple in marketing techniques is the accessibility of influencers to any company of any size and type. Have you heard of Sophie Hinchliffe? With her 4.4 million Instagram followers in the area of home cleaning, she would be a good one for any detergent brand to get to know. @Juliatakesahike? She has 5,688 Instagram followers who seek her advice on hiking trails and adventures and is an influencer for a wide variety of clothing brands from 32 Degrees to Drifted Co.

The marketing options are endless in terms of what influencer to use, where to have them post, and what type of post (video/photo/story/TikTok/reel). Regardless of what channel to use them for, marketing through influencers gives companies invaluable statistics. While traditional mail marketing allowed companies to know where their materials were sent, today, social media marketing allows companies to know many people see their ads, how many engaged with the ads, where the people live, who engaged or did not engage, what overall likes and dislikes viewers have, and so many other statics.

Influencer marketing has grown to the point where it is here to stay, and with this new method of marketing are various specific marketing legal considerations that never existed before. 

As attorneys, Steven Weigler and Marie Dutton found these 4 issues the most obvious potential issues and important to protect your company’s liability:

1. Make Sure You Own Or At Least Licence What You Post

Influencers (or their photographer) own the copyright to the videos and pictures they create to market your products and services. Copyright law grants the creator of the work exclusive rights to reproduce their work, distribute copies, and prepare derivative works. So, when the influencer makes an Instagram live video to explain the benefits of your product, the influencer owns the copyright to the video. Thus, without any agreement with the creator of the work, companies do not have any rights to re-post or use the influence’s materials on other platforms (such as their website). Any usage of influencers’ materials without their permission is copyright infringement. On top of that, there is the issue that the actual creator (the copyright owner) may not be the influencer. Thus, companies need to create contracts that properly account for the fact the influencer may not take the photographs and ensure the influencer is taking the proper steps to receive the copyright rights to their materials.

2. Influencer’s Name And Likeness Rights Need To Be Explicitly Included

The right of publicity is the right of a person to control the commercial exploitation of their name, likeness, or voice. This means if the company uses the influencer’s name or a photograph of their face on their website, or maybe re-posts a user of their product’s Instagram post without receiving permission, then that person could sue the company. For example, a tenant of an apartment complex posted a picture of his dog enjoying the local beach and tagged the complex. The complex re-posted the photograph without permission, and the tenant sued. The tenant’s face was not visible in the photograph, so the courts threw out the suit (but you get the picture).

Over thirty US states recognise some form of the right of publicity. Although not every state has a right of publicity, influencer marketing is a nationwide affair, and laws in states other than where your company is located may apply. Thus, it is highly important to protect your company’s liability and receive consent to use the influencer’s name, image, and likeness as well. This applies to any re-posts as well (as long as someone’s name or face is visible).

3. Influencers And FTC

Another legal issue that arises from influencer marketing is deceptive marketing, as defined by the Federal Trade Commission (“FTC”). The FTC requires endorsers to disclose that they are receiving funding for their endorsement and requires the influencer not to make any false or unsubstantiated statements. Luckily, Instagram and other social media platforms have created specific ways for influencers to easily be “sponsored by” or “paid for” to ensure they meet FTC requirements. However, it behoves any corporation to add provisions in their influencer agreements reminding the influencer to follow the FTC laws and minimise the corporation’s liability if any FTC issues occur.

4. Privacy

As marketing methods expand, so have privacy laws with a specific focus on informing consumers about how their data is used and providing opt-out options. California and the European Union have the most robust privacy laws. In addition, over twenty other US states have active privacy legislation or have already enacted privacy legislation. These laws have a particularly prominent role in influencer marketing because: 

  1. Influencers tend to post blogs that do not have any privacy compliance.
  2. Social media is mainly run through cross-contextual behavioural advertising.
  3. Personal data of consumers is exchanged through many third-party hands to provide companies with the data from their influencer marketing. Thus, companies need to implement their own privacy policies and minimise their privacy liability with their third-party collaborators, like influencers, through contracts.

Social media and influencer marketing pose a lot of liability risks for companies. Having a well thought out influencer agreement is one of the easiest ways to minimise liability. There are many ways to accomplish this and having a strategic law counsel on your side is key to minimising costs and maximising the rewards social media and influencer marketing can bring.

About the authors:

Steven Weigler specialises in the protection of brand, IP, and other business assets. His entrepreneurial perspective of building a startup balanced by his role as senior counsel for a Fortune 50 technology company has allowed him to develop the skills required to be empathetic legal counsel.

Marie Dutton specialises in corporate and intellectual property law. She holds a B.S. in Mechanical Engineering from Colorado State University and a J.D. from the University of Missouri School of Law. She is also a former Legal Extern with Venture Partners, the Technology Transfer Office of University of Colorado-Boulder.

https://emergecounsel.com/

info@emergecounsel.com

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