Hey, it’s Brian. This article is for informational purposes and is NOT legal advice, cool? Onto the article…
The internet is a revolutionary platform for business, innovation, communication… the ideal – and easiest – way to make money today is online. I don’t need to tell you about all the advantages it offers, like low overhead, instant access to a market of millions, and others.
But in all your excitement to be doing business online, it can be easy to forget that just like any other business, your online venture is subject to things like taxes and laws. That includes laws that apply to any business in operation, as well as those solely in the online realm.
And it pays to pay to attention to these regulations lest you lose your hard-earned money, and face fines or other penalties.
That’s not the only reason, of course. Being ethical and above-board is always the best course of action.
One of the great things about the internet and all its social media platforms, apps, and other tools, is that it has radically changed some many aspects of our lives. It’s changed the way we work, communicate, have fun, consume information, enjoy entertainment, get medical care, and… do business.
That’s not a new observation, of course. But one worth making because it’s easy to forget how things were before.
I want to stick with that last point. The online world has really leveled the playing field in many ways… for so many people… when it comes to starting and running a business.
People who could never pull together funds to start businesses in the traditional sense have found new avenues as influencers, content creators, ecommerce entrepreneurs, YouTubers, and more.
But just because it’s easy to start and run an online business does not mean you can abandon all the concerns of a traditional business owner. You have to consider the most advantageous business structure, get solid tax advice from a pro (yes, you have to pay taxes on your earnings and your business’s earnings), and more.
You must also follow the law. And there are several that apply to your activities online, including those that you may not realize, that impact the content you can post, how you talk about products you’re endorsing, how you talk about other people, the material you use in your content, and more.
Gone are the Wild West days of online business. The government is keeping an eye on influencers and content creators. They are watching what people are posting and saying online, on YouTube, Instagram, TikTok, and the like.
And you ignore the law – or don’t attempt to familiarize yourself with applicable laws – at your peril. Ignorance is no excuse.
Fortunately, by keeping in mind some key rules and regulations, you can stay in the government’s good books, especially with regards to the main ways influencers and content creators get in trouble:
- Copyright infringement
- Endorsement disclosures
- Securities violations
- Deceptive advertising
Let’s take a look at some of the legal issues influencers and creators must know about.
Copyright Infringement and Influencers
Simply put your strategy as an influencer cannot depend – or even include at all – simply copying and pasting images from the internet and posting them on your website, blog post, Instagram, or wherever else.
Same goes with a video, song, movie dialogue, or other work.
When you don’t have the original creator’s permission – that’s copyright infringement. Even if you attribute the photo or song or whatever else or even link to the original source.
You might think that you can get away with it, especially if you take images or audio from a large company. And it’s true that the original creator might not notice. That’s why you’ve seen so much content out there, especially on social media, where copyrighted material is used. For example, TikTok videos with people dancing choreographed routines to popular songs.
But if the copyright owner does notice, even months or years after the violation, they can come after you for damages, as well as legal fees. And that can be a lot of money!
Why? Because you are capitalizing – making money – off their hard-earned intellectual property.
There was a recent case in which Sony Music sued fitness apparel company Gymshark for using its artists’ songs in its social media ads without permission. The lawsuit ended up being settled—no doubt for a substantial amount.
All this said, you can use portions of a song or video in your own work, even their images under certain conditions and without the permission of the copyright owner. That is if it falls under the scope of fair use.
The doctrine of fair use permits you to incorporate copyrighted material if it is used in criticism, commentary, news reporting, teaching, scholarship, or research.
For example, say somebody has a YouTube channel dedicated to reviewing Star Wars TV shows and movies. They are allowed to use clips from Return of the Jedi in their review of that work because they are commenting on it.
And, of course, you can always use songs and such included in the commercial libraries of TikTok, Instagram, and other platforms.
Endorsement Disclosures and Influencers
For influencers, one of the holy grails is to land an endorsement deal with a brand. You can get free stuff – and, better yet, get paid.
No problem there. That’s what it’s all about.
But the Federal Trade Commission wants to make sure you do it the right way… or they will come after you!
At the base level, the FTC wants you to make it obvious that you have a financial relationship with the brand – and that includes payment, or free or discounted products or services. This is even if you do nothing more than include a hashtag, like, or pin for the brand. It’s all about being transparent.
You should do this in each and every post involving that brand and, again, it should be obvious and hard to miss. Some guidelines direct from the FTC:
- The disclosure should be in the message itself – like the body of social media post.
- You can’t get away burying it in an About Me or profile or at the end of a post. And don’t mix the disclosure in a big group of hashtags or links.
- If the endorsement is in a video, the disclosure has to be in the video itself – not just the video description.
- If the endorsement is in a live stream, the disclosure could be made periodically in the stream.
So how should make those disclosures? It’s straightforward and you have options:
- Use a phrase like “Thank you to BRAND for the free PRODUCT.”
- Use terms like “advertisement,” “ad,” and “sponsored.” Also, “BRAND Ambassador” or “BRAND Partner.”
- Use hashtags like “#ad” or “#sponsored.”
Some last details to know…
- It’s not allowed – not to mention not ethical – to endorse a product you haven’t used.
- If you think the product or brand is bad – you can’t tell your followers it’s good.
- You can’t make up claims about the product. You can only make claims that the brand has proof for.
Copyright infringement and proper endorsement disclosures are two of the legal areas where influencers and content creators get into trouble most often. Fortunately, it’s easy to navigate these issues and follow the law as you build your following and business… if you follow the tips I’ve shared above.
Now I’d like to cover three more key legal rules to follow to stay on the right side of the law.
Basically, these were stock influencers with the personas of successful traders. They would buy a specific stock and hype it up on Discord, Twitter, and podcasts to their followers. Then when there was a rush to buy the stock and the price rose… they would sell without disclosing to their audience. In fact, they actively made false claims about the due diligence they’d done, how long they would hold on to the stock, and what they believed about the stock’s performance.
The novice investors among their followers, of course, lost money.
This sort of manipulation has always been illegal. It’s not something targeting influencers, YouTubers, and other content creators. It’s just that with the reach of influencers today and the massive audiences that they have built, it’s never been easier to impact stock prices and otherwise affect financial markets. And when somebody profits from doing so intentionally, that’s illegal.
This is a tried-and-true tactic of scammers. It’s just back in the day, the methods of communication were restricted to phone calls from boiler rooms and stock pick newsletters. With social media, the cycle of “pump and dump” is so much faster.
Promoting certain stocks is fine. But when you use social media to manipulate people and stock prices and profit… that crosses the line.
Free speech is one of our country’s most treasured rights. But that doesn’t mean you can say whatever you want. And that’s even true on social media.
It’s called defamation, an umbrella term that covers libel and slander. Basically, this is when you post (or comment) something false about a company, organization, or individual, whether intentionally or unknowingly.
These are civil actions, which means the supposedly defamed person or company has to sue you. Generally, the social media platform itself is exempt from this sort of legal action, so you’d be on your own.
Of course, this does not mean you can’t have an opinion. You just can’t make untrue and damaging statements.
For example, you could say that you hate the latest Marvel movie. But you couldn’t say that they killed baby seals during the filming of the new Marvel movie.
Influencers have run into problems in this area in the past by defaming their competitors.
This is an easy one to avoid. You can criticize all you want… but always adhere to the truth.
For influencers and content creators, endorsing products and brands is one of the best ways to monetize their online followings. But, as I shared earlier in this article, the Federal Trade Commission has some very strict rules about how to go about disclosing those paid relationships. Basically, if you’re being compensated for a social media post, you have to disclose that clearly.
There are also some pretty strong rules about how you go about it. At a basic level, you can’t lie in your posts promoting a product or brand.
If you’re promoting your own product, you can’t include fake testimonials, not to mention make false claims.
The SEC’s stated goal is to protect consumers. In the case of social media influencers, they’re seeking to protect impressionable young people who make up the bulk of the audience and trust influencers to sometimes dangerous levels.
Often, it is folks in the health, wellness, and weight loss niches that get in trouble here.
It could be an influencer who says an herbal tea helped them lose 20 pounds in 20 days… or that a special cream cured their acne. Sometimes a content creator might have never tried a product but still stays it worked great for them in an endorsement. Or they could have used it and not enjoyed it… but still give it a positive review.
All are violations according to the FTC and grounds for them to pursue legal action against you. And health claims are especially monitored. You can’t say a product helps with any health issues without actual scientific evidence.
Where to Go From Here
As your online business takes off, you should be aware of several legal issues that can result. Just because you’re not running a bricks-and-mortar business – and the internet seems so wild and free – does not mean that the rules don’t apply.
And the government is becoming increasingly savvy in keeping a close eye on influencers and content creators in regards to protecting consumers from what they perceive as threats.
Most likely, you won’t be crossing the line in any of the areas mentioned in this article or in Part 1 of this series.
But staying informed and taking proactive steps to address these legal issues can only help you build a successful, fulfilling, and profitable venture.