If mobile is still in its formative years as a marketing channel, then influencer marketing as a subset of mobile — since much of it happens on social media and most social media is consumed on mobile — is barely out of the delivery suite.

In its very early days, it was something of a closed shop, restricted to YouTube vloggers like Zoella, with millions of followers. But with the emergence of agencies that aggregate lesser-known (and followed) Internet stars across a variety of social channels, enabling brands to use a group of influencers to endorse their products at scale, there are hundreds, if not thousands, of people making a decent living promoting products and brands.

All of this is fine, except for one key issue: transparency.

Prominent influencers in the Fyre Festival campaign did not disclose their compensation.
Prominent influencers in the Fyre Festival campaign did not disclose their compensation.

The law requires these influencers declare when they are being paid to endorse or recommend a product. That requirement holds true whether they’re being paid in hard cash or receiving a form of payment in kind, like being allowed to keep the products they are raving about as they unbox them to an expectant Millennial audience on their YouTube channel.

It’s only been two weeks since the Federal Trade Commission (FTC) in the United States revealed it had sent out more than 90 letters reminding influencers and marketers of their obligations to “conspicuously disclose their relationships to brands when promoting or endorsing products through social media.”

The FTC said the letters were informed by petitions filed by Public Citizen and affiliated organisations regarding influencer advertising on Instagram, and by Instagram posts reviewed by FTC staff.

The FTC’s Endorsement Guides provide that if there is a “material connection” between an endorser and an advertiser — in other words, a connection that might affect the weight or credibility consumers give the endorsement — that connection should be clearly and conspicuously disclosed, unless it is already clear from the context of the communication.

A material connection could be a business or family relationship, monetary payment, or the gift of a free product. The Endorsement Guides apply to both marketers and endorsers.

In addition to providing background information on when and how marketers and influencers should disclose a material connection in an advertisement, the letters each addressed one point specific to Instagram posts — namely, that consumers viewing Instagram posts on mobile devices typically see only the first three lines of a longer post unless they click “more,” which many may not do.

The staff’s letters informed recipients that when making endorsements on Instagram, they should disclose any material connection above the “more” button.

The letters also noted that when multiple tags, hashtags, or links are used, readers may just skip over them, especially when they appear at the end of a long post, meaning a disclosure placed in such a string is not likely to be conspicuous.

Some of the letters also addressed particular disclosures that are not sufficiently clear, pointing out that many consumers will not understand a disclosure like “#sp,” “Thanks [Brand],” or “#partner” in an Instagram post to mean the post is sponsored.

The issue reared its head again this past week with the fallout from the disastrous Fyre Festival.

The event was marketed as a luxury music festival in the Bahamas for the wealthy, but descended into chaos after attendees arrived to find the “cultural moment” was taking place amidst muddy fields and piles of rubbish, with no basic amenities and little in the way of food or even water.

Not surprisingly, the event was cancelled, leaving many would-be revellers stranded on the island of a remote island in the Exumas.

The organisers of the event, Fyre Media, co-founded by rapper Ja Rule, are now facing a US$100 million (£77.4 million) fraud case brought by attendees of the event. The attendees are claiming the festival organisers knew in advance the event was “outrageously underequipped and potentially dangerous for anyone in attendance,” and they warned A-list guests and performers not to attend the festival prior to it beginning.

Separately, a leaked pitch deck has revealed that hundreds of online personalities were recruited to advertise the event on social media, without disclosing they were part of a marketing campaign, in return for luxury accommodation and other perks at the festival.

According to Vanity Fair, 400 influencers with large social media followings were brought onboard to publish promotional videos and posts for the event. Very few of the influencers, who included Kendall Jenner, Nick Bateman, Emily Ratajkowski, and Elliot Tebele, mentioned in their posts these were paid promotions.

In exchange for this social media blitz, which reportedly generated 300 million social impressions within 48 hours, the influencers were offered free flights, accommodation, and tickets to the event, which ranged in price from US$1,500 to US$12,500. Many of the posts promoting the event have since been deleted by the same celebrities who helped convince others to attend.

It’s easy to lay the blame for this sort of behaviour at the feet of the brands. They, after all, are the ones with the big legal departments who should be laying down strict guidelines for the influencers they are dealing with.

But the influencers themselves must take responsibility for their actions. The ones involved in the Fyre Festival debacle are hardly kids fresh out of school with no marketing nous. Until the FTC and other regulatory bodies go beyond writing letters and start handing out some stiff fines, the influencers will carry on getting away with it.