Lord & Taylor Settles with FTC Over Uber-Successful Blogger Campaign

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Last weekend, Lord & Taylor paid 50 bloggers to wear a dress from its new Design Lab clothing collection and post it to Instagram, all at the same time. The initiative grabbed headlines the following week because the blitz worked incredibly well: the featured dress sold out within days of the posts.

A photo posted by Wendy Nguyen (@wendyslookbook) on Mar 28, 2015 at 11:28am PDT

However, a Marketing Land report reveals that none of the bloggers specified that Lord & Taylor had sponsored the Instagram posts, which puts the campaign in violation of the U.S. Federal Trade Commission guidelines for digital advertising. In the report, Marketing Land spoke with the founder and CEO of Izea, a company that pairs up brands and bloggers for campaigns like this.

"It's really difficult being in this space today to claim that you didn't understand that that's how things were supposed to be done," the founder, Ted Murphy, told Marketing Land. Murphy says that in his experience, sponsored posts haven't garnered less engagement on social media and when bloggers denote which posts are ads, it builds credibility among followers. As it stands, Murphy pointed out that people had commented on the Lord & Taylor-sponsored posts wondering if they were sponsored.

"I actually think in the long run it is the only way to do this and be successful, because once people feel like they've been tricked or deceived, they lose trust in the brand and they perceive it negatively," Murphy says. "And the same happens to the creator. Once people figure out that the person who they thought was just taking a picture in a dress that they liked was actually being paid to do that and was not disclosing that to them, that authenticity and credibility that person had with you is eroded.

Lord & Taylor hasn't issued a statement on the situation yet.

Update: The FTC announced today that it has reached a settlement with Lord & Taylor over the Instagrammer campaign. Consumerist calls it a "slap on the wrist," and the settlement bars Lord & Taylor from misrepresenting that paid ads are from an independent source. It also requires that the retailer's influencers disclose that they received payment in exchange for posts.

Consumerist also dug up some interesting details from the FTC's announcement, including the fact that those Instagrammers were each paid $1,000 to $4,000 to post photos of themselves wearing the Lord & Taylor dress. All those posts were viewed by 11.4 million people.

The Instagrammers weren't required to write that Lord & Taylor paid them for the posts, and the department store's team reviewed the text and photos for all 50 Instagram posts pre-publication. Nylon also ran a gallery of L&T Design Lab looks that was written and edited by the Lord & Taylor, but the story wasn't labeled as an ad.