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 “@lordandtaylor” 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.
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