- The tea marketer Teami LLC has settled a lawsuit with the Federal Trade Commission (FTC) over health claims the company has made about some of its products.
- In addition, a number of social influencers, including singer Cardi B, have settled the legal action, which charged them with repeating the promises without properly disclosing payments.
- Experts say this type of deception on social media platforms has become more common and the FTC is starting to crack down.
The Federal Trade Commission (FTC) has put a blemish on a cosmetics company for making false claims about its products — and on social media influencers for repeating those promises without properly disclosing that they were getting paid to do so.
The FTC said the company also stated that its teas fight cancer, clear clogged arteries, decrease migraine, treat and prevent influenza, and treat colds.
All of the claims lacked reliable scientific evidence, the FTC said in laying down a $15 million judgment against Teami.
The company was permitted to pay an up-front penalty of $1 million and have the rest of the judgement suspended, “based on the defendants’ inability to pay the full judgment,” according to an FTC statement.
Under the proposed settlement, Teami also would be required to cease making unsupported weight loss and health claims about its product.
The FTC noted that Teami continued to make such claims even after receiving a warning from the agency in April 2018.
“Social media is full of people peddling so-called detox teas, promising weight loss,” said Andrew Smith, JD, director of the FTC’s Bureau of Consumer Protection.
“Companies need to back up health claims with credible science and ensure influencers prominently disclose that they’re getting paid to promote a product.”
“The Teami FTC ruling reminds brands, brand partners, and influencers that we must take disclosure laws seriously,” Andrya Allen, founder of media and communications consulting firm Crossland Communication, told Healthline.
“Educated consumers are empowered to make better choices for their health, happiness, and freedom. Disclosure builds trust and transparency, which are increasing in priority as marketing dollars move to digital.”
The health claims were amplified in Instagram posts by prominent social media influencers, including Cardi B, Katya Elise Henry, Brittany Renner, Adrienne Bailon, Princess Mae, Jordin Sparks, Alexa PenaVega, Leyla Milani-Khoshbin, Jenicka Lopez, and Darnell Nicole.
All received payments from Teami, but their followers couldn’t see a disclosure that the endorsements were paid for unless they clicked the “more” option on the posts, a violation of FTC rules, the agency said.
Influencer Adrienne Bailon, for example, endorsed Teami tea in an Oct. 2, 2018, Instagram post to her 4.8 million followers, but failed to prominently display the “#teamipartner” disclosure prominently.
An accompanying video posted by Bailon had no disclosure whatsoever.
Neither Teami nor several of the influencers involved in the case responded to requests for comment from Healthline.
Influencers involved in the case weren’t penalized by the FTC, but received a warning letter with a requirement that the influencers describe the “actions you are or will be taking to ensure that your social media posts endorsing brands and businesses with which you have a material connection clearly and conspicuously disclose your relationships.”
Lena Katz, founder of Variable Content, which provides social media and other content to a variety of travel, food, and consumer electronics brands, told Healthline that compliance with FTC disclosure rules is “not good, overall.”
“There are a lot of nonprofessional content creators who want to make easy money,” said Katz.
She added many companies and advertising firms subcontract their social media marketing to smaller firms who are “not well-versed” in the disclosure rules.
Katz noted, for example, that the food brands she works with have to get approval from their legal department when using terms such as “clean” or “natural.”
“But if an influencer decides to use those words in a skinny tea ad and the brand doesn’t stop her, she might be breaking laws around what actually qualifies as a natural product,” she said. “And might not realize it or care too much.”
“To date it’s been minimal risk unless you’re a major company or influencer in the most heavily scrutinized industries,” Katz said. “Beauty and gaming were two that came under early scrutiny because the spend was so high and the rule breaking so blatant.”
Theodore C. Max, a partner in the Entertainment, Technology and Advertising and Intellectual Property Practice Groups at the law firm Sheppard Mullin, told Healthline that deceptive practices such as those Teami was charged with have become “much worse” in the social media era.
Max said the FTC has been slowly ramping up enforcement on social media marketing, first targeting advertisers and, increasingly, influencers.
In November 2019, he noted the agency posted a guide called Disclosures 101 for Social Media Influencers that “made it clear that as an influencer it’s your responsibility to make these disclosures.”
Max added, “That was putting everyone on notice.”
In the Teami case, he said, the FTC made clear that it’s not enough for companies to sign contracts with influencers requiring them to disclose their ties in social media posts.
“They need to monitor and enforce it, too,” he said. “There have to be repercussions for not doing it.”