FTC brings action against Lord & Taylor over deceptive ads

Dive Brief:

The Federal Trade Commission has brought an enforcement action against Lord & Taylor under its new native advertising guidelines.
Fifty Instagram personalities—so-called "social media influencers"—wore the same dress on the same day in March 2015 and added hashtags without revealing that Lord & Taylor paid them to promote its spring collection.
A feature appearing in Nylon magazine also failed to disclose the retailer’s sponsorship, flouting disclosure guidelines already in place.

Dive Insight:

The Federal Trade Commission brought its first enforcement action under new regulations governing native advertising this week, charging Lord & Taylor with using deceptive advertising practices in a March 2015 social media campaign that showed 50 personalities wearing the same asymmetrical paisley dress on Instagram.

The department store chain failed to reveal that it had paid the endorsers up to $4,000 each to wear the dress and use hashtags related to Lord & Taylor and its Design Lab label, flouting FTC regulations. Lord & Taylor again failed to disclose sponsorship of featured placements in Nylon magazine and its Instagram page.

"The Design Lab Instagram campaign reached 11.4 million individual Instagram users, resulted in 328,000 brand engagements with Lord & Taylor’s own Instagram user handle (such as likes, comments, or re-postings), and the dress subsequently sold out," the FTC wrote.

Lord & Taylor indicated that it wasn’t trying to deceive consumers, cooperated fully with the FTC inquiry, and will observe the guidelines going forward. Under the terms of the settlement, the department store chain must launch a monitoring program that prevents such errors in the future and report back to FTC periodically.

The implication to advertisers is clear: Any sponsorship, payment or incentive that leads to a media mention in the social or traditional media requires disclosure. Legal experts say that this is likely the first of many actions, so retailers should take care to reveal any such connection immediately, or face an FTC inquiry and possible fines.