Virtual Influencers Leave Unanswered Questions on FTC Act Compliance

Alexandra Cabezas

Associate Editor

Loyola University Chicago School of Law, JD 2021


Thanks to the continued prominence of social media in people’s daily lives, it is no surprise that more familiar marketing strategies such as celebrity product endorsements would update for the current era. Recently, social media advertising has practically entered the realm of science fiction with the introduction of computer-generated influencers. These avatars are created to sell, but who is responsible if they fail to comply with advertising laws?

The influencer market

An influencer is someone who has to power to affect purchase decisions of others because of his or her authority, knowledge, position, or relationship with his or her audience. Much like the classic celebrity product endorsement, influencers are using their social media presence to endorse products through means such as videos, blogs, and social media posts. Influencers who take advantage of social media certainly include celebrities, a major example being reality television personality and entrepreneur, Kylie Jenner, who boasts nearly 150 million Instagram followers.

The influencer marketing business is on its way to becoming a $6.5 billion industry by the end of 2019. Reportedly, the beauty and fashion industries account for the largest portion of all influencer niches. How much an individual can make off of a sponsored post depends primarily on the amount of followers they have. An influencer of a mere 100,000 followers may only make $1,000 for a post whereas Kylie Jenner will earn upwards of $1,000,000.

Influencers and the FTC Act

The Federal Code of Regulations Title 16 Part 255 provides the Guides Concerning the Use of Testimonials in Advertising (“the Guides”). Though explanations and examples, the guides address application of Section 5 of the Federal Trade Commission Act, and provide the basis for voluntary compliance with the law by advertisers and endorsers.

As a response to a growing issue of sponsored posts being virtually indistinguishable from an “organic” social media post, the FTC sent out more than 90 letters to influencers and marketers, reminding them to clearly and conspicuously disclose their relationships to the sponsors when promoting a product. These disclosures must be made when there is a material connection between an influencer and a sponsor. As noted in the FTC guidelines, this means that if there is a relationship the influencer and the sponsor that might material affect the weight or credibility of the endorsement, that relationship must be disclosed to the consumer.

The virtual influencer

A new type of influencer is making waves on the scene, as computer-generated avatars are becoming de facto influencers by gaining impressive online followings. However, this phenomenon is not foreign to countries like Japan, where virtual celebrity Hatsune Miku has held an incredible amount marketing power since 2007. The most recognizable virtual social media star in the United States is eternally-19-year-old, Miquela Soussa, or Lil Miquela. At a glance, Miquela appears like any other trendy teen likely to appear on the Instagram explore page, but she is actually a computer-generated character with a personality and career in her own right. Miquela has amassed over 1.7 million Instagram followers through her work as a model and even a musician. Other brands such as luxury skin care brand SK-II and even fast food chain Kentucky Fried Chicken have tried their hand at virtual influencing as well.

Like with real influencers, the standard of clear and conspicuous applies to these virtual characters. Problems surrounding with compliance with advertising laws may not seem likely in the case KFC’s virtual influencer Colonel, because he is obviously not a real. It is clear that he is a character created by the restaurant in order to promote their food. The legal lines become blurry in situations like that of Miquela. Unlike the virtual Colonel, Miquela’s owner, creator, and account manager is unknown. This unknown origin presents her existence as something closer to that of a regular influencer who supports companies and causes at her own discretion.

The question is what happens if a virtual influencer like Miquela does not comply with advertising laws. If more anonymous influencers appear on the market, who will be held accountable for their actions? Logically, the same rules that apply to Kylie Jenner should apply to Miquela. Where there is a violation, FTC could certainly contact companies directly as it has done in the past, but the companies are do not control the virtual influencer. Despite her very real influence, Miquela herself is not, and her creator is unknown.There should be push to identify the creators of computer-generated influencer accounts, in order to hold the real brains of the operation responsible. Even if it is the avatar doing the influencing, the person controlling their actions should make themselves known. The same way that a human influencer discloses sponsorships, computer-generated influencer account managers should disclose their identities, or at the very least their contact information. In order for the FTC to contact Miquela in order to enforce compliance would be her business email, and that correspondence would no doubt get lost in the sea of emails from companies eager to work with the digital star.