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SAN FRANCISCO (Reuters) - Photo-sharing app Instagram plans to roll out a feature on Wednesday that will make it easier to label posts as paid promotions, taking what it called a step toward transparency in an area that has drawn attention from U.S. authorities.
Product endorsements have become more common on Instagram, owned by Facebook Inc, as celebrities and others with large followings on the social network have struck deals to talk up clothing, food and other items.
Known inside the industry as "influencers," people promoting products are required under truth-in-advertising rules to tell fans about their compensation, according to the U.S. Federal Trade Commission (FTC). It is not clear how many do.
Instagram said in a statement that it would begin allowing people who are posting a picture to add a "paid partnership with" label that would appear above the picture. Users can already add such disclosures below a picture.
"As more and more partnerships form on Instagram, it's important to ensure the community is able to easily recognize when someone they follow is paid to post content," the company said.
The label would be voluntary, Instagram said. The company added, though, that it expects the label to be used because some users requested it.
Instagram said it would develop a policy about paid endorsements based in part on the feedback it gets about the label. The policy would include some kind of enforcement but the details are still to be determined, the company said.
The FTC, the chief enforcer of U.S. truth-in-advertising rules, has sent letters to more than 35 stars and more than 40 companies telling them they must disclose compensation for promoting products on social media.
As advertising has migrated from television and print publications to social media, it has become increasingly difficult to distinguish from non-advertising content.
The FTC settled with retailer Lord & Taylor in 2016 over social media posts by select "fashion influencers" who put up photos of a paisley dress. As part of the settlement, Lord & Taylor agreed to ensure that future paid posts would be identified.
Reporting by David Ingram,; additional reporting by Diane Bartz in Washington; Editing by Andrew Hay