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Promotions Were Part of the Company’s March 2015 Design Lab
Collection Launch
National retailer Lord
& Taylor has agreed to settle Federal Trade Commission charges that
it deceived consumers by paying for native advertisements, including a
seemingly objective article in the online publication Nylon and a Nylon Instagram post,
without disclosing that the posts actually were paid promotions for the
company’s 2015 Design Lab clothing collection.
The Commission’s
complaint also charges that as part of the Design Lab rollout, Lord
& Taylor paid 50 online fashion “influencers” to post Instagram
pictures of themselves wearing the same paisley dress from the new
collection, but failed to disclose they had given each influencer the
dress, as well as thousands of dollars, in exchange for their endorsement.
In settling the charges, Lord & Taylor is prohibited from
misrepresenting that paid ads are from an independent source, and is
required to ensure that its influencers clearly disclose when they have
been compensated in exchange for their endorsements.
“Lord & Taylor needs to be straight with consumers in its
online marketing campaigns,” said Jessica Rich, Director of the FTC’s
Bureau of Consumer Protection. “Consumers have the right to know when
they’re looking at paid advertising.”
According to the FTC, over a weekend in late March 2015, Lord
& Taylor launched a comprehensive social media campaign to promote its
new Design Lab collection, a private-label clothing line targeted to women
between 18 and 35 years old. The marketing plan included branded blog
posts, photos, video uploads, native advertising editorials in online
fashion magazines, and online endorsements by a team of specially selected
“fashion influencers.”
 The complaint alleges that Lord &
Taylor placed a Lord & Taylor-edited paid article in Nylon, a pop culture
and fashion publication. Nylon also posted a photo of the retailer’s Design
Lab Paisley Asymmetrical Dress on Nylon’s Instagram site, along with a
caption that Lord & Taylor had reviewed and approved. The Instagram
post and article gave no indication to consumers that they were paid
advertising placed by Lord & Taylor.
Over the same weekend in March 2015, Lord & Taylor gave 50
select fashion influencers a free Paisley Asymmetrical Dress and paid them
between $1,000 and $4,000 each to post a
photo of themselves wearing it on Instagram or another social media site.
While the influencers could style the dress any way they chose, Lord &
Taylor contractually obligated them to use the “@lordandtaylor” Instagram
user designation and the hashtag “#DesignLab” in the caption of the photo
they posted. The company also pre-approved each proposed post.
In addition, the FTC’s complaint charges that Lord &
Taylor did not require the influencers to disclose that the company had
compensated them to post the photo, and none of the posts included such a
disclosure. In total, the influencers’ posts reached 11.4 million
individual Instagram users over just two days, led to 328,000 brand
engagements with Lord & Taylor’s own Instagram handle, and the dress
quickly sold out.
The proposed consent order settling the FTC’s complaint
prohibits Lord & Taylor from misrepresenting that paid commercial
advertising is from an independent or objective source. It also prohibits
the company from misrepresenting that any endorser is an independent or ordinary
consumer, and requires the company to disclose any unexpected material
connection between itself and any influencer or endorser. Finally, it
establishes a monitoring and review program for the company’s endorsement
campaigns.
The FTC recently issued an enforcement
policy statement that businesses can use to ensure they make required
disclosures in native advertisements.
The Commission vote to issue the administrative complaint and
to accept the proposed consent agreement was 4-0. The FTC will publish a
description of the consent agreement package in the Federal Register
shortly.
The agreement will be subject to public comment for 30 days,
beginning today and continuing through April 14, 2016, after which the
Commission will decide whether to make the proposed consent order final.
Interested parties can submit
comments electronically by following the instructions in the
“Invitation To Comment” part of the “Supplementary Information” section.
NOTE: The Commission issues an administrative
complaint when it has “reason to believe” that the law has been or is being
violated, and it appears to the Commission that a proceeding is in the
public interest. When the Commission issues a consent order on a final
basis, it carries the force of law with respect to future actions. Each
violation of such an order may result in a civil penalty of up to $16,000.
The Federal Trade Commission works to promote competition, and
protect
and educate consumers. You can learn more
about consumer topics and file a consumer
complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC
on Facebook,
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read our blogs
and subscribe
to press releases for the latest FTC news and resources.
Contact Information
MEDIA CONTACT:
Mitchell J. Katz
Office of Public Affairs
202-326-2161
STAFF CONTACT:
Robin Rosen Spector
Bureau of Consumer
Protection
202-326-3740
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