UPDATE 1-U.S. settles with Lord & Taylor over undisclosed advertising

(Adds statement from Lord & Taylor)
By Diane Bartz
WASHINGTON, March 15 (Reuters) - Lord & Taylor, which is
owned by Hudson's Bay Co HBC.TO , has settled with a U.S.
regulator over the store's decision to advertise in an online
magazine without disclosing the article as advertising, the
Federal Trade Commission said on Tuesday.
The practice, known as native advertising, is only allowed
by the FTC if the company distinguishes the advertising from
objective content. Not to do so is misleading, according to the
FTC.
The settlement is the first regarding native advertising
since the agency issued guidelines in December, according to
Lesley Fair, an attorney with the FTC's Bureau of Consumer
Protection.
Lord & Taylor caught the attention of the agency when they
paid for an article in the online fashion publication Nylon
Magazine that the store reviewed and approved, and then paid for
the dress to appear in Nylon's Instagram feed but did not
identify either as advertising, according to the FTC complaint.
Instagram is a photo-sharing app.
"Lord & Taylor needs to be straight with consumers in its
online marketing campaigns," said Jessica Rich, director of the
FTC Bureau of Consumer Protection. "Consumers have the right to
know when they're looking at paid advertising."
The company also gave the dress to "50 select fashion
influencers" and paid them $1,000 to $4,000 to post a photo on
Instagram of them wearing the dress but without disclosing the
payment, the complaint said.
Lord & Taylor noted in a statement that the FTC did not find
any wrongdoing on the part of the company in its ad campaign.
"When it came to our attention that there were potential
issues with how the 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," the company said. "We cooperated fully
with the FTC's inquiry into the marketing of this dress and have
of course agreed to uphold the current version of the
guidelines."
Under the terms of the settlement, Lord & Taylor is barred
from presenting advertising that it pays for as coming from an
independent source, such as a magazine. It also agreed to
require any fashion influencers that it hires to disclose that
they have been paid.
Lord & Taylor did not immediately reply to email and
telephone requests for comment.