Ghost Advertising: Compliance Takeaways From the Gymshark Influencer Class Action

A recently filed class action lawsuit against Gymshark, a prominent athletic apparel company, highlights the escalating legal risks associated with influencer marketing. The complaint, brought in the U.S. District Court for the Southern District of New York on June 16, 2026, alleges that Gymshark systematically paid social media influencers to promote its products without ensuring that the influencers were providing clear and conspicuous disclosures about such payment, in violation of Federal Trade Commission (FTC) guidance and New York state law.

The proposed class action asserts that Gymshark orchestrated a marketing strategy in which a large number of influencers were compensated to post about its products on platforms such as Instagram and TikTok. According to the complaint, these posts were presented as authentic, uncompensated endorsements, misleading consumers into believing the recommendations were genuine. The suit claims that Gymshark’s influencers frequently omitted disclosures or buried them within lengthy captions or hashtags, contrary to the FTC guidance. As a result, consumers were allegedly misled into paying premium prices for Gymshark products, believing in their organic popularity and demand.

FTC Guidance on Influencer Marketing

Influencer marketing in the U.S. is governed primarily by the Federal Trade Commission Act. The FTC has issued guidance on how companies can avoid misleading and deceptive advertising practices. Under that guidance, a material connection between an endorser and a seller — such as a monetary payment — must be clearly and conspicuously disclosed, including the nature of that connection, so that consumers can properly evaluate its significance when making purchasing decisions.

The FTC has also published guidance specifically addressing influencer marketing best practices, providing companies and influencers with concrete direction on how to structure compliant disclosures. Among other requirements, the FTC instructs that disclosures be placed prominently in a location consumers are unlikely to overlook and written in clear, simple language that is easily understood by the average viewer.

For example, if an endorsement is in a picture, the disclosure should be superimposed on the image, and for timed posts (such as an Instagram or Snapchat story), the disclosure should be displayed long enough that consumers have sufficient time to read it. In video endorsements, the disclosure should be made within the video and not only in the video description. Similarly, during a livestream, a disclosure should be made repeatedly throughout the stream.

The FTC can independently investigate and pursue its own enforcement for deceptive advertising, though it has not presently indicated it will pursue such an action against Gymshark. However, the FTC has previously brought similar actions, most recently in 2020 against Teami, LLC, a tea and weight loss marketer, where the company and its two owners made unsubstantiated weight loss claims and paid for endorsements from social media influencers who did not properly disclose they were being compensated to promote Teami products. Ultimately, the case settled for $15.2 million, and the influencers involved received warning letters from the FTC.

Emerging Industry Initiatives: The Institute for Responsible Influence (IRI)

To bridge the gap between effective influencer marketing and a lack of endorsement transparency, the BBB National Programs’ Center for Industry Self-Regulation (CISR) launched the Institute for Responsible Influence (IRI) on April 13, 2026. The IRI was informed by the BBB National Programs’ National Advertising Division (NAD) 2025 Influencer Trust Index, which found that consumers greatly value transparency and honest product reviews, and are more likely to trust an influencer’s recommendation when that influencer has been certified in proper disclosure practices and advertising industry standards. Accordingly, the IRI provides training and certification programs to help brands manage relationships with influencers while complying with FTC guidelines, and helps influencers understand and adhere to their disclosure requirements, thereby bolstering credibility, minimizing risk for potential brand collaborations, and increasing trust between businesses and influencers.

New York State Consumer Protection Standards

While the plaintiff draws on FTC guidance to establish the applicable disclosure standard, the complaint is rooted in the New York General Business Law (NYGBL) which, unlike the FTC Act, confers a private right of action on consumers. Two provisions of the NYGBL establish consumer protection standards that complement the FTC’s framework and impose independent compliance obligations on companies. Section 349 prohibits all unfair, deceptive, or abusive business practices, while Section 350 prohibits strictly false advertising that is materially misleading.

As discussed in a prior client alert, Section 349 grants different powers to consumers and the New York State Attorney General (AG). The private right of action exists only for consumers injured by a company’s deceptive acts or practices. As of 2025, however, under the Fostering Affordability and Integrity through Reasonable Business Practices Act (FAIR Business Practices Act), the AG has the power to bring an action against companies that engage in unfair practices (those that cause substantial injury not reasonably offset by benefits) or abusive practices (those that interfere with a consumer’s understanding or take unreasonable advantage of a consumer’s situation). Like consumers, the AG retains its pre-2025 ability to pursue enforcement against companies engaging in deceptive acts or practices.

Implications for Businesses Engaging in Influencer Marketing

The Gymshark proposed class action serves as a clear warning to businesses leveraging influencer marketing: transparency is not optional. Brands must rigorously enforce disclosure requirements in all influencer partnerships to mitigate legal and reputational risks. Companies should review and update their compliance protocols, provide comprehensive training to both internal teams and external partners, and monitor influencer content for adherence to disclosure standards. By prioritizing transparency and proactive compliance, businesses can safeguard consumer trust and avoid the costly pitfalls exemplified by the Gymshark litigation.

We would like to thank Jillian Foley for her contribution to this alert.