The government considers the luxury retailer's marketing campaign -- including a paid article and Instagram posts that were not labeled as advertising -- to be deceptive.
Luxury department store chain Lord & Taylor has settled Federal Trade Commission charges that it deceived consumers by trying to pass off paid ads as objective editorial content.
The retailer supplied 50 online “fashion influencers” with a free dress, then paid them between $1,000 and $4,000 each to post a picture of themselves in the dress on Instagram with a caption that included [email protected] and #DesignLab, according to the FTC.
Lord & Taylor did not require the fashion bloggers to disclose that the company provided them with compensation for the post.
Lord & Taylor also failed to disclose that an online article that appeared in Nylon, a pop-culture and fashion magazine, was actually a paid endorsement, not an unbiased article.
The retailer’s online marketing campaign violated the Federal Trade Commission Act’s mandate barring companies from engaging in unfair or deceptive marketing.
“Lord & Taylor needs to be straight with consumers in its online marketing campaigns,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Consumers have the right to know when they’re looking at paid advertising.”
Lord & Taylor maintains that it responded as soon as it realized there was a problem with its ads.
“A year ago, when it came to our attention that there were potential issues with how the influencers posted about a dress in this campaign, we took immediate action with the social media agencies that were supporting us on it to ensure that clear disclosures were made,” Lord & Taylor spokeswoman Molly Morse told USA Today.
The FTC says the settlement, which is subject to a 30-day comment period, prohibits the retailer from “misrepresenting that paid commercial advertising is from an independent or objective source.” It also establishes a monitoring and review program for the retailer’s endorsement campaigns.
Have you ever been swayed by advertising that you thought came from an objective source? What do you think about the FTC’s settlement with Lord & Taylor? Share your comments below or on our Facebook page.