If a person is receiving money, they must file taxes. If a person is filing taxes, they are a business, and this goes for influencers as well. Businesses never know what will happen in the future and when a customer will file a lawsuit against them. Law suites can happen from little things such as the name they use for business. Just like other entrepreneur, influencers need to be protected as well and be safeguarded against unexpected circumstances.
1. When a business or another influencer has a similar name and do a lot of the same kind of business, the first created influencer might not want customers taken away or customers be confused between the two influencers. If an influencer is promoting good and their customers are confused with another influencer promoting inappropriate things, do you think the first influencer would you want to be associated with the other influencer? Unexpected liability can keep you protected with liability insurance.
2. When you think about what influencers do, you will understand the liability to being an influencer. Influencer provide information dissemination and marketing. Companies are collaborating with social media “influencers” to promote their brands. Say your brand is Christian based and the influencer had a drunken night of fun and it is video taped and goes viral. The company is not going to be happy and will want out of any contract with an influencer. Corporations facing liability based on influencer posts may find coverage available under traditional corporate insurance policies, but for the influencer there is no coverage. Legal fees are not cheap and can take several years to settle.
3. Influencers who utilize the protected intellectual property (IP) of others in their social media posts, without obtaining approval, run the risk of copyright infringement. Imagine an influencer giving a testimonial of a product and they accidently say an ambiguous word that viewers could misinterpret. The product owner is not going to be happy and if sales go down, a lawsuit to recoup that money could be in the future.
4. False or deceptive posts about a business, product, or service could violate the securities laws and rules of disclosure promulgated by the Federal Trade Commission (FTC) or be considered market manipulation.
5. If an influencer fails to disclose that their review was a paid advertisement, can be a violation of the Federal Trade Commission Act of 1914. Paid review will be more likely to do everything to promote the positives of the product and leave out the negative aspects of the product which is deceptive practices to consumers.
6. A lot of influencer in very highly demand are trend-related and can have a very limited shelf-life. If the influencer is not aware that the trend is no longer popular, it can have an affect on a business.
7. When and influencer loses access to an account because of hacking and has a brand post obligation with a deadline, this can make them fail to meet an obligation that can lead to a lawsuit. Social media platforms can decide to deactivate your accounts. There goes all your followers and contracts you now cannot fill. LAWSUIT big time!
Here are some interesting facts
The influencer marketing industry is forecasted to be worth as much as $10 billion with companies netting $6.50 for every $1 spent.
Consumers are more likely to make a purchase based on social media references 71% of the time.
Social media influencers in America spend between $350 - $900 per year for $1 million in general liability coverage.
The Digital Marketing Institute states that 70% of teens trust influencers more than traditional celebrities.