Influencer Misleading Advertising Lawsuits: Undisclosed Ads, False Claims on Instagram?

Attorneys working with ClassAction.org are looking into whether class action lawsuits can be filed against certain companies and influencers for potentially misleading consumers by promoting products on Instagram without proper advertising disclosures.

Specifically, the attorneys believe influencers, celebrities, models and other personalities may be getting paid by certain brands (listed below) to mention their products on Instagram but are not clearly indicating that the posts are sponsored. They suspect that these undisclosed ads could violate certain laws that require social media influencers to disclose when they have a financial relationship with the brand they’re promoting. It’s also possible that consumers may have paid higher prices due to the potentially misleading advertising.

FTC Guidance Against False Advertising

The Federal Trade Commission (FTC) has published clear guidance on how advertisers and influencers can comply with the law when posting sponsored content.

Importantly, social media influencers must disclose when they have a “material connection,” including a financial relationship, with a brand whose product or service they endorse on their account. Financial relationships include when an influencer receives anything of value—such as money, free products or discounts—in exchange for mentioning a product.

The FTC specifies that the disclosure must be “hard to miss” and should be placed with the endorsement message itself in a place that does not require the user to click “more” in order to see it. The language used to indicate the relationship must be “simple and clear”—e.g., using words like “advertisement,” “ad” or “sponsored” instead of potentially confusing terms like “sp,” “spon” or “collab.”

Additionally, influencers are not allowed to lie about their experience with a product or make false claims about it. The FTC warns that both advertisers and influencers could be liable for false advertising or unsubstantiated statements—or for failing to “clearly and conspicuously” disclose their relationship.

Undisclosed Ads: Statistics, Complaints

Studies have shown that undisclosed ads have been rampant among social media influencers for years.

A 2017 report from a marketing firm that analyzed 50 of the most-followed celebrities on Instagram found that 93% of the posts promoting a brand were not properly identified as ads in accordance with FTC guidelines.

More recently, a February 2024 report from the European Commission analyzing social media posts from influencers found that although 97% of the influencers posted commercial content, only 20% of them systematically disclosed the content as advertising.

Social media users themselves have also been complaining about and exposing the prevalence of undisclosed ads from influencers. Many Reddit.com users cited specific examples of possibly misleading ads or accused influencers of lying about whether they do paid sponsorships. One Reddit user echoed others’ sentiments, stating that consumers can “hardly trust anyone” given the lack of transparency in influencer advertising and the fact that influencers are involved in a [sic] “money making business.”

Other Reddit users shared the following complaints about undisclosed ads on social media platforms [sic throughout]:

I'm in the market for a new camera and after spending some time on YouTube it seems to be clear to me that many influencers probably have undisclosed relationships with many of the big camera manufacturers. This is often times easily verifiable because concurrent to a video's release from an influencer, a company's marketing department drops an accompanying in-depth post about it with testimonials from the YouTuber.. However, there is often times not a single peep about the manufacturer's involvement in the YT videos.”
— kitsune, Reddit.com

I remember this one couple had a video on Facebook that was clearly an ad but it was about perfume. I cant tell you how annoyed I was that she was so "genuine" about a gift that was clearly an ad.”
— StarTrippinn, Reddit.com

I have no issues with ads and sponsored posts. And support it. Get your coin! I take issue with the hiding off it[…] [because] it does make me think that they just really hate the product if they are willing to hide the partnership.”
— Yaseuk, Reddit.com

This annoys me. I’m a beauty YouTuber and I see so many say it was gifted when it was a paid partnership. I know because I am on creator job sites.”
— JayneNic, Reddit.com

Another user who claimed to be a content creator in the beauty industry admitted that “brands will sometimes tell creators to specifically not use the paid partnership label,” purportedly as a marketing strategy since the platform’s algorithm “doesn’t prioritize” posts that are disclosed as ads.

How Could a Lawsuit Help?

Instagram users could potentially get back money for products they purchased that were promoted by influencers without proper disclosures. A lawsuit could also force the influencers and the companies they represent to make changes to their advertising practices.

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