CSGOLotto Scandal: What Marketers Need To Know

CSGOLotto Scandal FTC Influencers
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What Marketers Must Know About CSGOLotto’s Scandal & The FTC

As influencer marketing continues to grow across Instagram, YouTube, and emerging social media platforms, the FTC has become increasingly active with monitoring proper disclosure from both brands and influencers. Earlier this year, it was found that 93% of top celebrities on Instagram do not adhere to the FTC’s guidelines for adequate disclosure.

While the CSGOLotto scandal is the latest instance of brands and influencers breaking FTC stipulations, it is the first case where the FTC has specifically charged individual social media influencers.

What Caused The CSGOLotto Scandal?

CSGOLotto, which stands for Counter-Strike: Global Offensive, is an online gaming website where users can gamble on Counter-Strike related items namely “skins.” CSGOLotto is owned by two popular online gaming influencers, Tom Cassell AKA the Syndicate and Trevor Martin AKA TmarTn, who paid other social media influencers to promote CSGOLotto with disclosing 1) their ownership ties and 2) the paid sponsorship nature of their promotions.

CSGOLotto Scandal TmarTn ProSyndicate FTC

As CSGOLotto’s president, Martin owned 42.5%; vice president Cassell owned the same percentage:

FTC CSGOLotto first influencer caseSee the FTC’s entire agreement and consent order with CSGOLotto here. According to the FTC’s Acting Chairman Maureen Ohlhausen,

“Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts. This action, the FTC’s first against individual influencers, should send a message that such connections must be clearly disclosed so consumers can make informed purchasing decisions.”

The FTC’s Involvement With CSGOLotto, Brands, & Social Media Influencers

For a history of the FTC and their involvement with influencer marketing, see our timeline here. Previously, the FTC’s involvement centered upon brands including Machinima, Lord & Taylor, Fyre Festival, and Warner Brothers.

CSGOLotto’s case is the first instance of the government agency charging specific social media influencers. Prior, the FTC sent warning letters to top celebrities and influencers.

CSGOLotto Scandal FTC first influencer case

In conjunction with CSGOLotto’s proposed settlement, the FTC also sent additional warning letters to social media influencers (21 individuals who had previously received letters).

Related Post: A History Of FTC Violations In Digital & Social Media Marketing

The FTC’s Do’s & Don’ts For Social Media Influencers

Included in the FTC’s CSGOLotto press release is a graphic that lines out eight quick FTC recommendations and practices to avoid, four for each:

FTC Recommendations

  • Clearly disclose financial or family relationships with brands.
  • Sponsorship disclosures easily visible – the FTC has described this as “clear and conspicuous.” In their graphic, they add that these disclosures must be “hard to miss.”
  • Sponsored tags are to be treated just like other types of endorsements. Many influencers tag brands in their photos (with or without disclosures in captions and/or sponsored hashtags). If influencers are paid to tag a sponsoring brand, then the FTC’s guidelines for social media endorsements apply. 93% of top celebs and influencers on Instagram do not adhere to FTC guidelines.

Practices To Avoid

  • Do not assume audiences/subscribers/followers are cognizant of influencer-brand partnerships.
  • Native social media sponsorship disclosures built into each platform cannot be treated as ample disclosure. Instagram recently rolled out their paid partnership disclosure tool.
  • #collaba, #sp, #spon, or #ambassador do not count as clear and conspicuous disclosures (unlike #ad or #sponsored). Additionally, many brands create branded hashtags for social media influencers to use (e.g. #[insert brand]ambassador or #[insert brand]partner).

Related Post: The Updated, FTC Endorsement Guidelines [Infographic]

What’s Next For The CSGOLotto Scandal & Influencer Marketing?

As the first case against individual influencers, the FTC’s agreement and consent order with CSGOLotto focusses on 1) clear and conspicuous disclosure, 2) close proximity, and 3) unexpected material connection.

The agreement and consent order also mandates the following from CSGOLotto:

  • Providing associated influencers with a clear statement of disclosure
  • Creating, enforcing, and maintaining a system to ensure disclosure compliance among influencers
  • Terminating payment for influencers who are not in compliance
  • Creating reports of the above-mentioned
  • For five years, providing all CSGO-associated parties with a copy of the FTC’s order (all parties must sign and date and return within 30-days confirming receipt)
  • Additional compliance reports and record-keeping of varying time-lengths (from one to ten years)

Additionally, the FTC has provided updated examples for social media endorsements and testimonials. Stay tuned for further developments by subscribing to our weekly industry bulletin.

CSGOLotto FTC Case Syndicate Apology Twitter

Also See Our Posts On:

Breaking Down The FTC’s Letter Sent To 90 Celebs & Influencers

What Marketers Need To Know About Fyre Festival

The Updated FTC Endorsement Guidelines [Infographic]

5 Ways Brands & Influencers Break FTC Guidelines On Instagram