The Law of Fashion: Part IV
FIRE JAWNZ. Yes, we’ve been waiting with baited breath for the duration of this series to stitch that slang, but that’s what this drop comes down to — the relationship between fashion influencers and the ever-scrolling influencees.
It’s no secret that the business of Tailor Made Style subsists on a healthy diet of consumer culture and an emerging push for sophisticated attire to be normalized within the younger demographics. It seems as though we are all in an objectively zealous pursuit to “get a fit off.” And it is within those younger, social-media-fluent, fire-fit-chasing demographics that the contexts of life and marketing have converged. That is the phenomenon we know as native advertising. Indeed, from the retail perspective, what better way to urge the purchase of a product than to weave it subtly into consumers’ self-curated timelines? Therein lies the value proposition of DJ’s business and a direct path to his desired growth. Fashion addicts follow DJ. Tailor Made Style scrolls the fix. Corporate brands see opportunity.
At the start of this series, DJ boasted just over 6,000 Instagram followers. Over the course of 4 collaborative drops in about as many weeks, he now curates double-tappable content for over 7,100 folks. That’s trajectory. If this were a business blog, we’d string together a few nuanced sentences basically advising that Tailor Made Style keep doing what it’s doing. But that’s not why you’re here, nor why we write. The reality is that long-term business success is only as certain as the ability to anticipate and mitigate cognizable risk.
The question is: when a successful fashion blogger collaborates with a corporate brand in a native advertising play via social media, what is the anticipated risk?
The simplest answer is a violation of federal law.
A certain federal regulatory body, the Federal Trade Commission (FTC), by and through the FTC Act, does what it can to preclude misleading or deceptive advertising practices in the marketplace. To that end, whenever a corporate brand and social media influencer have some material connection between their advertising efforts, the FTC requires that each party disclose that connection to the consumer (the ever-scrolling influencee). The idea is to ensure that the consumer is aware of the solicitation and that an educated decision about a potential purchase can be made. Hence, when a corporate brand either pays or supplies a social media influencer with complimentary jawns to represent it through a post, failure to disclose that fact can spell liability for one or both parties.
What of it?
We have two thoughts to offer here. First and foremost, comply. It’s easy. All the influencer has to do is comment “#Ad”, “Ad:” or “Sponsored” in the posted Instagram pic to validly disclose to consumers that the particular post is the type of sponsored content described above. If the campaign is to span several posts, disclose on each one. Moreover, ambiguous language like “in partnership with” or “a collaboration between” will not suffice as unequivocal disclosure. With the excess of hashtaggery we see employed on the daily, thumbing “#Ad” into the mix is shouldn’t be too off-putting.
Second, the potential for liability behind such a violation of the FTC Act illustrates exactly why formal incorporation is a no-brainer. Recall in previous posts the discussion we had about the personal liability shield that accompanies organizing as an LLC or some variation of a corporation. It’s tough to tell whether a benchmark of 7,000+ followers is enough for DJ and Tailor Made Style to show up on the FTC’s enforcement radar. So although direct regulatory enforcement is a risk, it might very well be a low one. However, influencers in DJ’s position are often part of a broader network of individual influencers bearing their own respective followings and thus contracts with the same corporate brand. As we mentioned last week, anytime a contract exists, so does the possibility of breach. One crucial element of big corporate contracting is the concept of indemnity. Basically, big companies draft language in these sorts of agreements to insulate themselves from ultimate liability. While Lord & Taylor may make headlines behind a violation, it is often the independent contractors (the Tailor Made Style’s of the world) who pay the price. Thus, the risk of indirect regulatory enforcement may be much higher.
Without getting too in the weeds, it breaks down like this. A corporate brand will offer some sort of compensation via contract to a social media influencer in exchange for some agreed upon fire-jawn-posting from the influencer’s account. The contract will spell out the rights and obligations and also include an indemnity clause. The indemnity clause will go something like, “If we get sued, you get sued and you’ll compensate us for any losses.” In the event of a suit and resulting unfavorable judgment, an influencer could be on the hook for more than they have the ability to pay. If said influencer did not formally incorporate (and thus fail to secure the liability shield) they could be on the hook personally. We’re talking about the house, the car, the college fund — all at risk. Not fire.
The bottom line is that social media influencers and fashion bloggers alike should know what they’re signing before they sign it. Don’t be too intimidated by the size or leverage of a corporate brand, or too pressured by the prospect of some short-term money to adequately understand your own obligations and protect your ability to make a business doing something you love. Even if its not one who can properly get a fit off, find an attorney to look over your contract(s) and advise about your social media strategy going forward. Per usual, Carolina Craft Legal is here for just that. Shoot us an email or drop us a line anytime.
Until next week. Cheers!
Originally published at www.carolinacraftlegal.com.