Lord & Taylor Paid Fashion Bloggers $4K Each To Advertise On Instagram

Lord & Taylor has been using some sneaky advertising tactics to generate interest and sales via social media platforms. The retail giant paid fashion bloggers upward of $4,000 each for a paid advertisement on Instagram.

Lord & Taylor has agreed to settle a complaint with the U.S. Federal Trade Commission for their shady advertising practices. The company was accused of paying each of the fashion bloggers to post a photo of themselves wearing the exact same paisley print dress on the photo-sharing app. The bloggers were chosen based off of their massive online followings.

Among those were Rachel Lynch and Rachel Marie Iwanyszyn, who admitted they were paid for wearing the dresses for free.

"They reached out and said, 'We have this dress from design lab and we want to send it to 50 influencers and see how they all style it and promote it. They had us all post at the same time -- between 12 p.m. and 3 p.m. -- and then tagging @lordandtaylor," Lynch revealed to ABC News.

The posts were pre-approved and included the @lordandtaylor username and hashtag #DesignLab in the caption. However, those posts did not include specific wording or phrasing that would have explained that each of the photos was a paid advertisement. According to the FTC, social media posts and blog posts should include appropriate tags such as "ad," "paid ad," "advertisement," or "sponsored post."

According to the official complaint, Lord & Taylor paid 50 "influencers" to post photos of themselves wearing the same dress from the same collection on Instagram at the same time. The company did not disclose that they paid the bloggers $1,000 to $4,000 to endorse the dress on their Instagram accounts, according to the FTC.

The promotions were used for Lord & Taylor's 2015 Design Lab clothing collection. The advertising campaign included a combination of advertising editorials in fashion magazines, blog posts, photos, and online endorsements on various social media outlets. The posts were seen by 11.4 million Instagram users over the span of two days back in March 2015, which all led back to Lord & Taylor's official Instagram account. Although the dress quickly sold out within days, the FTC says that it's not right for the retailer to trick their customers.

"Lord & Taylor needs to be straight with consumers in its online marketing campaigns," said Jessica Rich, director of the FTC's bureau of consumer protection. "Consumers have the right to know when they're looking at paid advertising."

The retailer was also hit with a charge for ad violation inside the pages of Nylon magazine, which they also did not disclose. Lord & Taylor admitted that they paid the fashion magazine to post an article about the dress, calling it one of the season's "must-have" items, the FTC said. The retailer then acted accordingly after they found out that they violated the advertisement policies. They had each of the influencers go back and edit the captions to clarify that the posts were paid for. Lord & Taylor also told ABC News that the company has since "cooperated fully" with the FTC.

"A year ago, when it came to our attention that there were potential issues with how influencers posted about a dress in this campaign, we took immediate action with the social media agencies that were supporting us on it to ensure that clear disclosures were made."

But now, it's too late. The FTC revealed that Lord & Taylor is now banned from "misrepresenting that paid ads are from an independent source, and is required to ensure that its influencers clearly disclose when they have been compensated in exchange for their endorsements."

Although this marks the first case under FTC investigation following its revised guide for native publishing back in December 2015, sneaky advertisement tactics like this are not uncommon. Some fashion bloggers have been demanding as much as $15,000 per post to advertise for brands on their Instagram accounts, which has turned fashion blogging from a side hobby into a serious business. But advertisers, bloggers, and consumers will have to be better aware of these marketing campaigns, as social media and advertising continues to mix and blur the lines of what's acceptable and what's not.

[Photo by Cindy Ord/Getty Images For Lord & Taylor]