As of June 2025, Bloomberg surmised that the influencer marketing industry was worth $30 billion. As the industry grows, compliance with disclosure requirements has become even more important.
The Rise of Class-Action Lawsuits
An influencer is one who inspires or guides the actions of others and is able to generate interest by posting across social media platforms. Brands hire influencers to promote products, services, technology and experiences through storytelling across social media platforms. Storytelling may take the form of video content, a carousel post, a caption on a still image, a podcast, a YouTube channel or live streaming. However, since content creation can be done relatively inexpensively and informally, influencers can sometimes forget their legal disclosure obligations while telling the story. As a result, influencers and brands have become the subject of class-action lawsuits alleging violation of Federal Trade Commission disclosure requirements.
Brands such as ALO Yoga, Celsius and Revolve, together with their influencer partners, have been hit with class-action lawsuits demanding in the tens to hundreds of millions for failing to properly disclose in violation of Federal Trade Commission disclosure requirements.
With respect to the April 2025 $50 million class-action lawsuit filed against Revolve, a fashion retailer often crowned as the creator of the influencer marketing industry, it was alleged that Revolve and its influencers failed to disclose paid partnerships in violation of Federal Trade Commission guidelines. The claimants said it had the effect of misleading consumers by disguising posts as organic and independent. Although this case has now moved to arbitration as a result of the mandatory arbitration clause and class-action waiver, this case has become a regulatory wake-up call.
Material Connection Disclosures
Regardless of whether they are a consumer, expert or virtual influencer, if the influencer received any form of compensation — such as payment, affiliate commissions, discount-based earnings, free products, services or any other material connection — it must be disclosed. A material connection is anything that a reasonable consumer would want to know before making a purchase and includes personal, financial, family or employment relationships. The Federal Trade Commission states that the disclosure must be “clear and conspicuous,” meaning that it must be immediately noticeable and understandable to the average viewer.
Consumer, Expert and Virtual Endorsements
Influencer content must comply with Federal Trade Commission disclosure requirements. The Federal Trade Commission distinguishes between a consumer endorsement and an expert endorsement and treats them as separate categories with different rules.
A consumer endorsement means that an endorser must have actually used the product and shared their truthful personal experience. The disclosure must use clear, simple language and the content must reflect “honest opinions, findings, beliefs or experience.” The influencer’s message must be authentic. The endorsement must also be representative of what the consumer will generally achieve with the promoted product.
An expert endorsement must have evidence that supports their claims at an expert or professional level, ensuring that their evaluation methods are not misleading. If the endorser’s promotion represents directly or indirectly that the endorser is an expert, with respect to the message shared, the endorser must possess the represented expertise. It does not matter how many followers an expert has. What matters is the level of qualification they possess. The expert’s “evaluation must have been conducted in a manner that would normally be expected of someone with the same degree of expertise.” If the expert shares that they used a method of testing and did not actually use the method or have a basis for their endorsement, the influencer may be liable.
Recently, the Federal Trade Commission addressed disclosure requirements for virtual influencers. A virtual influencer is one that is created by artificial intelligence, is hyper-realistic and human-looking, and is created to act like a real-life influencer. Virtual influencers must avoid making statements about having personal experience with a product and misrepresenting the virtual influencer’s capacity, such as indicating that the virtual influencer enjoyed driving a specific car.
Social Media Platforms Introduce Requirements
The Federal Trade Commission is not alone in imposing disclosure requirements. Social media platforms now have their own guides on disclosures and additional requirements for influencer marketing. Content disclosure must be tailored to each platform to ensure it is consistent with the platform’s user experience. The placement of the disclosure is critical and may be subject to change depending on the social media platform. If the consumer has to hunt for the disclosure, it is not a sufficient disclosure.
Conclusion
In light of increased consumer scrutiny and class-action lawsuits, compliance is imperative. The failure to comply with disclosure requirements exposes both brands and influencers to significant legal, financial and reputational risk. To mitigate this, brands and influencers should work together to ensure compliance with disclosure requirements by including disclosure terms in influencer agreements, monitoring posts for compliance, using clear disclosure language and confirming the material relationship. For more information, please contact Ashley E. Blume (ablume@brodywilk.com) or another BW attorney.
