Lord & Taylor has agreed to settle charges brought by the Federal Trade Commission, which state that the department store deceived consumers by paying for an article in Nylon magazine without disclosing that it had a hand in reviewing the paid-for content.
The FTC also charged that Lord & Taylor promoted one of its collections by giving 50 fashion "influencers" the same paisley dress — and paying them between $1,000 and $4,000 to post themselves wearing it on social media — without disclosing that it had done so.
An example of one of the fashion "influencers" who wore the paisley dress on Nylon.com. The magazine has since noted that this is sponsored content. Marianna Hewitt did not immediately respond to a request for comment.
Source: Nylon.com
According to the official complaint, the retailer's March 2015 Instagram campaign reached 11.4 million users, led to 328,000 engagements with Lord & Taylor's official handle and helped the dress sell out.
"Lord & Taylor needs to be straight with consumers in its online marketing campaigns," said Jessica Rich, director of the FTC's Bureau of Consumer Protection, in a release announcing the settlement. "Consumers have the right to know when they're looking at paid advertising."
The FTC settlement states that Lord & Taylor is prohibited from misrepresenting paid ads as independent editorial content, and it must clearly disclose when fashion influencers have received some form of compensation for their endorsement.
In a statement, a Lord & Taylor spokeswoman said: "Lord & Taylor is deeply committed to our customers and we never sought to deceive them in any way, nor would we ever. In the FTC's consent order announced today, there is no finding of wrongdoing whatsoever. 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."
She added that the company "cooperated fully with the FTC's inquiry into the marketing of this dress and have of course agreed to uphold the current version of the guidelines."
"The FTC has changed its guidelines since last year and we applaud the new guidelines that clarify the rules. Further, we encourage the FTC to continue to update and communicate their guidelines clearly and swiftly as the digital and social media landscape rapidly evolves. We remain dedicated to our core values of transparency and honesty in everything that we do for our customers."
A spokeswoman for Nylon said the publication had no comment.
The FTC agreement will be subject to public comment through April 14. After that date the commission will decide whether to finalize the proposed agreement.