The use of social media influencers is now a well-established marketing technique. A variation on the idea — now becoming a substantial marketing trend — is creating and using virtual influencers. Virtual influencers are hyper-realistic, human-looking social media influencers who are designed to act and sound like the “real thing.” These creations are also called “fake,” “non-existent,” or “fabricated” influencers, which are based on computer-generated images (“CGI”) and animation and “run” by AI software programs.

The Federal Trade Commission (“FTC”) recently finalized its updated Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”) to expand the definition of “endorser” to include virtual influencers. Specifically, “endorser” is now defined to include things that “appear to be an individual, group, or institution” (emphasis added). Further, the FTC’s comments to the new Endorsement Guides — see here at Section 2 — make it even more clear that the new definition of “endorser” applies to virtual endorsers, fabricated endorsers, non-existent entities that purport to give endorsements, and even writers of fake reviews.

The “good news” for companies and brands wanting to create and use virtual or fabricated social media influencers is that the FTC’s new Endorsement Guides clarify that virtual influencers are not, in and of themselves, a form of false or misleading advertising. A total ban was an option, given that hyper-realistic images manipulated by an AI computer program have much potential for creating confusion among consumers. However, rather than banning virtual influencers, the FTC’s new Guides state that the rules that apply to real-life human influencers apply to virtual influencers. This is a reasonable middle ground since advertisers have long used cartoons and other types of animation for marketing purposes. The difficulty, of course, is that consumers will not typically be confused or misled by cartoon advertising vehicles, but they might be confused or misled by hyper-realistic “cartoons.” Thus, the “middle-ground” rule is that virtual influencers are subject to the same rules as real influencers.

What does this mean?

In very simple terms, this means disclose, disclose and disclose. If the user and operators of a virtual influencer do not disclose to consumers that the “influencer” is virtual or fabricated, then under the new Guides, use of the virtual influencer will be considered a type of false, misleading and fraudulent marketing.

Further, the new FTC Endorsement Guides have reinforced and strengthened what it means to “disclose.” The stronger definition of “disclose” requires that the disclosure be “unavoidable” to consumers. In practice, this means the disclosures must be on, next to, or in the endorsement as opposed to being listed on a hyperlinked page, in the Terms and Conditions, in a hashtag, on some other website, etc. So, the disclosure that a virtual influencer must surely be above, under, or beside an image, and for videos, the disclosure must be contained prominently in the video. This is important because, often, brands and companies purchase the use of a virtual influencer for a short campaign or even a “one-off” endorsement. The creator and operator of the virtual influencer will have plenty of disclosure on the “main” website, but the FTC has made it clear that disclosures also must be made by the brand that is purchasing the use of a virtual influencer. The new FTC Endorsement Guides make it clear that every person and entity in a brand’s chain of marketing is responsible for complying with the Endorsement Guides.

Be careful what the virtual endorser claims

One final note concerning use of virtual influencers. Since they are not real human beings, they cannot make any endorsement claims that are uniquely human such as “Wow, this beverage tastes great.”

FTC Enforcement Actions Involving Undisclosed AI and Virtual Influencers

The FTC’s enforcement history with respect to undisclosed AI-generated and virtual influencer content is still developing, but the agency has made clear it views non-disclosure as a form of deceptive advertising subject to enforcement under Section 5 of the FTC Act. The FTC’s 2023 policy statement on commercial surveillance and data security explicitly identified AI-generated content as an area of heightened enforcement focus.

More directly, the FTC’s enforcement action against Machinima, Inc. — while predating virtual influencers — established the principle that any failure to clearly and conspicuously disclose a material connection between an endorser and the brand being endorsed is an unfair or deceptive practice. The FTC’s current Endorsement Guides apply this principle to virtual influencers: if consumers viewing an endorsement might reasonably believe it comes from an actual human with real opinions and experiences, failure to disclose that the endorser is AI-generated is deceptive.

State consumer protection laws add additional layers of compliance obligation. California’s Consumers Legal Remedies Act and Unfair Competition Law provide private rights of action for deceptive advertising practices. A class action under California law for undisclosed use of AI-generated influencers in advertising campaigns is a realistic litigation risk for brands operating in the state.

Platform-Specific Disclosure Requirements

Beyond the FTC’s guidelines, the major social media platforms impose their own disclosure requirements that brands using virtual influencers must comply with:

• Instagram and Facebook (Meta) — Meta’s Branded Content Policies require that sponsored posts be tagged as Paid partnership using the platform’s branded content tool; Meta has also begun requiring disclosure of AI-generated images in some advertising contexts
• TikTok — TikTok’s Community Guidelines require disclosure of sponsored content; TikTok has also updated its policies to require labeling of AI-generated content
• YouTube — YouTube’s paid promotion policies require disclosure of paid partnerships within videos; YouTube has also implemented AI content labeling policies under which creators must disclose realistic AI-generated content
• X (formerly Twitter) — X’s sponsored content policies require disclosure of paid partnerships; X has implemented labels for AI-generated profile images and content under its synthetic media policy

Platform violations can result in content removal, account suspension, or permanent deplatforming — significant business risks for brands that rely heavily on social media marketing. The FTC has also signaled that it views platform policy violations as relevant context in evaluating whether an advertiser has engaged in a deceptive practice.

International Legal Considerations for Virtual Influencer Campaigns

Brands that run virtual influencer campaigns in international markets face a patchwork of additional disclosure obligations. The European Union’s Digital Services Act (DSA) requires platforms to implement mechanisms for identifying and labeling advertising and AI-generated content. The UK’s Advertising Standards Authority (ASA) has issued guidance on virtual influencer disclosure that mirrors the FTC’s approach: disclosures must be clear, upfront, and not capable of being missed. Australia’s consumer protection regulator, the ACCC, has taken enforcement positions on social media influencer disclosure that apply equally to virtual influencers.

From a trademark and right of publicity perspective, virtual influencers that are designed to resemble real people — or that use the name, voice, or likeness of a real person without authorization — create significant legal exposure. Several states, including California (Cal. Civ. Code § 3344), New York, and Texas, protect the right of publicity both during life and posthumously. Creating a virtual influencer whose appearance is based on a real celebrity without that person’s consent is likely to give rise to right of publicity claims even if the virtual influencer is not explicitly identified as the real person.

Contact the FTC Compliance Attorneys at Revision Legal

For more information, contact the experienced FTC Compliance and Defense Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.