FTC ISSUES NEW SOCIAL MEDIA/ ENDORSEMENT
GUIDANCE
The FTC’s Endorsement Guides
were revised
in 2009 to provide advertisers with guidance on how to apply traditional
legal principles regarding testimonials and endorsements to new marketing
channels and techniques. More recently, in 2013, the FTC issued its revised .Com
Disclosure Guide. Recognizing the continuing growth and evolution of social
media and consumer generated content as well as the space constrained nature of
some platforms, on May 29, 2015, the FTC issued "The
FTC’s Endorsement Guides: What People Are Asking,” which provides an update
to the Guides’ Q&As.
The FTC has consistently stated
that traditional truth-in-advertising principles apply to social media and other
forms of user-generated content. This requires advertisers that have a material
connection with a person who speaks about its product or service (i.e., an
endorser) to take affirmative steps to ensure that the posting is truthful and
is not misleading. In order to do so, the FTC has made clear that the endorser
must typically disclose the material connection between the endorser and the
advertiser, and the endorser cannot make a claim that is either untruthful or
one for which the advertiser lacks adequate substantiation. These principles may
seem logical, but the challenge advertisers and endorsers have faced is how to
provide the disclosures in a manner that fits with the platform, and how the
principles apply to actions frequently taken by consumers, such as entering a
sweepstakes.
While the FTC reiterates that
no special language is required in providing the disclosures, an advertiser and
endorser should keep in mind the 4P’s — prominence (size), presentation
(understandable), placement (will it be seen), and proximity (is it close to the
triggering claim) to the claim. These standards apply to social media platforms
and small screen devices.The FTC’s revisions cover a
number of topics. A few highlights and examples are discussed
below.
Receipt of
Value
Endorsers and advertisers must
remember that the FTC still applies a different standard to bloggers than it
does with traditional media as it relates to sample products. While traditional
newspapers and magazine reviewers of products do not need to disclose if they
received the sample for free, particularly if there is an ongoing relationship,
the FTC continues to hold that those writing on a personal blog or in social
media posts need to make the disclosure, such as "Company X gave me this product
to try….” The FTC has also reiterated its position that affiliate marketers must
clearly and conspicuously disclose their relationship to an online retailer on
its site and not rely simply on an "affiliate link” or "buy now”
button.
The
Platform Doesn’t Matter
The disclosure obligations
apply regardless of the platform. This means if an endorser must disclose his or
her connection to the advertiser, it must be made irrespective of space
limitations. For example, for Twitter (which has a 140 character limitation),
the FTC states the user should start the tweet with "ad” or #ad or include
"Sponsored”, "Promotion” or "Paid Ad”. Similarly, in uploading a video review on
YouTube, the FTC advises that the disclosure must be clearly and conspicuously
made by placing the disclosure in the beginning of the online review, and
repeating throughout a longer video, so that it is not missed by a
viewer.
Sweepstakes
and Promotions
The FTC’s position regarding
material connection has been expanded recently to require a disclosure if a
person receives a sweepstakes entry in exchange for a post, as well as
incentives with potentially no financial value. The FAQs provide that if a user
is "rewarded” with an entry for a post, the advertiser should ensure that such
post include the (hashtag) disclosure #contest or #sweepstakes. The FTC does not
recommend using abbreviations, such as "#sweeps”, because of concerns that a
consumer would not understand the disclosure.
Advertiser’s
Responsibility
The FTC continues to reiterate
that advertisers have an affirmative obligation to train and monitor what
persons with whom they have a material connection say regarding the advertisers’
products and services. The FTC recognizes that advertisers cannot possibly know
every post, but stress that there should be a program in place in which the
advertiser: (a) instructs members of the network on their responsibilities for
disclosing their connections to the advertiser; (b) periodically searches for
what those people are saying; and (c) follows up if it finds questionable
practices. In instituting such compliance and monitoring programs, advertisers
should be sure to document the steps it has taken with regard to such a
program.
Takeaway
As advertisers continue to
utilize social media channels as a marketing vehicle, they must take affirmative
steps to ensure that advertising is not only truthful, but discloses a material
relationship when someone speaks about their product. An advertiser’s obligation
in this regard is ongoing and requires a robust and documented training and
monitoring program.
For
more information about the FTC’s Endorsement Guides, including its recent social
media update, please feel free to contact the Olshan attorney with whom
you regularly work or Andrew Lustigman of this firm to discuss any of these
matters.
Contact
Information:
Andrew B.
Lustigman
Olshan Frome Wolosky
LLP
65 East 55th
Street
New York, NY
10022
(212) 212.451.2258 (direct
dial)
alustigman@olshanlaw.com |