“My 16-year-old-daughter announced that she and a friend are in the process of becoming internet ‘influencers.’ They have been in discussions with a small, local company that manufactures specialty dog and cat food that we have been feeding to our pets — and they want these girls to advertise it.
“How risky is this?”
“Risky?” replied Sanford, Fla.-based attorney Christy L. Foley. “It is far riskier than most parents realize. One-third of internet influencers are 18 to 24 years of age, and we are seeing more and more high school students bitten by the bug, and they want to jump in. Few realize the legal consequences they are facing.”
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Foley is recognized as one of the nation’s top experts in social media influencer law, and she conducts continuing education seminars for lawyers across the country. During our interview, she outlined some of the very real dangers that are out there for influencers — and their families.
Preliminary Legal Requirements
The first thing a parent must do “is to have a consultation with a business attorney, ideally familiar with Federal Trade Commission advertising regulations, tax and business insurance,” Foley points out, explaining, “You need a proper business entity, such as an LLC, something that offers protection for your family in the event things go wrong down the road.”
Such as a dog getting sick from a bad batch of food? “Precisely,” she replied.
Sound complicated?
“It is, but certainly doable with the right legal and accounting support. Without that, trouble lies ahead, especially where parents are unaware of their obligation to safeguard the child’s earnings, and following requirements of Coogan’s laws, which several states have.”
Named for the child actor Jackie Coogan of the 1930s — who as an adult stared as Uncle Fester in The Adams Family — a minimum of 15% of earning must be placed in a blocked account for the minor. Parents who steal their child’s earnings face civil and criminal penalties.
Honesty Absolutely Required by the FTC
“What makes influencers successful is that they act like a normal person, putting on the face cream, for example, and saying, ‘It works great for me.’ They may link to the product, but because it is their own opinion and experience, they are safe, and not making representations about appropriateness of the product for anyone else.
“But if they say, ‘This will be wonderful for you,’ or in your reader’s case, ‘This dog food will be great for your pet,’ this is an invitation to being sued if something goes wrong,” she cautions.
And what if she gets free dog food for her post?
“Stating your opinion is one thing, but if there is a quid pro quo — if she is getting something in return for her comments — this must be revealed at the beginning of the post as it is a paid-for endorsement. The FTC requires making the consumer aware they are seeing an advertisement.”
What if the influencer hasn’t actually used the product?
“FTC regulations state that you must have actually tried the product in order to endorse it, and any endorsement must be truthful. What you post must be truthful at the time of the post. It can evolve, but must be truthful when posted.
“You can’t lie about your endorsement,” Foley points out, and recommends a conversation covering these points that parents need to have with their influencer kids:
- Honesty matters. Truthfulness matters. There are consequences to being in front of the public. The internet never forgets, so if you lie, someone will discover it years from now when you are applying for a job.
- Parents should stress that when you are out there as an influencer, there will be negative comments. Teenagers are sensitive to social media comments. Many have committed suicide when bombarded with hurtful remarks. Parents need to prepare their kids for this and ask themselves, ‘Can our child deal with negative comments or bullying on social media?”
- Realize that the more your child reveals about your home life — the home itself, furnishings, visible wealth — this can be an invitation for bad guys to do real harm. So, if you are going to allow your child to be an influencer, create a “safe space” that does not reveal too much.
Should Becoming an Influencer Be Encouraged or Discouraged?
So, what’s a parent to do? Encourage becoming an influencer or not?
“It depends,” Foley says. “Factors include how well are the parents informed about what the child is doing? How willing are you to take on this risk? Can the child handle other responsibilities, such as school? There are simply a lot of ‘ifs.’”
Foley’s website is christyfoley.com, and it is a must read for any parent dealing with these issues.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
-
We Don’t Have to Let AI WinJust as companies and employees evolved with tech advances in the past, we can do that again with AI, but employers need to focus on preparing their workforces to keep up.
-
Five Ways to Get Key Employees to Ride Out Big Changes
Business transitions can be difficult on workers, but company owners can take steps to incentivize key employees to stick around during times of change.
-
Are You Overlooking Your Most Valuable Retirement Asset?
Selling your home and relocating could become a bigger part of the retirement conversation, given how real estate markets have boomed over the last decade.
-
Insuring Your Plan for Retirement Income
‘Longevity insurance’ ensures you don’t run out of money in retirement. How to figure out how much you need, the types of annuities to use and when the income should kick in are tricky questions, though.
-
Pros and Cons of Fixed Index Annuities as Retirement Tools
With so many FIA products available, each with its own contract terms and varying rates, it's crucial to invest in one that fits your retirement plan.
-
Retirement Planning with Life Insurance
An indexed universal life insurance policy can help you with tax mitigation and extra retirement income in addition to death benefits for your beneficiaries.
-
Which Retirement Accounts Should You Withdraw From First?
Here’s a standard order for when you should tap which account when you’re in retirement.
-
Nervous About the Markets and Economy? Consider History
To put things in perspective, focus on what you can control and remember that the ups and downs of the markets and economy can be cyclical.
