ABSTRACT
In relation to digital commerce, influencer marketing is a massive thing and it raises a number of salient questions: who takes responsibility for what if people are misled through the use of endorsements? Historically, regulators have been concerned with brands being held accountable, but developments in recent times indicate that there is a growing interest in holding influencers accountable. The Federal Trade Commission Act (the “FTC Act”) is one basis for direct liability under U.S. consumer protection law; negligence and strict liability are two other bases for direct liability. It states that the influencers and followers have a trust-based relationship, with legal and ethical obligations. Dual liability – in which brands are primarily responsible for compliance, while influencers are responsible for knowingly deceptive conduct – seems to be the law currently in place.
KEY WORDS : Influencer marketing • consumer protection • FTC Endorsement Guides • deceptive advertising • disclosure • direct liability • negligence • class actions • parasocial trust • digital commerce
INTRODUCTION
In the present advertising scene influencers are a unique species. They usually don’t sell a product to the consumer but rather give their honest opinion, which is more compelling and convincing to the consumer. Brands leverage this authenticity and have created a multibillion dollar industry out of it known as influencer marketing. The issue with the legality is not that there are paid endorsements, it is that there are no disclosed commercial relationships or false or unsubstantiated ones made. The consumer can purchase items that they would not otherwise have purchased; and they are paying a LOT more for it than they may have to, since they feel they are getting their “due” from an “honest” recommendation. Consumer protection law in the past has generally centered on the liability of brands for false advertising. With the rise of influencers as key contributors to content creation and the incentives they receive for personal involvement in causing consumer harm, however, there is doubt as to whether they should take personal responsibility for consumer harm. The article examines the possibility of continuing to use the traditional model from a legal and moral perspective.
REGULATORY FRAMEWORK
The Federal Trade Commission (FTC) in the United States has the most comprehensive regulations regarding influencer endorsement, with the new “Endorsement Guides” being effective in 2023. The Guides require disclosure of any material connection or benefit an influencer may have with a brand, including payments, gifts and other benefits. Disclosures should be easily accessible, conspicuous and easy to understand. More is needed than seeing more links with hidden hashtags or disclosures. However, in times gone by, enforcement was targeted to brands. Regulators tend to focus on marketers instead of individual influencers, as brands devise campaigns, approve content and benefit the most commercially, remarked scholars Tamany Vinson Bentz and Carolina Veltri. Guidance from the FTC also mandates brands to keep an eye on influencer content and fix violations. In its action against Teami LLC, the FTC did just that. The company was issued a multi-million dollar judgement for misrepresentative health claims in posts through influencers, but the influencers were not held liable. The Guides however leave open a pathway for direct liability of the influencer. An endorsement needs to be an honest opinion and a true experience. If an influencer makes false product use statements or health or performance claims without evidence to back it up, he or she may take on the responsibility of deception on his or her own. Additionally, there have been a few recent enhancements that have broadened the creators that can be covered, such as bloggers, streamers, affiliate marketers, and other online personalities.
PRIVATE LITIGATION
Until recently, accountability was primarily by the FTC, and industry self-regulation. However, in 2025, private class action litigation was an important method of enforcement. Several lawsuits were filed against both brands and influencers for their endorsement payments, when the consumers thought they were making real recommendations, but really they were paid campaigns. In one instance, for example, Sulici v. Alo Yoga, the company and 15 influencers were charged with failing to disclose sponsorships. Plaintiffs demanded significant damages because they believed the price that they paid was different from the value of the products without the misleading endorsements. Similarly, in Dubreu v. Celsius Holdings, influencers were determined who allegedly incorrectly claimed the energy drink’s nutritional claims. Another key pivot from Revolve was its sponsored fashion content which was displayed as a personal recommendation. What’s remarkable about the cases is that they seek to directly hold influencers accountable and to impose potentially huge damages. “While following the guidelines of the FTC may not be enough to fully shield the influencer from liability when a court or jury finds that the content was still misleading,” legal commentators note.
DIRECT LIABILITY
There are three main legal theories for considering the question of direct influencer liability.
1.Consumer Protection Law: Deception. Under the FTC Act, the easiest bases for liability are the ones that are the most obvious. The FTC clearly implies that influencers could be liable for false or deceptive endorsements. Bloggers and/or social media personalities who claim to use a product but greatly overhype its qualities or conceal that it is sponsored may be engaged in deceptive advertising.
- Negligence: Negligence must be proved by the failure to have had a duty of care, failure to fulfill the duty of care, and actual damages. The more the influencers look like experts, the more interesting the duty question is. For instance, doctor-influencers, nutrition influencers, or financial influencers might justifiably be expected to check the facts before pushing products or services. Considering that there are easily identified risks that are not probed or reported, this may constitute a lack of reasonable care. In determining whether an influencer owed a duty to know, or could have known, about the products they promoted, courts have generally focused on whether or not the influencer had a specific duty to know, as a matter of law.The courts have tended to be interested in whether the influencers, as a matter of law, had a duty of knowledge, or could have known, of the products that they promoted. This is an important factor in negligence liability.
- Strict Product Liability : Another, more debatable, argument is on the basis of strict product liability. It holds that, under this doctrine, those who are involved in distribution of a product can be liable for the damage resulting from bad products even if they are not at fault. Some pundits say that influencers who make a difference in creating purchases should be considered a part of the commercial chain. Courts haven’t yet adopted this line of thought, but it is a burgeoning body of law and it’s becoming more relevant.
MORAL ASPECT
There is more of a moral question than the laws. Influencers communicate in personal stories, authentic experiences, and real life. This creates a “parasocial relationship”, in that followers feel familiar and trusted with the influencer.
That’s how influencer marketing has its commercial worth. The influencers who are out of the way they are being paid to post are doing it for money, they are selling products they haven’t used, or have unverified claims are exploiting that.
But when they really create content, they’re choosing the language that’s compelling and getting paid for it, that’s not quite as accurate. When they’re in those situations, they’re in control and make money from their endorsements, so it’s hard to argue that it’s immoral.
There’s also a social problem in general. The spread of misleading endorsements erodes trust in online information and hurts those who abide by disclosure regulations. The aim of direct liability is not only to compensate consumers, however, additionally to safeguard trust in the electronic marketplace.
ROAD AHEAD
The law is definitely trending towards holding influencers more accountable.
Enforcement has increased, even beyond the traditional actions taken by the FTC, by private class action, which can increase the financial risks for creators. The verdicts in the Alo Yoga, Celsius and Revolve cases will have ramifications for the future of litigation and will define the extent of court’s willingness to hold influencers liable.
In addition, regulatory shifts are occurring to drive this trend. Fake reviews, fake followers and other shady online tactics that go hand-in-hand with influencer marketing are especially significant in the context of the FTC Consumer Reviews and Testimonials Rule, which will come into force in 2024. The FTC has also said that it will also penalize brands, not just creators.
The dual liability model is the most likely future structure. Brands will retain primary responsibility for ensuring compliance, monitoring and disclosure of brands. At the same time, influencers who know about a misrepresentation or a hidden relationship will be directly held responsible for a civil and regulatory liability, and influencers who make a positive recommendation of a harmful product will be directly liable for civil and regulatory responsibility.
The line between advertising and recommendations is becoming blurred with influence marketing. In the midst of all this, the law is evolving to create more accountability for brands, and for the individuals who have actions that affect consumer decisions.
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WRITTEN BY : ARNAV NAIK
