FTC Finalizes Its First Settlement For Social Media Influencers

This week the Federal Trade Commission (FTC) unanimously approved, by way of a 2-0 vote, a finalized order in what has become widely known as the first-ever FTC case brought against individual social media influencers.

As previously reported on Tubefilter, Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell posted videos on their YouTube channels showing the pair of stars (with a respective more than 3.3 million and 10 million subscribers) taking part in the online gambling service CSGO Lotto. The problem was that the two ‘Let’s Play’ social influencers failed to properly disclose they each held a 42.5% ownership interest in the online gambling company, directly in violation of FTC disclosure laws.

Martin and Cassell were also under fire for paying thousands of dollars to several other well-known influencers, such as Jahova, also known as Jahovaswitniss to his now more than 1.7 million subscribers, and G2 Esports member Nathan “NBK-” Schmitt, to post on platforms including Twitter and Instagram about the gambling site without proper disclosures that they were paid to do so.

The FTC first released details of a proposed settlement with CSGO Lotto, Martin, and Thomas in September 2017. Public comments were accepted through October 10, 2017, after which time the FTC spent time to decide whether the settlement would become final. Part of the terms of the settlement required that CSGO Lotto, Martin and Cassell, entered into an “Agreement Containing Consent Order,” referred to as a Consent Agreement. The Consent Agreement requires that going forward they, among other things:

• Comply with FTC disclosure guidelines, with an additional burden to properly monitor and ensure compliance by any endorsers they partner with for promotional purposes in the future;
• Submit a compliance report in one year;
• Keep records of activities related to the business for up to 10 years; and
• Submit to ongoing compliance monitoring by the FTC for a period of up to 10 years.

All of the public comments received by the FTC during the open comment period were not in favor of the now finalized penalty. “I am appalled and disgusted with this ruling,” wrote Jack Thorpe, a commenter from Michigan. He continued on in his comment to refer to the terms of the Consent Agreement as “a slap on the wrist” for the parties involved.

The FTC’s press release and full decision and order are now available online.

Franklin Graves is an in-house media & technology attorney based in Nashville, TN, a YouTuber providing legal educational for internet creators, and member of the Internet Creators Guild. He can be reached at franklin.graves@gmail.com.