Latest / Influencer Marketing with Fexingo: Creators, Sponsorships, and Modern Endorsement Deals / Why Influencer FTC Disclosures Are Getting Disrupted
Transcript
- Lucas: So last month the FTC proposed a new rule that would fine creators up to fifty thousand dollars per undisclosed sponsored post. And I think a lot of people in the influencer marketing space are only starting to realize how big a deal this is. Luna: Fifty thousand dollars per post? That's not a slap on the wrist. That's the kind of number that gets a founder's attention. Lucas: Exactly. And it's retroactive in spirit—the FTC is signaling that they'll go after past violations if they're egregious enough. They already settled a case this January with a health and wellness creator who had fourteen undisclosed posts over eighteen months. The settlement didn't name the financial penalty, but it required her to delete the posts and submit all future content for FTC review for two years. Luna: That's effectively a career probation. For a creator whose whole business is trust, having every post pre-approved by a regulator is devastating. Lucas: Exactly. And the FTC's argument is that these disclosures aren't just about the letter of the law—they're about consumer deception. The proposed rule codifies what they call the 'clear and conspicuous' standard: the disclosure has to be in the same language as the post, on the same screen, and not hidden behind a 'see more' button. Luna: Right, because so many creators put the hashtag ad at the very end of a caption or in a stack of hashtags that no one scrolls to. Lucas: Exactly. And the FTC's algorithms now scan for three specific red flags. First, hidden affiliate links—links that are masked with a generic URL shortener without any clue that it's an affiliate link. Second, fake engagement pods—groups that artificially inflate likes and comments, which the FTC considers misleading because it suggests organic endorsement. And third, what they call 'ambiguous thank you tags'—when a brand tags a creator in a post about a product but doesn't explicitly say it's sponsored. Luna: I've seen that a lot. A brand will post a photo of a creator using their product and caption it 'Thanks for the shoutout, @creator!' without disclosing that they paid for that placement. The creator's audience thinks it's an organic endorsement when it's really a paid ad. Lucas: Right. And the proposed rule would make both the brand and the creator liable. The brand can't just outsource compliance to the influencer and say, well they should have disclosed it. The FTC wants the brand to have a reasonable process in place to ensure disclosure happens. L'Oreal and Unilever have already started rewriting their influencer contracts to include specific language about where and when the disclosure must appear, and they're requiring creators to use a specific hashtag—like '#ad' or '#sponsored'—in the first line of the caption. Luna: So are we going to see a wave of contract renegotiations across the industry? Lucas: I think so. And it's not just the big brands. Creator-management platforms like Grin and CreatorIQ are building automated compliance tools. Grin just rolled out a feature that scans a creator's draft post for disclosure language before it goes live. If it doesn't find a compliant disclosure, it flags the post and sends an alert to both the brand and the creator. Luna: That's smart. But it also means the platform is taking on some liability if they miss something. I wonder if we'll see those tools become a requirement in contracts. Lucas: I think we're heading that way. In fact, some creators are forming their own legal co-ops to negotiate disclosure standards collectively. There's one called the Creator Transparency Alliance that launched in March. They're essentially a group of about two hundred mid-tier influencers who've pooled resources to hire a law firm that specializes in FTC compliance. They negotiate standard contract clauses with brands so that all their members have the same disclosure requirements and protections. Luna: That's fascinating. It's almost like a union for influencer marketing compliance. I wonder if that'll scale. Lucas: It's still early, but the economics make sense. A single creator might not be able to afford a lawyer to review every contract, but two hundred creators pooling money can. And they're also sharing data on which brands are the worst offenders when it comes to pushing for less conspicuous disclosures. Luna: I love that. So the market is self-correcting in a way. But let me ask you this—does the FTC actually have the resources to enforce fifty-thousand-dollar fines across thousands of creators? Or is this more of a scare tactic? Lucas: It's a good question. The FTC's budget hasn't increased dramatically, but they've gotten better at automated detection. They now use machine learning models that crawl Instagram, TikTok, and YouTube looking for patterns consistent with undisclosed sponsorships. For example, if a creator posts about a product across multiple platforms within a short period and the brand also posts about that creator, the algorithm flags it. Then a human reviewer checks for disclosure. Luna: So scale is actually on their side because the technology is getting cheaper. That makes the threat more real. Lucas: Exactly. And the proposed rule would also allow the FTC to seek civil penalties without going through the full administrative process—it streamlines enforcement. So even if they only go after the most egregious cases, the risk is now much higher. Luna: Let's talk about the tension between the 'clear and conspicuous' standard and what actually performs well. Audiences tend to trust unsponsored-looking content more. A creator with a perfectly placed '#ad' might see lower engagement than one who buries it. So there's a real incentive for creators to minimize the disclosure. Lucas: That's the core conflict. The FTC wants the disclosure to be equally prominent, but the creator wants the content to feel organic. Some platforms have tried to solve this with native disclosure tools—like TikTok's 'Paid Partnership' tag—but the FTC has said those aren't enough on their own because users scroll past them. The disclosure still needs to be in the caption or the video itself. Luna: And brands are caught in the middle. They want the engagement but they also want to avoid liability. I think the smart brands are the ones that bake disclosure into the creative brief from the start, so it's not an afterthought. Lucas: Completely agree. The best practice I've seen is brands that include a storyboard or mockup with the disclosure already placed where it needs to be. That way the creator knows from the beginning that compliance is non-negotiable. And we're seeing some brands actually pay creators a small premium for using the ftc compliant format, because it reduces the brand's risk. Luna: That's smart. It turns compliance into a value-add rather than a burden. Lucas: Yeah, and I think that's the direction the industry needs to go. If these marketing conversations have sparked something you've actually used at work or in your own content, I'll be honest—a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many episodes. No ads, no sponsors, just people who find the show useful. Luna: And we really appreciate it. It keeps us independent and lets us cover things like FTC rules without worrying about upsetting a sponsor. Lucas: Exactly. So back to the FTC—one more thing I think is worth noting. The proposed rule also covers virtual influencers, ai generated avatars that promote products. The FTC says the same disclosure standards apply: if a brand pays for an AI influencer post, it has to be disclosed. That's going to be tricky to enforce, but it's already being debated. Luna: Interesting. So an AI influencer like Aitana Lopez or the ones from TheSoul Publishing would have to say 'this is an ad' just like a human creator would. Lucas: Right. And the FTC has warned that failing to disclose that an AI influencer is paid could be considered deceptive even if the audience knows it's AI, because they might not know the financial arrangement. So the standard is really about the sponsorship, not the authenticity of the persona. Luna: That makes sense. So what do you see as the next big compliance challenge? Is it cross-border? Because a lot of us based creators work with international brands. Lucas: That's a huge one. The FTC only has jurisdiction in the US, but many creators are based here and work with European or Asian brands. Those brands may not be aware of FTC rules. I think we'll see more disputes where a US creator gets a warning letter from the FTC because of a campaign with a non us brand. And the brand may not be liable under FTC rules, but the creator is. Luna: So creators need to be the ones who educate their brand partners. That's a lot of pressure on an individual creator. Lucas: It is. And that's why the co-op model I mentioned earlier could be really valuable. The collective can provide template compliance language that creators can share with brands upfront. It shifts the burden from the individual to the group. Luna: That's a smart structural fix. So where do we go from here? What's the one thing a marketer or creator should do this week to get ahead of this? Lucas: I'd say audit your last three months of sponsored content. Look at every single post and check where the disclosure appears. If it's not in the first two lines of the caption or clearly visible in the video, assume it's non-compliant. Then update your contract templates to require a specific placement. And if you're a creator, join a group like the Creator Transparency Alliance or at least get a template contract from a reputable source. Luna: Good advice. I think the key takeaway is that the era of loose disclosures is ending. The FTC is getting serious, and the industry needs to adapt. Lucas: Exactly. And the brands that get ahead of it will avoid the reputational damage that comes with an enforcement action. We'll be watching how the proposed rule evolves through the comment period, but for now, compliance is the smartest investment you can make.