The situation gets dicey - and now illegal - when they won't agree to full disclosure of that arrangement. If they keep up with legal news they won't be attempting that any more.
In PR Week, attorney Michael Lasky of law firm Davis & Gilbert reports that the Federal Trade Commission (FTC) caught up with Lord & Taylor on that kind of scheme. The retailer was launching a new line - the Designer Lab Collection.
To promote it, it involved Nylon, the publication, and 50 fashion influencers. It paid all those in the loop. But didn't require full disclosure. And no disclosures were made. The influencers each were paid between $1,000 and $4,000. And got to keep the dress.
The FTC contended, states Lasky, "Lord & Taylor engaged in deceptive practices in violation of Section 5 of the Federal Trade Commission Act." The retailer has entered itno a 20 year consent degree to settle the charges.
In this situation, it was the entity handing out the incentives which took it on the chin.
Soon enough, it could be those on the take. The FTC could leverage everything from public shaming (it does issue press releases) to legal action to discourage influencers from participating in those kinds of schemes.