The Federal Trade Commission settled its first-ever action against individual social media influencers for failing to disclose connections to brands the influencers endorsed. The action – against Trevor Martin (also known as “TmarTn”), Thomas Cassell (also known as “Syndicate”), and CSGOLotto, Inc. – alleged that Martin and Cassell endorsed CSGOLotto on their social media pages while failing to disclose that they jointly owned the company. Martin is president and 42.5% owner of CSGOLotto, Inc., and Cassell is vice president and 42.5% owner.
Martin and Cassell both have a large presence in the online gaming community. The CSGO name was based on a multi-player shooter game known as Counter-Strike: Global Offensive. The game allowed users to collect virtual “skins” to cover weapons in distinctive patterns, which could be bought, sold, or traded for real money. CSGOLotto allowed users to gamble with the skins being used as currency. Along with advertising CSGOLotto on their own social media sites, Martin and Cassell both allegedly paid other social media influencers to promote CSGOLotto on sites such as Twitter and Facebook, without requiring them to disclose their payments in the promotional posts.
The proposed order settling the FTC’s action against Martin, Cassell, and CSGOLotto, Inc. prohibits them from misrepresenting that they are independent users or ordinary customers of the product, and requires that any promotion made by them must clearly and conspicuously disclose any unexpected material connection with endorsers.
This action may be one of many to come. The FTC also sent out twenty-one warning letters to social media influencers it contacted in April of this year regarding Instagram posts. The FTC originally sent out ninety letters in April to influencers and brands with educational material.
Businesses that engage in social media marketing are encouraged to review the FTC’s recently updated guide on social media endorsements. This guide, entitled “The FTC’s Endorsement Guides: What People are Asking”, includes frequently asked questions, such as what to do when promoting a product that the promoter paid for on their own, drafting disclosures, and disclosures on Snapchat and Instagram stories.