For years, the Federal Trade Commission has put pressure on digital content creators to properly disclose when they’re being paid to advertise a product. But despite clear, stringent guidelines and a $50,000-per-incident fine for brands if their partnered creators don’t mark sponcon as ads, disclosures remain spotty across social platforms.
And now Gymshark is being taken to court about it.
Per Marketing Ethics, the activewear company is facing a class-action lawsuit from a Florida resident who alleges that not only did Gymshark compensate creators to post content that wasn’t disclosed, but it signed those same creators into non-compete deals where they weren’t allowed to promote rival brands as long as they were working with Gymshark.
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“According to industry analysis and Gymshark’s own statements, the brand’s success hinges on its portrayal of these influencers as ‘genuine athletes’ or ‘members of the community’ rather than paid endorsers,” the suit claims.
It also argues that undisclosed ads made Gymshark (which has notably tapped creators and athletes for endorsements and sponcon since it was founded in 2012) seem more popular and authentic than it was because undisclosed endorsements tend to perform better algorithmically than posts tagged as ads.
One of the key elements here is that the suit accuses Gymshark of encouraging creators to ditch disclosures–which, if true, is obviously not on the same level as a creator forgetting to copy over their #ad when posting from TikTok to YouTube, or independently deciding not to disclose. Both of those actions violate FTC guidelines and negatively impact consumers, but they’re the actions of individual creators.
This suit is alleging Gymshark has a systemic practice of ducking disclosures across its network of creators–a practice that would put both itself and creators at risk of FTC sanction.
As for the non-compete contract, Marketing Ethics lays it out like this: “The earlier cases [against Revolve and Alo Yoga] said: you didn’t tell me this person was paid. The Gymshark case says: you didn’t tell me this person was contractually prohibited from recommending anyone else.”
“In short, Gymshark’s core marketing strategy is based on deception: it deliberately works to create the illusion that everyday people and fitness professionals genuinely prefer Gymshark products—and prefer it so much that they wear nothing else—when in reality, they are paid to do so,” the suit claims.
The suit seeks compensation for all customers in the U.S. and Canada who purchased something from Gymshark after seeing creator content that wasn’t properly disclosed.
Of course, it’ll be up to a court to decide if the plaintiff’s claims have merit, but this suit (and the aforementioned similar cases against Revolve and Alo Yoga) is another reason for brands and creators to both make sure ads are disclosed.
While some companies may feel like disclosures push viewers away from videos, we’ve seen enough high performers on our Gospel Stats Weekly Brand Reports to know if the content is good, thousands or even millions of people will watch–whether it’s sponsored or not.
