FTC’s Regulatory Inclusion of Influencer Marketing by Amending the Principles for Handling Online Advertising Cases

April 2023

Elva Chuang and Doris Hsu

In the past few years, a new wave of “stay-at-home economy” has emerged due to the epidemic, and online influencers and live streamers have joined the new marketing model of promoting products or initiating group purchases through social networks and monetizing their personal image by capturing the attention of their fans.  To prevent false advertising from Infringing consumer interests, the Fair Trade Commission (hereinafter, the “FTC”) adopted the Amendments to the Principles of the Fair Trade Commission for Handling Online Advertising Cases (hereinafter, the “Online Advertising Principles”) during its Commissioners’ Meeting on February 15, 2023.  The Amendments will include users of social networking sites such as online influencers and live streamers in the regulation.

The Fair Trade Act requires that advertisers shall not make any false advertisements and shall not make any false or misleading representations on matters relevant to goods and sufficient to affect trading decisions, such as the prices, quantities, quality, contents, manufacturing methods, etc., of goods (Article 21 of the Fair Trade Act). Following the revision of the Online Advertising Principles, the scope of advertisers is expanded to include online influencers, live streamers, bloggers, etc. (Point 3 of the Online Advertising Principles).  For products or services sold by online influencers, live streamers, bloggers, etc., on the Internet, be they their own branded products or services, their co-branded products or services, or products or services provided by the companies for endorsement by online influencers, live streamers, bloggers, etc., and broadcast and sale to the public, the online influencers, live streamers, and bloggers are all regarded as advertisers (Point 4 of the Online Advertising Principles).

Therefore, online influencers, live streamers, bloggers, or others who use social media to post pictures or videos to provide shopping guides or conduct group purchases or live streaming e-commerce are all required to comply with the requirements under the Online Advertising Principles and ensure that the contents of advertisements are consistent with the actual circumstances of their offerings (Point 5 of the Online Advertising Principles).  If the content of an advertisement is incorrect, changed, or the sale of the goods or services has been discontinued, it shall be corrected by prompt and effective means, which shall not be replaced by mere in-store announcements or telephone inquiries (Points 6 and 8 of the Online Advertisement Principles).  If an advertisement is subject to any condition sufficient to affect the consumers’ trading decisions, this should be fully disclosed, and layout arrangements or manners of presentation such as small fonts, light colors, or screen changes should not be used to mislead the consumers (Points 7 and 8(3) of the Online advertising principles).

According to a survey released by Influencer Marketing Hub, more than 80% of companies tend to plan their budgets for influencer marketing in 2023.[1]  Therefore, in the future, when users of social networking sites author articles or produce audiovisual materials on the Internet for advertising, or when enterprises adopt influencer marketing in the future, they should be careful not to step on the red line of false advertising under Article 21 of the Fair Trade Act.

[1] The State of Influencer Marketing 2023: Benchmark Report, https://influencermarketinghub.com/influencer-marketing-benchmark-report/#toc-26.

The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners.  All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners. 

The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case.  The Content may not reflect the most current legal and regulatory developments.  Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors’ opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.