Legal Fundamentals of Contracts for Influencers and Brands

If a business and a content creator don’t anticipate an ongoing contractual relationship, the parties should, at a minimum, document the brand’s permission to use the content and the duration and parameters of that grant. For instance, if a content creator posts images unsolicited by the brand that features the brand’s product, the brand should make an inquiry to the content creator and obtain their permission before reposting the images. Failure to obtain the content creator’s consent to re-posting the images may result in claims of copyright infringement or misappropriation of the creator’s right of publicity and may lead to Digital Millennium Copyright Act (DMCA) takedown requests through social media platforms. This could negatively impact both the brand’s image as well as its ability to market itself on the content creator’s social media channel in the future.

Critical to the conversation around using content creators in marketing is the FTC’s increased interest in influencer advertising. FTC rules provide that content creators must disclose their relationships with brands within their posts so that followers can understand whether the content that they are seeing is organic or whether it’s an ad that the content creator is being paid to post. Failing to appropriately disclose the relationships between brands and content creators can result in penalties, fines, and legal fees. In November 2019, the FTC released a “Disclosures 101 for Social Media Influencers” brochure to teach content creators how to correctly disclose when the content they post constitutes a paid endorsement. In 2020, the FTC requested public comments on whether the guidelines for influencers should be revised. The guidelines from the FTC indicate that even products received for free in exchange for an endorsement trigger the disclosure requirement, and the disclosures must be easy to understand and placed in such a way that an average viewer would be able to see that the content is sponsored.

While the FTC guidelines place adherence to the disclosure requirements on the shoulders of content creators, it is incumbent on companies to ensure content creators they work with are following these requirements because brands may also be held liable when the content creators they work with aren’t diligent about their disclosures. For instance, in March of 2020, the FTC entered into a settlement with Teami, LLC, for $1 million after alleging that Teami promoted its products using deceptive health claims and endorsements by well-known influencers and celebrities who failed to adequately disclose that they were being paid to promote the products. The FTC imposed a $1 million fine on Teami after determining that Teami would be unable to pay the full $15.2 million judgment against it.

The corporate attorneys at Milgrom & Daskam have extensive experience drafting and negotiating contracts between businesses and content creators. If you are entering into such an agreement and would like counsel to help you protect your interests, feel free to reach out to the corporate practice group at Milgrom & Daskam for a free consultation