Social media has irrevocably altered many of the ways we interact and receive information, including news and advertisements. Instagram, for instance, has become a major mode of outreach for brands, enabling them to easily connect with loyal and potential customers. It has also become a substantial source of income for many “social media influencers” and celebrities who introduce their sometimes millions of followers to new products. Often times, though, the line is blurred between a personal choice to use that product and a sponsored post, where payment or other remuneration was made in exchange for the placement. The U.S. Federal Trade Commission (“FTC”) has begun cracking down on promotions that don’t inform viewers that the presence of a product in an Instagram post is an advertisement. Under FTC “truth-in-advertising” rules, spokespeople are required to make disclosures about payments. Currently, there are more than 700 million active monthly users on Instagram. A study from Mediakix, a media agency, found during a one-month period that 93% of the sponsored posts from Instagram’s 50 “most followed” celebrities didn’t meet the FTC’s requirements.

In an effort to make things more transparent, Instagram introduced a feature in June that will make it easier to label posts that are paid promotions. In a public statement, the Facebook-owned company said, “As more and more partnerships form on Instagram, it’s important to ensure the community can easily recognize when someone they follow is paid to post content,” according to Reuters. The new “paid partnership with” tool will allow creators to tag the business they have a relationship with, and the notice would appear above the picture. Instagram also indicated that it would develop a policy about paid endorsements based on feedback, and would include some process for enforcement eventually. For now, it remains optional. Instagram began testing the feature back in February before the official rollout this June. According to Mashable, the creative program director at Instagram Charles Porch said, “This is something I’ve been talking to our creators about with for a while. In terms of how long it’s taken us to get here, we wanted to be very careful about it.”

Back in April, the FTC sent a letter to more than 90 influencers and marketers on Instagram notifying them that they had to display clear and conspicuous notice about commercial relationships. Although the FTC did not specifically name who received letters, The Fashion Law noted that watchdog group Public Citizen’s formal complaint to the FTC included the Kardashians/Jenners, David and Victoria Beckham, Naomi Campbell, Jennifer Lopez, and Steph Curry, to name a few.

Recently, Lord & Taylor and Warner Bros. both settled with the FTC after failing to publicly disclose payments to influencers about products.

Instagram is not collaborating with the FTC on this new measure.

For more information on FTC rules on sponsorship disclosures, please contact The Fried Firm.