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With one billion registered users on Facebook and 517 million people signed on to Twitter, it’s no wonder why social networks have become breeding grounds for advertising. Once you add celebrities into the mix, the marketing power for products thickens. Branding agencies rely on celebrities with sizable clout to reel in cash from malleable fans. The Federal Trade Commission (FTC), however, isn’t too happy about the deceptive celebrity product plugs found on Twitter and Facebook, according to the The New York Times.

In May, Kim Kardashian took to Twitter to show off her peachy kisser: “Pregnancy lips….@EOS to the rescue! LOL.” Followers find it hard to decipher whether Kardashian genuinely favors Evolution of Smooth (EOS) lip balm or if she’s being paid by EOS to boost sales.

According to FTC guidelines, if celebrities do not explicitly disclose their financial relationship with a brand, they run the risk of being accused of deception. Known as “Dot Com Disclosures,” if Kim Kardashian, for example, agrees to sponsor a brand of lip balm, she must be clear about her celebrity endorsement. If not, she could be slammed with a hefty fine for misleading potential customers.

Kim isn’t the only one the FTC has to watch out for. With about 14 million followers on both Facebook and Twitter, Ashton Kutcher also uses his celebrity edge on social networks to increase visibility for products he sponsors. When negotiating with these up-and-coming companies, Kutcher assures them he will share their product in the social media world.

Kutcher doesn’t stop there. He had no shame in placing Foursquare, Chegg, and Flipboard, companies he’s invested in, on his character’s laptop in Two and a Half Men.  When the network started to realize what Kutcher was doing, they began blurring his laptop during the show.

A-list celebrities are paid $20,000 by companies to post  Twitter or Facebook updates that endorse their product, according to talent agencies.

Mark K. Engle, associate director of the advertising practices division at the FTC, suggests endorsed celebrities to implement the term “ad” in their posts to avoid being penalized for deceptive practices.

From a business perspective, in my opinion, a celebrity announcing that they’re being paid to advertise significantly decreases the desirability of that product. Fans would be suspicious that the brand being advertised is a plug based on business and not a genuine personal preference. Still it’s always up to the consumer’s discretion to determine the integrity of a brand. As long as celebrities on Facebook and Twitter do not bombard their followers with incessant sales talk, I don’t see the harm. What do you think?

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