How to Avoid Lawsuits When Working with Social Media Influencers
by Paul Ruden and Doug Gollan /
Yesterday in a Travel Market Report article, we outlined what you need to know about the Federal Trade Commission (FTC) Influencer Guidelines as they pertain to social media influencers.
Today, we run through a number of scenarios that could impact your business as a travel advisor, with veteran travel attorney Paul Ruden discussing what you need to do to protect yourself. You may be surprised.
Scenario #1
The Happy Hotel posts images from Suzy Influencer on its various social media outlets, including Instagram, Twitter and Facebook. Suzy Influencer shares the same. She posts: “Hotel Happy is amazing. Best vacation ever. This is a place you have to visit.” Neither the hotel nor Suzy make any mention that she was given a free stay. A client who sees the post from Suzy calls you up, and asks you to book the hotel. On returning, your client says the hotel was awful and was, in fact, the worst vacation ever. Your client sues the hotel, Suzy and you. Who, in this scenario, should worry, and what should they do in the future to protect themselves?
Answer:
Both the hotel and Suzy Influencer failed to disclose that she was given a free stay. The FTC guidelines make it clear that the failure is fatal, because this is clearly information consumers would want to know in evaluating Suzy’s endorsement. While there is no indication that the client relied on the hotel’s posting, as distinct from Suzy’s reposting, there are concerns about the hotel’s role in positioning Suzy to mislead the consumer.
The advisor, however, may escape in this case because there is no indication that the advisor knew about Suzy’s endorsement. If the advisor did know about it and reasonably believed the client relied on it, there is a troublesome question about whether the advisor has a duty to warn the client about the risk. A close call.
I’m not sure this is very practical, but the best strategy for travel advisors booking a hotel or other supplier that the consumer pre-identifies is to check for the presence of endorsements that may have influenced the client. The advisor can also simply adopt an “inquiry policy” — whenever the client pre-identifies a supplier, ask about the reason the client has selected that supplier. It might be as simple as the price, but if it’s, “I saw that Suzy Influencer recommends them,” the advisor should dig deeper for endorsement issues.
Scenario #2
The Happy Hotel posts images from Suzy Influencer on its various social media outlets, including Instagram, Twitter and Facebook. Suzy Influencer shares the same. She posts: “Hotel Happy is amazing. Best vacation ever. This is a place you have to visit.” The hotel follows FTC best practices, but Suzy does not make any mention that she was given a free stay. A client who sees the post from Suzy calls you up, and asks you to book the hotel. On returning, your client says the hotel was awful and was, in fact, the worst vacation ever. Your client sues the hotel, Suzy and you. Who, in this scenario, should worry, and what should they do in the future to protect themselves?
Answer:
The hotel is off the hook because it complied with the FTC guidelines. Suzy, however, did not and has legal exposure. The situation for the advisor is the same as in Scenario #1. If he/she wishes to avoid problems arising from compensated endorsements, the travel advisor needs to inquire as to why the client wants this particular property, and make sure the client understands the complete situation.
Scenario #3
The Happy Hotel posts images from Suzy Influencer on its various social media outlets, including Instagram, Twitter and Facebook. Suzy Influencer shares the same. She posts: “Hotel Happy is amazing. Best vacation ever. This is a place you have to visit.” Neither the hotel nor Suzy make any mention that she was given a free stay. You then repost the hotel’s post from Suzy. A client who sees your post from Suzy’s stay, asks you to book the hotel. On returning, your client says the hotel was awful and was, in fact, the worst vacation ever. Your client sues the hotel, Suzy and you. Who, in this scenario, should worry, and what should they do in the future to protect themselves?
Answer:
Everyone has a problem here. Neither the hotel nor Suzy disclosed the free stay, which is a clear violation of the FTC guidelines. The travel advisor would be held responsible for failure to inquire whether the reposted endorsement involved a free stay. Professionals are held to a higher standard than consumers, and should know that influencers often receive free stays or other concessions from properties they recommend.
Scenario #4
You go on a fam trip to the Happy Hotel. Your stay is free. You then post a write up on the hotel in your agency blog and post images on social media. You don’t follow FTC guidelines. A client sees your post and blog, calls you up and books based on your posts. When they come back, unhappy, they sue, naming you as well as the hotel. Who, in this scenario, should worry, and what should they do in the future to protect themselves?
Answer:
This is an easy case. The travel advisor is responsible for failure to disclose that concessions were provided to induce the advisor to visit the property. The hotel does not have that problem here because it made no representations on which the client relied in making the booking. Standing alone, there is nothing wrong with a hotel providing fam trip concessions to induce travel advisors to visit and book.
Scenario #5
An agent who works for you as a salaried employee goes on a fam trip to the Happy Hotel. Your agent’s stay is free. He/she then posts a write up on the hotel in your agency blog and post images on social media. You follow FTC guidelines, but your employee does not when posting on his/her personal social media. A client sees the posts on the personal Instagram, calls your agent up and books based on those posts. Do you, as the employer, have anything to worry about? What if the agent was an IC instead of an employee?
Answer:
This case is complicated. The agency is likely to be held responsible for the “personal” posts of its employee, which were intended to attract business and succeeded in the case posed. The agency cannot escape from the FTC guidelines by arguing that its employee was acting on his/her own. The agency, I believe, should have a policy on this practice, making it clear that all so-called “personal” social media that involve solicitation of business are agency-related and must follow disclosure requirements.
If the acting party in this case is truly an independent contractor affiliated with the agency and that affiliation was disclosed to the client, the agency is likely to be responsible for the violation of the FTC guidelines committed by the IC. There are no clear court opinions on this point, but I believe that it is consistent with the IC relationship for the agency to require the IC to comply with the federal guidelines, just as it would be for a homeowner to demand that an independent electrician have required licenses to perform electrical work. Conversely, sharing commissions with an IC, for example, may be sufficient to make the agency responsible for FTC violations. Clear case law or not, it is generally good practice for the hosting agency to require ICs to conform to the FTC regulations.
Scenario #6
This time, our influencer is a celebrity who hosts a major game show on TV, so perhaps the assumption is he/she gets free stays. On his/her Instagram and social media it’s clear he/she travels quite a bit, but nothing is marked as a paid promotion. You see he/she has visited a resort you want to promote, so you repost his/her social media posts with his/her glowing review of the hotel. You have no idea if he/she received a free stay or if he/she paid like a regular guest. A client sees you share of his/her posts, calls you up and books. They are appalled at the service, and while there learn that he/she not only received a free stay, but he/she was paid to post on social media. Yes, your client sues the hotel, the game show host and you. Who, in this scenario, should worry, and what should they do in the future to protect themselves?
Answer:
The hotel and the game show host have each failed to disclose concessions that would reasonably be expected to influence consumers’ responses if they knew about the concessions. Both have a problem under the FTC rules.
I believe the agency/advisor also has a problem in this scenario. A professional travel advisor should understand that glowing reviews by a celebrity are normally not given without some compensation to the endorser whose celebrity status gives his/her endorsement extra power in the minds of consumers. The advisor likely has a duty to inquire before simply re-promoting the celebrity’s endorsement.
Scenario #7
One last fam trip example. You or your agent go to a hotel and receive a discounted fam rate. You write a glowing report on your blog and share your images on social media — the goal, of course, is to generate bookings. You don’t mark any of it as a paid promotion — after all, you paid a discounted rate. Your client goes, is unhappy, comes back and sues the hotel and you, citing of course the FTC guidelines for influencers. Who, in this scenario, should worry, and what should they do in the future to protect themselves?
Answer:
The advisor has a problem because the discount is sufficient under FTC guidelines to create a duty of disclosure. This is a clear case. Like Scenario #4, the hotel has not made a representation on which the consumer relied and thus the hotel has no FTC guidelines problem.
In summary
If you, as a professional travel advisor, have knowledge or reason to know, given your expertise, that financial or other consideration was provided to an endorser/influencer, you have a duty to make disclosures of concessions that ordinary consumers might consider important in influencing the endorsements.
The FTC takes a broad view of when concessions have that effect, so you should err on the side of greater disclosure rather than less. Even if you have no actual knowledge as such that concessions were made, you will be treated as if you did have knowledge when the circumstances are such that you should at least have inquired about concessions. Remember that consumers are relying on you and your professional expertise to protect them, so act accordingly. If uncertain, inquire and/or disclose.