FTC updates endorsement FAQs, focuses on social media

The Federal Trade Commission, the government agency in charge of protecting consumers from deceptive and false advertising, published a set of Endorsement and Testimonial Guides in 2009. These Guides help advertisers understand the best ways to follow the law of the use of endorsements in advertising, and the proper way to disclose endorsers’ connections to advertisers to the public (see the Federal Trade Commission Act, Section 5).

While the Guides provided a number of hypothetical examples of how the law should be applied, (you can read those here), those examples only reflected social media scenarios as they were likely to exist in early mainstream social media.

Last week, the FTC published an updated “What People Are Asking” FAQ-type page that complements the Guides and provides a number of 2015-relevant scenarios under which disclosures should be made, and what they should look like.

An endorsement is an advertising message made on behalf of a sponsoring advertiser.  The endorsement must be honest, and the endorser must have actually used the product or service that s/he is endorsing.  If the writer of an endorsement has received something of value – cash, free product, free service, entrance into a sweepstakes, etc. – for making that endorsement, s/he must disclose that fact to the public.

It’s a matter of consumer protection from advertiser deception.  Consumers should feel comfortable that the endorsement is based on the endorser’s actual experience with the product or service. Consumers also have the right to know whether the endorser received something of value in exchange for the endorsement in order to determine for themselves what weight and credibility to give to the endorsement.

If a “significant minority” of consumers don’t understand the “material connection” between the endorser and the advertiser, a disclosure is required.  “Significant minority” is a pretty low bar, so the FTC suggests that when in doubt, it is better to disclose.

If you are a blogger or other digital influencer who is publishing content sponsored by a brand on your blog, on YouTube, or through any of your social media handles, you are an endorser, and this applies to you.  If you are a company engaging the endorser, you are the advertiser, and are obligated to ensure that the endorser follows the Guides, so this applies to you, too.

And in case you were wondering why these requirements aren’t trumped by free speech rights, it is because endorsements are typically commercial speech, which can be lawfully regulated by the FTC.

The following is an overview of what’s new from the FTC on this topic, along with some points reiterated or clarified from the original Guides.  I encourage you to read the full “What People Are Asking” at ftc.gov.

When and where do you need to make a disclosure?

Here’s the simple rule again:  A disclosure is required when an endorsement is made on behalf of a sponsoring advertiser.  There is no special wording required by the FTC to effectively make this disclosure.  “This post is sponsored by Company MNOP” or “Company RST gave me this product to try” will suffice.  The latter comes directly from the FTC.

A blanket disclosure somewhere on your website, like “Sometimes I write about products I receive from brands” in an “About” page or under “FAQs” is not sufficient.  The disclosure must be “clear and conspicuous.” That means it must be near the endorsement, in prominent font, not buried in text. (You can learn more about making effective disclosures here).

If the endorser writes about the product or service more than once, s/he should make the disclosure each time, because the reader of a blog post about Product Q in June might not have read April’s post about Product Q that contained the disclosure.

Who is responsible?

Social media influencers generally are given latitude with respect to the way in which they endorse a brand’s product or service.  After all, it is that writer’s voice that has gained her a following and therefore the influence.  But ultimately, everyone up the chain is responsible for ensuring compliance with disclosure requirements.  That means the brand paying for the endorsement, and any agency (marketing, advertising, public relations) engaging the endorser.  Agencies and brands should explain the Guides (and provide a link to the Guides) to influencers, and instruct them to follow the requirements and make the disclosures on all social media platforms.  Agencies and brands are required to monitor whether influencers do in fact make the required disclosures and follow the endorsement guidelines.  The FTC suggests that advertisers have a “reasonable training and monitoring program in place,” and if they use intermediaries, that they request reports on those entities’ training and monitoring programs.  An advertiser or intermediary agency is not expected to monitor every tweet and post from a campaign, but they are expected to “take reasonable steps to monitor” compliance.  Keep in mind that the FTC is more likely to go after a deep-pocketed corporation than a sole influencer.

Twitter

Disclosures in tweets are often viewed as a waste of some of the precious 140 characters allowed, and are therefore omitted entirely.  But as the new FAQs point out, “Sponsored” or “Promotion” take only 9 characters (10 if you # them).  Creative influencers should be able to cleverly convey both an advertiser’s message and the required disclosure in a tweet.  “Promotion,” “Sponsored” or “#ad” are the best bets. “#spon” is likely not clear enough.

Facebook and Pinterest

The FTC says that advertisers “should not encourage endorsements using features that don’t allow for clear and conspicuous disclosures,” like “liking” on Facebook, and “pinning” on Pinterest.  But it doesn’t explicitly discourage this behavior, either.  In fact, the FAQs admit “we don’t know at this time how much stock social network users put into ‘likes’ when deciding to patronize a business, so the failure to disclose that the people giving ‘likes’ received an incentive might not be a problem.”  So, for now, advertisers and endorsers can rest assured that asking endorsers to “like” a page or “pin” content “might not be a problem.”

Videos

Advertiser-sponsored video content is now common on platforms like YouTube and Vine.  While the audio/visual nature of the medium can be perceived as complicating the disclosure requirement, it really doesn’t.  The endorser can simply say, into the camera, something along the lines of “Some of the products I’m going to use in this video were sent to me by their manufacturers” (example from FAQs).  “This video is sponsored by Company HIJK” works, too.

A disclosure solely in the written description of the video is not sufficient.  The disclosure should occur at the beginning of the video, and the FTC would be really happy to see endorsers repeating the disclosure throughout the video for the benefit of those consumers who do not watch the video from the beginning.

Sweepstakes and contests

Sweepstakes and contests should not require participants to tweet, pin, or Instagram to enter the sweepstakes or contest without a clear and conspicuous disclosure that they are doing so in connection with a sweepstakes or contest.  Again, consumers seeing the tweet or pin need to know that the tweeter or pinner is using the hashtag or other content for the purpose of getting something in return (entering and potentially winning the contest), not solely because she really likes the advertiser or its products or services.   The FTC suggests having the entire word “contest” or “sweepstakes” in the hashtag that the advertiser desires to use.  #IheartWXYvitamins should become something like “#IheartWXYvitamins_contest.” “sweeps” is not sufficient, because consumers might not understand what that means.

Affiliate links

It is believable that a “significant minority” of consumers do not understand that when they click on a product link in a blog post and are redirected to an online retailer, and then they buy that product from the online retailer, the blogger writing the post is receiving a cut of that purchase.  The blogger must therefore disclose that she is being compensated from that retailer or product brand.  The FTC suggests “I get commissions for purchases made through links in this post.”  Again, a blanket disclosure is insufficient – the disclosure must be made each time an endorser uses affiliate links, and it must be nearby and easily understood.  Merely adding the words “(affiliate link)” or a “buy now” button would not be sufficient to put the consumer on notice that the endorser is receiving a commission from the sale.

Soliciting endorsements

Online review sites are popular with consumers, and can be both advantageous and disadvantageous to advertisers.  Positive online reviews on Yelp can boost an advertiser’s reputation or sales exponentially, so an advertiser may consider offering free or discounted products or services in exchange for those positive reviews.

But in the FTC’s legal parlance, “It’s not a good idea.”  Giving consumers something of value in exchange for their review would likely cause them to give potentially dishonest review, thereby deceiving other consumers.

The bottom line

The media keeps changing, but the law has not.  The law dictates that endorsements in any media must reflect honest opinions, must not mislead, and must disclose the material connection between the endorser and the advertiser.  The use of new media for advertising campaigns does not absolve advertisers from the obligation to avoid consumer deception that has existed in traditional media.  Influencers, marketers, and advertisers together have the resources to come up with creative ways to convey both their advertising message and the appropriate endorsement disclosure, even where space is limited.  The FTC’s new FAQs are a valuable tool for all types of marketers to use as guidelines in their social media campaigns.

Transparency is good for both consumers and advertisers.  Disclosure of the connection between advertisers and endorsers gives credibility to both the advertiser and the endorser, because it assures consumers that they are not being “tricked.”  Making disclosures in connection with endorsements online can be simple, need not detract from the advertising message, and does not mean that an influencer has sold out. Also, it’s the law.

– Amanda Schreyer

Schreyer

If you have any questions about complying with FTC regulations on endorsements and testimonials, or any other marketing and advertising law matters, please contact Amanda Schreyer, a member of Prince Lobel Tye’s Media Law Practice Group and the author of this alert, at aschreyer@princelobel.com.  You can follow her on Twitter @SchreyerEsquire, and you can follow the Prince Lobel Media Law Group at @PLT_Media.

 

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