How FTC Endorsement Rules Apply When a Designer Lends or Gifts a Look

A red-carpet look can reach an awards show in several ways. A designer may lend a look for one night, give it away or pay a performer to wear it.

The Federal Trade Commission's Endorsement Guides set out its interpretation of the law. A payment or free product that viewers would not expect can turn a post or appearance into an endorsement that must be disclosed, and liability can reach brands, endorsers and intermediaries such as ad agencies and PR firms.

Loans, Gifts and Paid Appearances Are Separate Arrangements

Many loans are informal. A May 28, 2025 piece from Brooklyn Law School's sports and entertainment blog describes loans that can be as casual as a text message, and says that informal arrangements can lead to legal disputes if expectations are unmet.

Some high-profile celebrity and brand deals are formalized in writing. The same piece says those agreements can cover compensation, social media obligations and return conditions.

Under the Guides, a free product can be a material connection, a point covered in the fourth section below. A paid appearance may sit inside a contract, and the next section covers what such contracts can address.

What Ambassador Contracts May Cover

Some loan and ambassador deals are documented in detail. The Brooklyn Law piece lists return conditions, rules on how a garment may be worn, who bears responsibility for damage or loss, publicity rights, and usage rights. It also says that without clear licensing terms defining usage rights, all parties are vulnerable.

A 2017 article from The Fashion Law describes ambassador work as covering campaign appearances, brand events and attendance at major shows, including runway presentations. It suggests red-carpet wardrobe choices may be spelled out in some contracts.

The same article says ambassador contracts generally do not dictate which brands appear on magazine covers, and that brands control which garment and accessory samples they loan to magazines. It also says Vikander's wearing of other designers at official movie events suggests the arrangement does not appear to be exclusive.

When the FTC Requires a Disclosure

The FTC revised its Guides Concerning the Use of Endorsements and Testimonials in Advertising in a final rule published in the Federal Register on July 26, 2023. The rule sits in Part 255 of Title 16 of the Code of Federal Regulations. The FTC has long described the Guides as administrative interpretations rather than binding law, and says that in an enforcement action it must still prove a violation of the FTC Act.

The central test is audience expectation. Under Section 255.5, a material connection must be disclosed when a significant minority of the audience does not understand or expect it. Connections most viewers generally expect do not need a label. The Commission says that question is fact-specific and may require empirical testing.

The FTC's influencer guidance, dated November 2019, applies the same idea in plainer terms. Disclosure is needed when a person has a financial, employment, personal or family relationship with a brand. Financial ties include free or discounted products, and a disclosure is needed even if the influencer was not asked to mention that product. The duty applies even when the endorser believes the review is unbiased.

Celebrities are covered too. The FTC's October 5, 2009 announcement of revised guides said celebrities must disclose their relationships with advertisers in settings such as talk shows or social media, and that advertisers and endorsers may both be liable for undisclosed material connections.

How Free Products and Payments Are Treated

The Guides use worked examples. In one, an influencer receives an expensive lathe for free and should disclose it if a significant minority of viewers would not know about it. The Commission also agreed that an ad agency should not have to monitor an influencer for decades based on a single gift.

A second example addresses a free app. Calling it free is inadequate if the developer also paid the reviewer, because that wording suggests nothing else was received.

The Commission said that general awareness that influencers receive early access is not the same as knowing what a particular influencer may have received.

The examples turn on what audiences expect, so a gift or a payment is measured against that same test. They are reference points, not a complete list of situations.

Where the Disclosure Goes and Who Is Liable

The FTC says the disclosure should be placed with the endorsement message itself. Its guidance says disclosures are likely to be missed if they appear only on a profile page, at the end of posts or videos, or behind a click for more text, and that disclosures should not be mixed into hashtags or links. In videos the disclosure belongs in the video itself, not only in the description. In live streams it should be repeated periodically, and on Stories it should be superimposed on the image.

Tags, likes and pins can count as endorsements too. Platform disclosure tools are not enough on their own, and the FTC suggests using any platform tool in addition to a clear disclosure in the post.

Liability is spread across the chain. Section 255.1 makes advertisers, endorsers and intermediaries potentially liable. Intermediaries such as ad agencies, PR firms, review brokers and reputation management companies may be liable for endorsements that they know or should know are deceptive.

The Federal Register preamble says the Commission expects advertisers to be responsible for and to monitor the actions of their endorsers. Section 255.1(d) also says advertisers should monitor their endorsers' compliance.

What Remains Unsettled for Awards-Season Looks

No awards-season case is cited here. The sources used describe the rules and general arrangements, not a specific red-carpet loan or payment reviewed under them.

Whether a particular loan creates a material connection depends on the facts, and the Commission says the audience test is fact-specific. The sources do not set a number for how many viewers make up a significant minority.

Readers checking exact wording should use the Federal Register text of the 2023 rule alongside the FTC's influencer page, since the influencer guidance is dated November 2019 and the Guides were published in final form in July 2023.