Social Media Poses a Challenge to the FTC’s Advertising Guidelines

Assuming you’re not already reading this on your phone, go ahead and open up your preferred social media app. Instagram, Facebook, Snapchat, whichever you prefer. Scroll through and quickly count the ads you see. How sure are you that you counted them all? How did you determine they were ads? Did the post say sponsored by? How about #ad?

Unfortunately, you may have missed one or two, because a content producer didn’t disclose that they were getting paid for their posts. They might be monetizing their audience, without their audience even knowing it.

This issue is not isolated to one particular industry or level and even occurs with high profile influencers such as the Kardashians, one of ninety social media influencers and marketers who received a letter from the FTC noting their legal obligations to disclose material connections. Despite this, consumer groups are still claiming that the Kardashian/Jenner family is failing to disclose that some social media posts are possibly ads.

Social MediaBut unfortunately, the Kardashian/Jenner situation isn’t the most nefarious or outrageous when it comes to this problem. That honor falls to CSGO Lotto owners Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell.

Before we get into what these two did, we need to understand one part of the popular first-person shooter Counter-Strike: Global Offense, otherwise known as CS:GO. CS:GO has a well known and very successful micro-transaction business model that creates unique and rare gun skins for cosmetic use inside the game. And because the developer and publisher of CS:GO, Valve, created a marketplace where players can trade in-game items for real money they quickly became a pseudo-currency that could be used for gambling on websites.

Social MediaTo have a complete and total understanding of what CS: GO skins are won’t be necessary for the rest of this article but if you want to know more here is a handy article to learn more.

But back to Martin and Cassell, both of whom are popular CSGO players on YouTube and Twitch. The pair co-owned and operated a skin gambling website called CSGOLotto in which they actively promoted on both other creator’s platforms, but their own.

(Here is one of Cassell’s videos where he gambles on his own website.)

Basically imagine a Vegas casino owner hiring Brad Pitt to play at their casino without letting anyone know, and then sitting down at their own table and playing a few hands with house money. While this already seems bad, it’s made worse by the fact that the main audiences of all social media influencers involved are minors.

This situation has to lead to the first-ever complaint against individual social media influencers on the FTC which was settled September of 2017. With Martin, Cassell and the influencers, they paid to promote their website getting little more than a slap on the wrist from the FTC. You can see the settlement here.

“Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts. This action, the FTC’s first against individual influencers, should send a message that such connections must be clearly disclosed so consumers can make informed purchasing decisions,” said Maureen Ohlhausen, the acting chair of the FTC, when the settlement was reached.

While there was a lawsuit over the illegal gambling which involves the CSGOLotto owners and the video game publisher Valve, there are no are legal or financial punishments for either Martin or Cassell for deceptively advertising their website.

For now, it seems, social media influencers will continue to give the FTC problems until an influencer is made an example of.

-Chase Danielson

2 thoughts on “Social Media Poses a Challenge to the FTC’s Advertising Guidelines

  1. I never realized how many ads there are hidden within popular people’s post on social media. I see your point how online gambling and how it relates to buying those upgrades on video games and what not, but I feel like that is pretty bad compared to advertising within specific social media accounts. The FCC has a lot of problems they will need to either solve or consider legal.

  2. I went through my social media and there are a lot of ads there. You made a great point about gambling and you clearly showed how this is a problem. I do agree with Nick’s comment. The FCC has a lot of stuff on their plate that they have to deal with.

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