The guidelines set by the Federal Trade Commission (FTC) regarding disclosures for brand endorsements are in place to promote honesty and transparency in advertising. It doesn’t matter if the endorsement takes the form of a tweet, blog, or video—the rules still apply. Despite this fact, we’ve seen time and time again how some influencers have taken advantage of their audiences. Let’s take a look at what you can do to spot these non-disclosures, how you can avoid making these mistakes if you’re an influencer, and what other organizations are doing about the situation…
Have you ever seen a NFT influencer tweet how much they love a certain project? Now, can you recall the same tweet having a disclosure saying that they have some sort of relationship with the project? Probably not.
It’s getting difficult to separate genuine interest in a project and whether an influencer has a relationship with that project that incentivizes them to promote it. That said, there are a couple of signs you can look for that will at least make you stop and think before you decide to conduct further research on a given project.
Typical Ad Format
Look at the way the influencer promotes and speaks about the NFT project. For example, are they running a giveaway or doing a collaboration with the project itself?
Take note of the ad format in the tweet above—projects love to use these formats, and they usually pay people in either ETH or NFTs from the collection. Naturally I’m not saying that every tweet in this format is a red flag. Sometimes two NFT projects will collaborate in this way in order to help each other grow. But when it’s an influencer working with a project, it should be disclosed what type of compensation was given (if any) for the promotion.
Do They Have a Wallet That Is Trackable?
It’s time to put on your detective hat! Now you don’t need to be a blockchain wizard to look up a wallet on Etherscan and check what transactions it has received and what wallets it has interacted with. You can also easily identify any payments that may have been made in connection with sponsored posts.
While this isn’t a surefire way of tracking down any one person’s failure to disclose, it’s amazing how many influencers have been caught red-handed like this!
Always try and look at any influencer posts from the perspective of a reasonable and objective person.
What reasons does this influencer have to promote an unreleased project, for example?
- Are they on a whitelist?
- Did they receive payment for it?
- Is their cousin the project lead?
- Or maybe, just maybe, they really like the art?
All of these scenarios are possible, which is all the more reason for you to approach these types of posts from a rational, objective perspective.
The Dos and Don’ts of Social Media Advertising
If you’re an influencer or project in the NFT space, the way you communicate with your audience is important. It takes years to build a good reputation and mere minutes to destroy it. The reason FTC guidelines exist is to stop deceptive advertising altogether. Anytime an influencer or project endorses a product or service on social media, they should disclose and make it obvious when they have a relationship with that specific brand.
You always need to disclose your relationship with a brand when there is a material connection at play. This simply means that you have a financial, business, personal, or family relationship with the brand or project you’re promoting.
Here are some quick and concise pointers to keep in mind:
When U.S. Law Applies
Even if you aren’t a U.S. citizen, you can still run afoul of the FTC if you aren’t careful. If it’s reasonably foreseeable that your post will affect U.S. consumers, you will likely be in violation of FTC laws as well as foreign laws within your own country. Seeing that the NFT space is made up of a diverse group of people from all parts of the world, it would be foreseeable that a post could directly affect U.S. consumers.
Financial Relationships Don’t Always Mean That Money Changed Hands
You can still have a financial relationship with a brand even if you aren’t “paid” in the traditional sense. Maybe you received an NFT or multiple NFTs for your post. Maybe you received whitelist spots. These are considered items of value, and when value is exchanged, you must disclose it.
Placing Your Disclosures
The golden rule when advertising on social media is to place your disclosure in a spot that is hard to miss. Video platforms like YouTube make it simple by including a checkbox prior to upload that confirms that your video has an advertisement. However, it’s also good practice to mention it verbally in the video and to mark it in the video’s description as well. On platforms like Twitter and Instagram, it’s useful to include hashtags like #ad or #sponsored. Just make sure you aren’t trying to obscure it by throwing it into a large group of hashtags and links. The disclosure itself still needs to be clear and very hard to miss.
While these tips above are not comprehensive, they are a good starting point if you’re looking to advertise and work with brands online. The lack of proper disclosures in the NFT space is similar to the troubles encountered in traditional Web2 marketing. While the FTC hasn’t brought any claims against specific NFT projects or influencers, watchdog groups are starting to take notice…
TINA Warns Celebs Endorsing NFTs
Truth in Advertising (TINA ) recently sent letters to over a dozen celebrities for promoting NFTs. Among them were individuals such as Justin Bieber , Reese Witherspoon , Snoop Dogg , Tom Brady , and Paris Hilton , just to name a few.
TINA stated that they had investigated celebrities who promote NFTs on their social media accounts and found:
It (celebrity endorsement of NFTs) is an area rife with deception including, but not limited to, a failure to clearly and conspicuously disclose the promoter’s material connection to the endorsed NFT company, as well as the omission of other material information, such as the risks associated with investing in such speculative digital assets, the financial harm that can result from such investments, and the personal benefit(s) the promoter may gain by virtue of the promotion(s).
It seems that the main celebrity in TINA’s crosshairs is none other than Justin Bieber. The singer touted about the inBetweeners NFT project and had in fact received several of them for free.
TINA sent a follow-up letter to Justin’s legal team after they stated that Justin has a financial connection with the inBetweeners project and was involved on a deeper level than initially disclosed. Justin, who has been a longtime fan of the project’s lead artist/founder GianPiero , said he wanted in on the project from the beginning. While he didn’t directly invest, Justin wanted to spread the art as much as possible.
What resulted were a slew of tweets showing off the colorful art to Justin’s fanbase via his Twitter account. However, there was no disclosure in sight about Justin’s personal relationship with the project as well as the value he received in exchange for his support. Justin Bieber’s wallet received about 36 inBetweeners NFTs, 8 of which he sold about 7 months ago.
The issue TINA has with Justin’s tweets is that his legal team said they would add the proper disclosures to his inBetweeners tweets so that regular individuals can be made aware of his affiliation with the project. Well, it’s been about 7 weeks now, and his tweets haven’t been changed…
The situation with celebrities and influencers only highlights the dire need for clearer disclosures in this space. Whether you’re a celebrity or a small influencer, everyone has a brand to protect. For this reason (and many others) it’s always better to make every type of promotion as clear and transparent as possible.