Red Carpet Pay-for-Play and the Legality of Designer Endorsements

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    eringough
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    In light of last night’s Golden Globes and the still impending Grammys, BAFTAs, SAG, and Academy Awards, a look at the blue prom dresses (and suits) that make it to the red carpet – and the legality of how they got there – is warranted. An interesting aspect of the red carpet that is often lost on the industry outsider is the secret, paid-for deals between celebrities and their stylists, and fashion brands that occur and enable certain dresses to make it onto these highly-visible red carpets in lieu of others. Such deals, while otherwise perfectly legal, may venture into the territory of legally problematic as a result of the federal truth in advertising laws.

    Red Carpet Pay-for-Play

    This was a topic of discussion at the 2015 Vulture Fest (and something BoF took on recently, as well), during which Isabel Wilkinson, senior editor of New York Magazine’s The Cut blog sat down with celebrity stylists Jessica Paster, Erin Walsh, Brad Goreski, and Brandon Maxwell. The most striking revelation of the discussion: It is not uncommon for brands to pay celebrities and their stylists for a certain dress to be worn at a big event. While Goreski and Maxwell say they have never been offered money to dress a client, Paster says she absolutely has.

    “It’s prevalent across the board,” says Paster, whose clients have included Cate Blanchett, Emily Blunt, Miranda Kerr, Sandra Bullock, and Rachel McAdams, among others. As for the actual financial breakdown, Paster says, “It could be just paying the stylist and we get anywhere between $30,000 to $50,0000. Or it includes paying the actress something between $100,000 and $250,000.”

    And Ms. Paster is not at all opposed to the practice. In fact, she welcomes such paid relationships between celebrities and brands, which she refers to as “ambassadorships.” She says: “If [a dress] looks gorgeous and this is the dress we were going to pick anyway, why not be paid?”

    That is often not the extent of such “ambassadorships,” though. In Paster’s experience, they often lead to even bigger pay checks for the actresses. “You start relationships with [the brand], and then eventually, the actress often gets a campaign from them because they have a relationship with her,” she says.

    Per Goreski, it is not necessarily a secret that brands pay to be showcased on the red carpet. “If someone shows up to the Oscars in a black dress and huge statement necklace, chances are they’re being paid by a jewelry company.” Pay-for-play when it comes to certain dresses, on the other hand, is often “hush-hush,” says Goreski, who does not think such backdoor deals are a big deal.

    “Why do any of us need to know how they’re making their money?” asked Goreski. “It’s not like they’re trafficking drugs, they’re being paid to wear a dress. So what? If someone offered me $150,000 to show up in a beautiful custom made gown by X designer, I’d be like, ‘Where do I sign?!'”

    Maxwell – who is now a red carpet favored designer himself – summed it all up quite succinctly: “The whole point of an actress having a stylist is so you can make more money, or more people want to hire you, or the brand that you’re wearing is making more money because it’s driving sales. It’s all wrapped up in money — it’s Hollywood.”

    But What About the Legal Ramifications?

    What was not discussed in the aforementioned conversation: The potential legal ramifications of such deals, namely, whether the Federal Trade Commission (“FTC”) Act – a federal law that governs the publication of commercial messages and prohibits the utilization of unfair or deceptive acts and practices in the market – comes into play at any point.

    In line with its “unique dual mission to protect consumers and promote competition,” the FTC issues guidelines to aid the public in ensuring that advertisements are not misleading and thus, do not violate Section 5 of the FTC Act, which provides that “unfair or deceptive acts or practices in or affecting commerce are declared unlawful.”

    The principles and policy considerations upon which the FTC Act and the corresponding FTC guidelines are predicated are simple. Consumers have the right to have access to “information they need to make informed [purchasing] choices,” and sellers “deserve the opportunity to compete in a marketplace free of deception and unfair practices.” Moreover, basic truth-in-advertising principles hold that it is deceptive to mislead consumers about the commercial nature of content, and advertisements/promotions are deceptive if they appear as though they are something other than ads.

    With this in mind, the FTC Act states that an act or practice is deceptive if there is a material misrepresentation or omission of information that is likely to mislead consumers acting reasonably in the circumstances. Note: a misrepresentation is “material” if it is likely to affect consumers’ buying choices. The FTC’s guidelines in connection with the FTC Act state that endorsements – that have come about as a result of a connection between the endorser and the underlying brand – without proper disclosure are violations of the FTC Act.

    The question then is this: Does an actress wearing a dress on the red carpet serve as an endorsement? Taking on the topic – albeit from the angle of a celebrity being gifted a garment to wear in exchange for the resulting press/promotion (an arguably less drastic instance than a celebrity accepting money in exchange for wearing it) – Venable, LLP, a corporate law with offices in Maryland, California, New York, Washington DC and Virginia, says that there is no question that the celebrities, in fact, were giving endorsements.

    According to Venable’s Daniel S. Blynn, a partner in the firm’s national Advertising and Marketing Practice, “The salient issue becomes whether or not the actors and actresses should have clearly and conspicuously disclosed that they received their attire for free in exchange for identifying the designers and gushing about their clothing.”

    The FTC’S Endorsement Guide provides guidance on this, stating that “when there exists a connection between the endorser and seller of the advertised product that might affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed’ in a clear and conspicuous manner. The FTC treats television commercials and other ‘traditional’ advertising media in which a celebrity endorsement appears somewhat uniquely in the Guides – in those situations, the Commission notes that it is likely that consumers understand that well-known celebrities who appear in such commercials and ads have been compensated and, thus, no disclosure typically is required.”

    But, Blynn says that “red carpet and other televised interviews are different. In those cases, the Guides suggest that the celebrity should disclose his or her material connection to the advertiser.”

    He cites a specific hypothetical set forth by the FTC in its Endorsement Guide as evidence. “Indeed, the Guides provide a hypothetical about a well-known professional tennis player who recently had LASIK surgery on her eyes and who appears on a television talk show to speak about the ease of the procedure, the kindness of the doctors at the clinic where she had the surgery, and the improvement in her life because of the surgery. ‘The athlete does not disclose that, even though she does not appear in commercials for the clinic, she has a contractual relationship with it, and her contract pays her for speaking publicly about her surgery when she can do so.’”

    Blynn continues: “Under those circumstances, the FTC Guides state that consumers would not necessarily expect that the tennis star has been paid to discuss the medical procedure and knowledge of such payments likely would affect the weight or credibility consumers give to the celebrity’s endorsement. Without a disclosure of the material connection between the clinic and the athlete, according to the FTC, ‘the endorsement is likely to be deceptive’ (even if nothing the tennis player says herself is false, deceptive, or misleading).”

    Since the FTC’s guidelines focus on whether or not consumers are likely to be misled, this serves as the most central inquiry. According to the FTC, “Under the law, an act or practice is deceptive if it misleads ‘a significant minority’ of consumers. Even if some readers are aware of these deals, many readers aren’t. That’s why disclosure is important.”

    With all of this in mind, the question is whether “a significant minority” would be misled about the nature of the dress that actress X appears in on the red carpet at the Golden Globes, for instance? Would that group of people understand that she was compensated – either by way of cash or some other perk – to wear that dress? Probably not.

    That is especially problematic, as while some red carpet looks are “paid for,” others are not. Given the lack of uniformity, consumers do not have a set-in-stone rule, so to speak, to go on when viewing red carpet coverage or viewing subsequent coverage, and therefore, reasonably lack a clear understanding of when an actress is endorsing a brand because she was paid to do so or when she is simply wearing a dress devoid of a behind the scenes deal.

    Will we all of a sudden see a host of complaints filed against fashion designers and/or celebrities arising from such undisclosed endorsement practices? Probably not. The FTC has, after all, been quite loath to act in furtherance of the FTC Act in connection with fashion.

    None the less, it is important for advertising brands to think critically about whether a connection between the product (a prom dresses uk or necklace, for instance) and its endorser (the celebrity) is material; whether consumers would understand that that endorser has been compensated for his or her endorsement; and whether a material connection disclosure needs to be made and how.

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