5 Legal Reasons Not to Accept Gifted Collabs (Unless You Want to Risk a Lawsuit)
Wondering if you should accept gifted collabs from brands? Here are the legal risks most creators don’t talk about that could cost you big!
As a lawyer for creators like you, I see far too many talented influencers, UGC creators, and content creators giving away content for free because they think that gifted collabs are a good opportunity, especially when starting out. Gifted collabs may seem harmless, but they’re often a legal trap disguised as an opportunity, especially when there’s no contract, no payment, and no legal protection in place. And I’m not even going into the fact that they’re making big profits while you don’t get fair compensation for it, just a freebie.
In this blog post, I’ll break down the legal reasons why gifted collabs can actually hurt your business and you personally, including:
All the risks of gifted collabs for influencers, content creators, and UGC creators in relation to usage rights
The legal liabilities you’ll face with brands that do gifted collabs on a large scale
The hidden tax obligations of influencer and UGC gifted collabs
Whether you’re a nano-influencer, seasoned content creator, or a UGC creator, this blog post will help you stay legally protected and confidently say “no” to the wrong kinds of offers (and know what to offer brands instead).
By the end of this post, you’ll know why gifted collabs aren’t as “free” as they seem — and what steps you can take to work with brands on your terms (without getting taken advantage of).
This post is all about the legal reasons not to accept gifted collabs and what to offer brands instead to keep your content and money safe.
Legal Risks of Gifted Collabs
1. Misunderstandings That Can Cost You in Influencer and UGC Fifted Collabs
Most gifted collabs don’t come with a formal contract. When there’s no contract, misunderstandings are almost inevitable — and that’s where gifted collabs can cost you way more time, energy, and credibility than that gifted product is worth.
Gifted collabs often happen quickly, usually through a few DMs and vague promises. You might casually agree to post something in exchange for a gift — without ever formalizing what exactly you’re expected to do. Something you thought was more of a low-effort favor can easily spiral into a demanding commitment you never intended to make.
Here’s what can (and often does) go wrong:
The brand pressures you to deliver content within 48 hours, even if you weren’t on that timeline.
They demand multiple rounds of revisions, turning a one-post collab into hours of unpaid work.
The product turns out to be low-quality or not aligned with your values, but the brand insists you post anyway — citing your DMs as proof that you agreed to promote it.
These kinds of mismatched expectations can lead to more than just frustration. You could end up burning out, disappointing your audience, or even damaging your brand by promoting something you don’t stand behind.
That’s why a written agreement — ideally a creator-friendly contract — is essential. It doesn’t just protect you from legal risk; it sets healthy business boundaries:
✅ It outlines timelines, so the brand can’t pressure you into posting at lightning speed
✅ It limits the number of revision rounds, so your one deliverable doesn’t turn into a part-time job
✅ It gives you the right to walk away when these gifted collabs no longer align with your brand or values
Bottom line? If it’s not in writing, you don’t have control. And that’s a dangerous position to be in — especially when your reputation is on the line.
2. You’re Legally Required to Pay Taxes on Gifted Collabs
Here’s something most creators don’t realize: gifted collabs aren’t actually “free.” In the eyes of the IRS (and many other tax authorities), a gifted product is still income.
Tax authorities will not care that you weren’t paid in cash.
That means you are legally obligated to report the fair market value of that product on your tax return.
So if a brand sends you a $200 serum in exchange for a Reel, you’re supposed to declare that $200 as income — and pay tax on it. Yes, even if you didn’t get paid in cash. And no, the brand doesn’t help you cover that tax bill. That sucks, especially if:
You didn’t get to choose the product
It wasn’t something you actually needed or used
You spent hours producing content for it
This becomes even more frustrating when the value of the product doesn’t match the time and effort you put into creating the content.
You’re working for free and still getting a tax bill. And the brand? They walk away with free promo — and zero tax consequences.
3. Usage Rights Are Usually Undefined (Which Means the Brands That Do Gifted Collabs Can Do Whatever They Want)
As I already mentioned, most gifted collabs happen without a written contract — and that’s where creators get burned.
One of the biggest legal risks of gifted collabs is losing control over your content. You may still own the copyright, but if you have never clearly limited how the brand can use your content, they might assume — or even argue — that they have an implied unlimited license to use it however they want.
That includes:
Reposting it on any social media platform
Using it in paid ads (without paying you a licensing fee)
Editing or cropping your video
Publishing it on their website, in emails, or even in print
Using it indefinitely, with no end date in sight
--> If you didn’t expressly say, “You can’t use this for advertising” or “You only have rights for Instagram for 30 days”, a brand may be able to keep using your content — and you’d have a hard time stopping them.
That means:
Your video could be turned into a Facebook ad campaign
Your image could appear on packaging or billboards
Your testimonial could be quoted in emails or press releases
And your name or likeness could be tied to the brand long after you want it to be
All without credit. All without pay. And all because you didn’t define usage rights in writing.
If you’re not explicitly granting a license, you should be explicitly limiting one.
That’s why a creator-friendly contract is non-negotiable — especially for gifted collabs. It lets you:
Set clear usage rights (platforms, time period, media types)
Charge extra for paid use or extended rights
Reserve your copyright and retain full control over your brand image
Want to stay in control of your content? Then protect it.
My Brand Sponsorship Contract Template and UGC Creator Contract Template include built-in licensing clauses that prevent brands from exploiting your content without permission — or payment.
4. You’re Still Legally Required to Disclose Paid Collaborations on Instagram and Other SM (and Could Be Liable If You Don’t)
Even if you don’t get paid in cash, you are still legally required to disclose gifted collabs. You must clearly label posts as ads if you received free products in exchange for exposure. It’s a legal requirement enforced by the FTC in the U.S., the ASA in the UK, and consumer protection laws in Canada, the EU, and elsewhere.
That means you should be using hashtags like #ad, or even better, a clear disclosure like “This product was gifted to me by [insert brand].” It has to be upfront, easy to understand, and visible before people click “more.”
This is not optional. Failure to disclose is considered deceptive advertising.
But the problem is that many brands that do gifted collabs ask content creators and influencers to post “organically”without including disclosures) — and you could get in big legal trouble.
So, if you thought accepting a free product was harmless, think again.
You’re taking on legal risk — and the brand isn’t lifting a finger to protect you.
And here’s the real kicker: if a brand gets fined, they might turn around and hold you — the creator — liable for damages, especially if your failure to disclose violated your agreement or contributed to the legal issue.
So, without a contract that protects you from liability in gifted collabs, you could get pulled into the mess either by:
The FTC or similar governmental authority in another country
The brand itself for the financial loss they incurred because you did not make the proper disclosures
You carry the risk, and the brand gets the reward — All only for a free product.
You can avoid all this by using a creator-friendly Brand Sponsorship Contract Template or UGC Creator Contract Template that includes indemnity protection so the brand covers legal or damage costs related to disclosure failures.
5. You Could Be Liable If Something Goes Wrong in Gifted Collabs
If a product you promote causes harm, contains misleading claims or violates someone else’s intellectual property — you could be held legally responsible. Yes, even in the case of gifted collabs.
Here’s what could happen:
A follower tries the product you recommended and experiences harm (e.g., a skin reaction, property damage, or emotional distress)
They file a claim — and depending on the facts, they could:
Sue you directly, alleging that your content misrepresented or falsely endorsed the product.
Sue the brand, and the brand could then turn around and sue you for damages, arguing that your promotional content included unapproved or incorrect claims.
Sue both of you, just to cover all bases — and now you’re dealing with legal fees, stress, and reputational damage.
And the risk doesn’t stop with physical products.
Even UGC creators have been hit with copyright infringement claims — especially when the brand provides music, stock footage, or assets they don’t actually have the right to use. If that content ends up in your video or Reel, you’re the one who gets the takedown, the strike, or even the lawsuit.
Bottom line:
Gifted collabs may feel casual — but you’re taking on real legal risk without compensation. And unless you have a proper contract in place, nothing is protecting you from being dragged into someone else’s legal mess.
That’s why your agreement must include:
Indemnity clauses (so the brand covers you if their product or materials cause legal trouble)
Disclaimers (clarifying your limited role and that you’re not responsible for outcomes)
Limitations of liability (so you’re not exposed to unlimited financial claims)
No contract = no protection. And that’s a risk no smart creator should take — especially for a “free” product.
What to Do Instead of Gifted Collabs: Work with Brands on Your Terms
Gifted collabs aren’t always a bad idea — but they should never be accepted without the right legal protections in place.
When brands that do gifted collabs reach out to you, don’t feel like you have to say yes just to build your portfolio. Instead, here’s what to do to keep it fair, legally safe, and still convince the brand to work for you:
1. Charge a Small Base Fee — Even if You’re New
Just because the brand isn’t offering payment doesn’t mean you can’t ask for a small base fee, like $150 (which covers the cost of my contract template, *wink*).
You can explain to the brand that:
You can’t accept gifted collabs because you are legally required to report that as income in your tax report, so the deal would essentially cost you money otherwise, and therefore, you charge a small base fee of $150.
The fee covers your time and content creation.
That fee includes a 3-month usage window for the content (after that, they can pay extra for continued use).
Brands can’t argue with that, and they’re usually more than willing to pay a small fee, even if you’re just starting out.
2. Always Use a Contract — Even for Low-Paying Collabs
Once you’ve agreed on a fair (even small) rate, send over your creator-friendly contract for the brand to sign via DocuSign (which makes it easy).
If a brand claims that they don’t do contracts, then demand the respect you deserve. This is a business, not a charity. Here’s how you could make it clear:
“This is just a small collaboration — I’m not getting a high payment for this, so it’s especially important that I’m legally protected. This contract is market standard for brand collabs.”
Your contract should set the following boundaries:
Usage rights (platforms, duration, licensing limits)
Deliverables (what you’re creating and when)
Revisions (so you’re not stuck in endless unpaid changes)
Termination (so you can walk away if needed)
Indemnities, limitations of liability, & disclaimers (so you’re not legally responsible if something goes wrong)
You don’t need to write your own contract from scratch. I’ve created two lawyer-drafted, plug-and-play templates that creators like you can use again and again:
Brand Sponsorship Contract Template — perfect if you’re promoting the brand on your own platforms
UGC Creator Contract Template — ideal if you’re creating content for the brand to use on their platforms, like in their ads, socials, or website
Both include all the essentials you need to legally protect yourself — usage rights, credit requirements, disclaimers, revision terms, payment clauses, and more — in plain, professional English (not legalese).
You can even bake your standard licensing terms into the contract, like 3 months of usage rights included in the base fee and additional months charged separately.
You don’t need to say yes to every gifted collab — especially if it puts your business or legal safety at risk. Work with brands on your terms, not theirs.
This post was all about legal reasons not to accept gifted collabs and what to do instead to get an even better deal.
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