Beauty is a visual industry and so many consumers rely on photos, videos and tutorials—in addition to personal recommendations and their own experiences—before they purchase cosmetic and personal care products. In fact, almost half of U.S. beauty shoppers purchase new products based on online feedback from others, which is why it is imperative that influencers’ messaging be clear, transparent, accurate, and substantiated. To better understand best practices, The Benchmarking Company sat down with Jennifer Santos, Esq., to tap into the expertise of BBB National Programs’ National Advertising Division (NAD; see What is the National Advertising Division?) on endorsement and testimonial advertising law to answer the nagging questions on every influencer marketer’s mind. Here's what we learned.
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Beauty is a visual industry and so many consumers rely on photos, videos and tutorials—in addition to personal recommendations and their own experiences—before they purchase cosmetic and personal care products. In fact, almost half of U.S. beauty shoppers purchase new products based on online feedback from others, which is why it is imperative that influencers’ messaging be clear, transparent, accurate, and substantiated. To better understand best practices, The Benchmarking Company sat down with Jennifer Santos, Esq., to tap into the expertise of BBB National Programs’ National Advertising Division (NAD; see What is the National Advertising Division?) on endorsement and testimonial advertising law to answer the nagging questions on every influencer marketer’s mind. Here's what we learned.
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Influencers’ Dominance in Beauty
The rise of platforms such as TikTok, Instagram, and YouTube bred a new form of advertising—dominated by influencers—that is more visual, engaging, seemingly organic and influential in a consumer’s beauty decisions.
The influencer marketing industry is expected to exceed $24 billion by the end of 2024. While influencer marketing is popular in many industries, it is especially popular in beauty.
This makes these influencers’ messaging particularly worthy of scrutiny for accuracy, clarity, transparency and substantiation.
Q&A: Endorsement & Testimonial Best Practices for Beauty Brands & Influencers
What advice would you give to brands who are using paid influencers to help market their products?
JS: The best advice I could give brands is to consult the FTC’s Guides Concerning Use of Endorsements and Testimonials in Advertising (“the Guides”) for guidance on how to craft influencer marketing that is both transparent and truthful.
The Guides were updated in June 2023 to address the prevalence of influencer marketing in social and other types of media and consumer’s increased reliance on online reviews to make purchasing decision.
The updated Guides include over 50 specific examples to illustrate how the Guides’ principles apply to real-world situations. In addition, the Guides were released along with a related Business Publication: FTC’s Endorsement Guides: What People Are Asking (Endorsement FAQs) that includes 40 questions and answers on influencer marketing including how to clearly and conspicuously disclosure material connections across platforms.
The Guides reflect the basic truth-in-advertising principle that endorsements must be honest and reflect the actual experience of the endorsers. In addition, endorsements cannot be used to make a claim the brand itself could not legally make (see: How can you substantiate beauty claims?).
The updated Guides also make clear that an endorsement can come in many forms, including, but not limited to verbal statements, tags in social media posts, and demonstrations and that an endorser can be an actual person or a fictitious individual, group, or institution.
Is there a difference between paying an influencer and giving them free products to try? Also, is there a monetary value cap that is acceptable/unacceptable to gift to influencers? Where is the line or is there one?
Is there a difference between paying an influencer and giving them free products to try? We have answers.Coetzee/peopleimages.com
For instance, a social media post that shows an influencer praising a mascara for boosting her eyelash volume and that influencer also receives money from the brand to endorse that mascara, the post is misleading unless the material connection is disclosed.
Alternatively, when a brand sends free product to an influencer with the hopes that the influencer will try the product, the FTC notes that receiving free product, regardless of whether the brand has a paid relationship with the influencer or requires an endorsement in return, is a material connection that needs to be disclosed.
Brands often ask whether there is a dollar amount that triggers a material connection disclosure. It is not the monetary value of the product that is the relevant consideration but whether the influencer’s connection to the brand (i.e., the fact that the influencer was given free product) affects the weight or credibility of the endorsement. The Guides further note that material connections can even include other benefits such as early access to a product.
What does a proper material connection disclosure look like?
JS: The disclosure of a material connection must clearly communicate the nature of the connection sufficiently for consumers to evaluate its significance. It does not require disclosure of the complete details of the connection.
"In a recent case, NAD recommended that a beauty brand require one of its paid influencers to modify a video demonstration that depicted the product’s performance on Instagram to include a clear and conspicuous material connection disclosure in the video demonstration itself," says Jennifer Santos of NAD.estherpoon
The Guides define “clearly and conspicuously” as a disclosure that is “difficult to miss (i.e., easily noticeable by ordinary consumers) and easily understandable by ordinary consumers.”
If the endorsement is visual, then the disclosure should be visual and should stand out from any accompanying text or other visual elements so that it’s easily noticed, read, and understood. For an endorsement made through audible means, the disclosure should also be audible, delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand.
The FTC indicates that if the representation is both visual and audible then a disclosure through both visual and audible portions of a communication is more likely to be clear and conspicuous.
In a recent case, NAD recommended that a beauty brand require one of its paid influencers to modify a video demonstration that depicted the product’s performance on Instagram to include a clear and conspicuous material connection disclosure in the video demonstration itself.
The built-in Instagram disclosure of “paid partnership” in the caption accurately informed viewers there is a material connection between the brand and the paid influencer, but, applying the Guides, NAD determined it did not satisfy the clear and conspicuous disclosure requirement.
The Guides caution that relying on social media built-in tools alone may not be enough and that they are more effective when used in conjunction with other clearer forms of disclosure.
Additionally, endorsements that visually display product performance rely on video and images to demonstrate product benefits; therefore, the FTC explains that disclosures in the video itself are more likely to be noticed and understood.
Other disclosures such as “#ad” and “#sponsored” in the caption also could be easily missed as they would be seen only if the consumer clicked on the link to expand the caption. Examples in the Guides provide that if a material connection disclosure is only visible when a viewer clicks on a link it is not unavoidable and thus not clear and conspicuous.
What liability/risk does the brand have vs. the influencer in the following scenarios?
In promoting a specific product, an influencer shares an outcome that they experienced personally which: a) makes a health claim, i.e. “healed my acne,” or b) makes a claim about the product that has not been substantiated by the brand either through clinical testing or consumer testing—i.e., reduces appearance of fine lines and wrinkles; hydrates my skin.
JS: The updated Guides expand guidance on advertiser, endorser and intermediary liability for endorsements.
"If there is a paid relationship between the brand and the influencer then the brand would be liable for unsubstantiated efficacy claims, whether it is a health claim (“healed my acne”) or a cosmetic one (reduces appearance of fine lines and wrinkles)," says Jennifer Santos.Krakenimages.com
Additionally, the brand is responsible for failing to disclose unexpected material connections between themselves and their endorsers.
Even if there isn’t a contractual relationship between the brand and the influencer, brands should still be cautious. A contractual relationship between the brand and endorser is not necessary for the brand to have liability for the endorser’s statements.
For example, if a brand retweets a positive statement from an unrelated third party, that statement becomes an endorsement for which the brand is liable, even if there is no connection between brand and endorser.
Additionally, brands may be liable for failing to disclose unexpected material connections.
To comply with the Guides brands should ensure that statements made by influencers are truthful, clearly and conspicuously disclose material connections, monitor influencer compliance, and take appropriate action to remedy non-compliance.
Influencers can also be liable for unsubstantiated claims about a product’s performance or effectiveness whether it is a health claim (“healed my acne”) or a cosmetic claim (reduces appearance of fine lines and wrinkles).
Influencers can be held personally liable for statements falsely representing that they personally used a product or service. Influencers who are not experts may also be liable if they misleadingly hold themselves out as an expert.
Is there a difference between an influencer/review on an external website (not managed by the brand) and one that is on the brand website or in materials/ads that the brands produce as it relates to responsibility for the claims made?
JS: If there is a relationship between the influencer and the brand, both parties are responsible for the influencer’s statements in the course of their endorsement no matter where the endorsement appears.
It is important to remember that if a brand re-posts an influencer’s review of their product, regardless of whether they have a relationship, the brand becomes responsible for the statements made in that review.
For example, if a brand sends an influencer free concealer to try and the brand re-posts the influencer’s video raving about how the concealer can actually lighten dark spots in only 1 week then the brand becomes responsible for the claim that the product can lighten dark spots in only 1 week.
The brand should also clearly and conspicuously disclose that the influencer received free product.
Let’s say...
...an influencer that is not affiliated with the brand/not paid/does not receive product for free decides to review a brand’s product. In doing so, the influencer makes outrageous claims about the product. Does the brand have anything to worry about other than backlash from consumers if the product does not do what the influencer said it does?
JS: The FTC’s Guides only address endorsements that can be attributed to a brand or marketer. According to the Guides if an influencer doesn’t have a relationship with the brand, then his or her posts are not covered by the Guides.
Can a brand use customer feedback collected during a lab test or a consumer survey in their advertising?
For example, if a brand hires a lab to conduct a clinical study on their product and they pay panelists for their participation and honest feedback, can the brand use a consumer’s open-ended feedback such as “hair felt softer and visibly shinier than normal” in their advertising (assuming they have permission from each panelist)?
JS: This is an interesting question. If the clinical test is not blinded and panelists know the brand of the test product, then the panelist’s statement would meet the definition of a paid endorsement. According to the Guides, an endorsement is an advertising message that consumers are likely to believe reflects the opinions or experiences of a party other than the sponsoring advertiser.
Even if the clinical test is blinded, the brand is still paying for the panelist to participate and for their open-ended feedback, making the brand the sponsor of the message. Additionally, when the brand features the panelist’s review in its advertising, according to the Guides, the panelist’s statements become an endorsement.
The fact that the panelist was paid and received free product is a material connection that would not be reasonably expected by the consumer and might affect the weight that a consumer gives the panelist’s statement; therefore, the material connection should be clearly and conspicuously disclosed.
Your Beauty Endorsement & Testimonial Questions Answered
What is the National Advertising Division (NAD)?
The U.S. advertising industry founded the National Advertising Division (NAD) and the National Advertising Review Board (NARB) in 1971 as a system of independent industry self-regulation to build consumer trust in advertising and support fair competition in the marketplace.
NAD holds national advertising across all media types to high standards of truth and accuracy by reviewing truth-in-advertising challenges from businesses, trade associations, consumers or on its own initiative.
Through its work, thousands of misleading advertising claims have been removed from the marketplace and NAD’s case decisions represent the single largest body of advertising law in the country.
If an advertiser does not agree to participate in NAD’s process or heed NAD’s recommendations the NAD can refer the advertiser’s claims to the Federal Trade Commission (FTC) for review.
How can you substantiate beauty claims?
Advertisers are responsible for all express and implied claims that reasonable consumers take away from their ads and must have substantiation for all claims before they begin advertising the product.
In substantiating a claim, the support should be a good fit for the claim. An advertiser must have a reasonable basis for all claims.
A reasonable basis can vary but generally means objective evidence that supports the claim. The appropriate level of substantiation is driven largely by the type of claim and product and what experts in the relevant field believe is reasonable.
For objective beauty claims such as “my moisturizer hydrates my skin 3x more than the leading brand,” objective well-conducted head-to-head clinical testing on the product and competitors is necessary.
For a subjective claim such as “my skin felt smoother and more moisturized,” a well-conducted consumer survey can suffice as substantiation.
Any material connection between an endorser and a brand that consumers wouldn’t expect must be clearly and conspicuously disclosed. The FTC has refined the definition of “clearly and conspicuously” to include a disclosure that is “difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers.”
NAD case decisions follow FTC guidance on endorsement and testimonials and are another good resource for brands to review when creating influencer marketing campaigns. Brands should also consider training their influencers, so they are aware of FTC and NAD guidance, monitoring them for compliance, and taking appropriate steps to bring noncompliant influencers into compliance.
About the Authors
Jennifer Stansbury and Denise Herich are co-founders and managing partners at The Benchmarking Company. The Benchmarking Company provides marketing and strategy professionals in the beauty and personal care industries with need-to-know information about its customers and prospects through custom consumer research studies, focus group, and consumer in-home use testing (IHUTs) for marketing claims and risk mitigation. www.benchmarkingcompany.com
About Jennifer Santos
Jennifer Santos is a seasoned advertising law attorney and broadcast standards executive with significant experience in commercial network clearance, network programming standards and FCC, FTC, and FDA regulatory law and guidelines. In her current role, at BBB National Programs’ National Advertising Division she resolves disputes over the truthfulness and accuracy of national advertising campaigns, writing and publishing detailed decisions that provide guidance and critical insights to the advertising industry.
