Disclaimer: This information is for educational purposes only. Nothing is intended to be legal advice. For inquiries about legal services, please complete a contact form.
May 2, 2025
The projected annual market value of social media influencing is set to reach over $30 billion in 2025. With numbers like these, it’s no surprise that brands are increasing marketing partnerships with influencers in favor of more traditional marketing networks of the past. With great profit, comes great responsibility to ensure compliance with applicable law. When the line between a casual social media post and advertisement becomes blurred, the Federal Trade Commission (FTC) has demonstrated it will come knocking to ensure enforcement with U.S. advertising law. The private sector has also demonstrated it will follow suit–with one company facing a $50 million lawsuit for alleged deceptive advertising practices on social media. More on that below.
But first, let’s review a quick background into the social media advertising landscape in recent years. The FTC has recently intensified its efforts to combat deceptive advertising practices on social media platforms. This crackdown targets influencers, brands, and tech companies that engage in misleading promotions, fake reviews, and undisclosed sponsorships. The FTC’s actions aim to enhance transparency and protect consumers from fraudulent or misleading content online. The National Advertising Division (NAD) of the BBB Programs, an independent non-profit organization, has also been monitoring and calling out the improper disclosure of social media advertisements per FTC guidelines, as discussed further below.
Influencers Under Scrutiny for Undisclosed Sponsorships
The FTC has taken action against individual influencers for deceptive practices. In a notable case, Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell were charged for promoting the online gambling site CSGO Lotto without disclosing their ownership stakes. They also paid other influencers to endorse the site without proper disclosures. This marked the FTC’s first enforcement action against individual influencers, highlighting the importance of transparency in sponsored content.
In November 2023, the FTC issued warning letters to two trade organizations (the American Beverage Association and the Canadian Sugar Institute) and a dozen nutrition influencers for failing to properly disclose paid promotional posts. These posts, promoting products like aspartame and sugary foods on platforms such as TikTok and Instagram, did not clearly indicate the influencers’ financial relationships with these organizations. The FTC emphasized that such omissions could mislead consumers and violate federal law.
Following the FTC’s warnings, some dietitians have begun to explicitly disclose their sponsors in social media posts. For instance, Steph Grasso, a registered dietitian with roughly 2.2 million followers on TikTok, now superimposes #Ad on her videos promoting products like Orgain protein powders.
Banning Fake Reviews and Social Media Clout
In August 2024, the FTC finalized a rule banning the sale and purchase of fake online reviews and social media engagement metrics. This rule prohibits practices such as buying fake followers, likes, and reviews, as well as suppressing negative feedback. Violations can result in fines up to $51,744 per incident. The rule aims to ensure that online reviews and endorsements reflect genuine consumer experiences.
Previously, the FTC settled cases with companies like Devumi LLC, which sold fake social media indicators, and Sunday Riley Skincare, whose employees posted fake product reviews. These actions underscore the FTC’s commitment to maintaining integrity in online advertising.
Demanding Accountability from Social Media Platforms
Recognizing the role of platforms in disseminating deceptive ads, the FTC issued orders to eight major social media and video streaming companies, including Meta, Instagram, YouTube, TikTok, Twitter, Pinterest, and others. These companies were required to report on their efforts to combat false advertising and scams on their platforms. The FTC seeks to understand how these platforms monitor and review advertising content, especially ads related to health-care products, financial scams, and counterfeit goods.
Revolve Faces Scrutiny Over Influencer Advertising Practices
In early 2025, online fashion retailer Revolve Group Inc. came under scrutiny for its influencer marketing practices. The National Advertising Division (NAD) of BBB National Programs, an independent non-profit organization, recommended that Revolve modify its influencer posts to clearly disclose material connections between the company and influencers in its product gifting program. NAD found that certain Instagram posts from influencers tagged Revolve without adequately disclosing their relationship, potentially misleading consumers.
Revolve responded by updating its Brand Ambassador Guidelines and Checkout Terms to ensure compliance with the FTC’s Endorsement Guides. The company committed to increased monitoring of influencer posts and provided examples of acceptable disclosures. However, NAD noted that some disclosures, such as hashtags like #giftedbyrevolve, were not sufficiently clear, as they combined words in a way that could be confusing to consumers. NAD emphasized the importance of unambiguous and conspicuous disclosures to inform consumers about sponsored content.
Revolve is now facing a $50 million class action lawsuit for alleged undisclosed influencer marketing practices. The case is Negreanu v. Revolve Group, Inc. et al., 2:25-cv-03186 (C.D. Cal.). In the Complaint, it states the class action consists of every customer of Revolve in the United States from March 2021 through present.
Lana Del Rey Faces Scrutiny Over Social Media Posts
In early 2025, Lana Del Rey also faced scrutiny from NAD regarding her social media posts promoting Skims, Kim Kardashian’s shapewear brand. The NAD evaluated three Instagram posts from January 2024 in which Del Rey featured Skims products without clear disclosures indicating a material connection to the brand. These posts lacked explicit tags such as “#ad” or “#sponsored,” which are required under the Federal Trade Commission’s (FTC) Endorsement Guides to inform consumers of paid partnerships.
The NAD recommended that the singer either modify these posts to include appropriate disclosures or remove them entirely. Skims, acknowledging the oversight, requested Lana Del Rey make the necessary changes in line with their contractual agreement, which mandates compliance with FTC guidelines. (Another reason solid attorney-written contracts are so important).
This incident underscores the importance for influencers and brands to adhere strictly to FTC regulations concerning advertising disclosures.
Why Compliance Matters
The FTC’s ongoing crackdown is a clear signal: transparency in advertising is no longer optional. For brands and content creators alike, failing to follow FTC guidelines on disclosure can lead to serious consequences—including public scrutiny, reputational damage, and steep financial penalties. The recent cases involving Revolve, nutrition influencers, and fake reviews show that no entity is too big or too small to be held accountable.
For influencers, proper disclosure not only keeps you on the right side of the law but also builds trust with your audience. For brands, clear, compliant social media partnerships protect your investment and reduce legal risk.
In today’s digital marketplace, integrity and honesty are not just ethical obligations; they’re business essentials. Dean Legal Solutions, PLLC is well-versed in the area of social media advertising. For help with a tailored contract, or legal guidance on proper disclosures, do not hesitate to contact the firm. Let’s work to help you avoid a legal headache and financial penalties.
Disclaimer: This information is for educational purposes only. Nothing is intended to be legal advice. For inquiries about legal services, please complete a contact form.