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.”

Contact the FTC Compliance Attorneys at Revision Legal

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