Posh frockers Lord & Taylor spanked after Instagram fillies shocker

Fashion retailer Lord & Taylor has been slapped on the wrist by the US Federal Trade Commission (FTC) for paying people to post pictures wearing one of its dresses without disclosing the fact.

Back in March last year, the company paid 50 online fashion "influencers" between $1,000 and $4,000 to wear a dress it sent them and then post the picture on Instagram, as part of a "native advertising" marketing push.

The individuals signed a contract that obligated them to include the company's Instagram name and the hashtag #DesignLab in the photo's caption. Lord & Taylor also pre-approved each post, but critically neither the company nor the posters revealed that they had been paid to do so.

The push was a success: 11.4 million individual Instagram users were reached over just two days, according to the FTC, which led to 328,000 "brand engagements." The dress sold out.

Unfortunately, the company also broke the law. The FTC decided that it had "deceived consumers by paying for native advertisements" for the posts as well as for an article in the online fashion mag Nylon that it has paid for without disclosing the fact.

As part of an agreement reached between the FTC and Lord & Taylor, it will be prohibited from carrying out such misrepresentations in the future and will require people it has paid to display its goods to clearly disclose the fact. The FTC will monitor future marketing pushes to ensure it complies.

The FTC did not impose a fine, but it noted that it is able to charge a civil penalty of up to $16,000 per violation, so the company faces an $800,000 fine if it doesn't change its ways.

Although this was one small situation, the decision is a clear warning to other companies who now make social media a key component of their marketing campaigns and who typically wish people to believe that the individuals posting glowing reviews of their products have not actually been paid to do so.

Companies are going to have to be much more careful and/or honest in future if they don't want the FTC knocking at their doors. ®