Advertising Through Social Media: Ten Tips For FTC & NAD Compliance

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
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This post first appeared in Law360 as “10 Considerations When Advertising On Social Media,” published on September 21, 2016.

Most modern advertising campaigns include social media components. In fact, it is not uncommon today to see products advertised exclusively on social media. For the most part, the same rules that govern traditional advertising also govern commercial speech on social media. For example, you can’t claim that your product cures the flu when it’s just sugar water; you shouldn’t use copyrighted photographs without permission; and you ought not advertise that a celebrity loves your product unless you actually have her authorized endorsement.

But there are some issues that seem to arise more commonly or even exclusively in the context of social media advertising. What are these issues and how do you think through them? Here are ten sets of compliance tips and discussions to get you started, based on the social media-related policies of the Federal Trade Commission (FTC) and the relevant decisions of self-regulatory mechanisms of the Advertising Self-Regulatory Council (ASRC) of the Better Business Bureau, such as the National Advertising Division (NAD). Although the operation of such self-regulatory bodies depends in large part on voluntary participation by advertisers, they may and often do refer matters to the FTC, which is likely to take such referrals seriously. If you want to discuss, praise, confer, criticize or bemoan any of the following, you can buttonhole me at the 2016 NAD Annual Conference in New York from September 26-27.

  1. Can I share or retweet my customers’ social media posts?

You can retweet or share social media posts by your customers. However, once you retweet or share a post, the contents of that post may be considered a product claim by you. In NAD Case #5861 (2015), a beverage advertiser shared a customer’s social media post that said nasty things about a competing sports drink maker. NAD emphasized that “an advertiser may not make claims through customer testimonials that could not be substantiated if made directly by the advertiser.”

NAD made similar findings in Case #5715 (2014), in which a food advertiser encouraged social media users to conduct “taste tests,” and then the advertiser shared the results of those taste tests on its Tumblr page and Twitter feed. Because the advertiser was unable to fully substantiate the claims made by the customer posts, NAD recommended the advertiser discontinue sharing such posts.

Another common scenario is where an advertiser includes a social media stream on its website. In Case #246 (2010), the Electronic Retailing Self-Regulation Program (ERSP) (another ASRC program) reviewed the website of an advertiser containing a feed of Twitter and Facebook posts by its customers discussing their experiences with the advertiser’s weight loss product. Even though the advertiser did not select or edit the posts (it claims to have reposted all customer comments, good and bad), the ERSP found that the advertiser was responsible for substantiating (or appropriately disclaiming) each individual weight loss claim.

  1. When am I responsible for third party content?

Suppose someone posts something nice about your product or nasty about a competitor, and you had nothing to do with it. You generally are not responsible in the first instance for statements by third parties with whom you truly have had no connection and no communication. However, you may be responsible for third party statements on social media if you have encouraged others to view, share or repeat them.

In NAD Case #5359 (2011), the manufacturer of a natural food product encouraged social media users to “Share the Truth” about the ingredients in a competitor’s product by posting links to third party YouTube videos about those ingredients (including one video in which the ingredients were used to cause a large explosion). NAD noted that “advertisers are not only responsible for supporting all messages reasonably conveyed by their advertisements, but also for messages conveyed by third party content disseminated to the public via viral marketing tactics,” which in this case included any claims in third party videos shared by its social media fans.

  1. When must I disclose incentives for social media endorsements?

In recent years, there has been much attention paid to rules regarding celebrity endorsements. However, it’s important to remember that the FTC Endorsement Guides and the Guides Concerning the Use of Endorsements and Testimonials in Advertising apply also to social media posts by non-celebrity consumers.  In short, if someone posts something nice about your product, and that nice post is preceded by some incentive from you, the incentive must be disclosed along with the endorsement. As the FTC puts it, “where there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.”

What constitutes a “material” connection depends on the circumstances. When Lord & Taylor recently paid social media influencers up to $4,000 to post on Instagram photographs of themselves wearing a new dress, and the influencers failed to disclose the payment, the FTC had no trouble finding materiality. But note that the bar is generally much lower than that. In Case #5715 (2014), NAD found that a $4 gift card, presented to consumers in order to encourage them to engage on social media with a food advertiser, was material. In Case #5889 (2015), the connection was material where a pesticide advertiser encouraged consumers to “Write a review for one of our products and be entered to win a $25 Visa gift card!”

Advertisers incentivizing social media posts need to inform consumers in advance that they are required to disclose the incentive in their post. This requirement must be prominent – burying it in terms and conditions will rarely be sufficient. If users nevertheless fail to disclose the incentive, the advertiser should take reasonable steps to add the appropriate information if possible, particularly if the post is shared or reprinted by the advertiser or by third party retail sites.

  1. What should my disclosure look like? Where should it be?

When a social media advertiser is required to make a disclosure in order to identify an endorsement, limit a product claim or otherwise prevent deception, the appropriate placement and precise appearance of the disclosure will depend on the circumstances. Many practical tips specific to social media posts are contained in the FTC’s .com Disclosures: How to Make Effective Disclosures in Digital Advertising.  Here are a few key things to keep in mind:

  • The size, color and graphic treatment of disclosure should be commensurate with the claims to which the disclosure relates;
  • The FTC prefers that disclosures be incorporated into the text of a social media post rather than placed at the other end of a hyperlink, particularly for health and safety disclosures. Where it is permissible to link to disclosures from a social media post rather than place the disclosure in the post itself (for example, in the case of complex financial terms), the link should be conspicuous and its nature and relevance should be obvious from the text (generic terms like “disclaimer,” “more information,” or “fine print” are probably not sufficient);
  • The disclosure (or link thereto) should be made in reasonably close proximity to the claims, such that scrolling is not required, especially if your claim is likely to be read on a smart phone or other small screen. Similarly, for Twitter and other social media platforms that stream posts, don’t separate the claim and disclosure into a separate posts, because they may not appear consecutively to consumers;
  • The technical limitations of the social media platform (such as the Twitter 140 character limit) will not excuse omission of the disclosure. In the specific case of Twitter endorsements, the FTC guidelines have cut this excuse off in advance by providing a list of potentially effective disclosures under 10 characters, including “Sponsored,” “Promotion,” “Ad” and “#ad.” In the case of social media contests, the FTC recommends that including a “contest” or “sweepstakes” hashtag “should be enough;”
  • The advertiser should employ best practices to make it more likely the disclosure will not be deleted when the post is shared, for example by placing the disclosure at the beginning of the post (e.g., “Ad: . . .”) or, in the case of Twitter and other space-limited platforms, by leaving enough room in the post for consumer comments;
  • Disclosures should be displayed in a manner that ensure the consumer sees them before making purchasing decision. This doesn’t just mean disclosing the terms before they hit the “buy” button. It also means that, if it is likely that a consumer will see a social media post and then purchase your product in a brick and mortar store before clicking or without ever clicking on the link to the disclosure, then your disclosure may be inadequate;
  • The disclosure should also be in the same medium as the claim (text with text; video with video; audio with audio). For example, earlier this year the FTC settled claims it brought against Warner Brothers Home Entertainment because influencers who were paid to create YouTube reviews of a video game were making their disclosures in the description box below the video, instead of within the video itself.
  1. Is a “Like” an endorsement requiring disclosure?

What if you promise to give consumers a coupon if they “like” your Facebook page, otherwise known as a “like-gated” promotion?  Is that “like” an endorsement that requires a disclosure? The FTC endorsement guidelines are expressly undecided on the issue, because there is no practical way for the “liker” to make such a disclosure, and because it is not clear how much stock other social media users will put into a “like.” NAD echoed this ambivalence in Case #5387 (2011), where an eyewear advertiser conducted a like-gated promotion by offering “free glasses” to consumers who “liked” its Facebook page. NAD opined that “likes” cannot be obtained through deceptive means, for example, the terms of the promotion must be adequately disclosed before the “like” button is clicked. However, NAD stopped short of requiring the advertiser to disclose the fact of the promotion when bragging about its number of “likes” to the investment community and others.

  1. What is “native advertising” and how does it relate to social media?

Put simply, “native advertising” (or “sponsored content”) is advertising that doesn’t look like advertising, usually because it bears visual similarities to the non-advertising content around it. The FTC, in Native Advertising: A Guide for Business and its Enforcement Policy Statement on Deceptively Formatted Advertisements, has stressed that sponsored content in social media can be particularly susceptible to deception. Because social media posts on the same platform tend to resemble one another in format and style, consumers may be deceived by a commercial post unless it expressly discloses that it is advertising (e.g., it is labeled “Paid Advertisement”) or its content makes it obvious (e.g., a posted picture of a car with the headline “Come and Drive it today”).

This means that disclosures are not always required. The FTC advises that, where consumers understand that a social media stream will include both sponsored and non-sponsored content, and each post is clearly attributable to its source (i.e., the consumer knows that the content comes from an advertiser), there is usually no problem even if the advertisement is otherwise formatted like the non-sponsored content around it. For example, if a social media user sees a tweet from @ZYXPaints about ZYX paint products, and that user knows that she does not “follow” the @ZYXPaints Twitter feed, she is unlikely to think that the tweet is anything other than an advertisement and will not be confused.

However, the lines can start to blur when content is shared. For example, the difference between sponsored and editorial content may be obvious while reading a magazine, but less obvious when the magazine headline is shared out of context on social media. Without a disclosure, consumers may wrongly believe they are looking at a link to editorial content. Something like this happened in NAD Case #5645 (2013), where a Pinterest page maintained by an advertiser placed posts with links to editorial content about hair color products (e.g., articles in the Wall Street Journal and Good Housekeeping) alongside similarly formatted posts with links to sponsored content. NAD recommended that the posts with links to sponsored content include disclosures identifying their commercial nature.

  1. Does social media commentary by my individual employees count as advertising?

Not necessarily, but it may in some cases. In Case #5790 (2014), NAD noted that commentary in a person’s social media profile can constitute national advertising within its jurisdiction. In that case, an employee of the advertiser posted allegedly false statements in his LinkedIn biography about the general performance of the advertiser’s soil erosion control product. NAD held that, in this particular case, the statements were not within its jurisdiction because (1) the social media profile did not appear to be under the control of the advertiser; (2) the statements were framed as a description of an employer rather than as a sales pitch; and (3) the employee was not a sales person, but an engineer.

However, where an advertiser actually induces its employees to make certain statements on a personal social media profile, those statements may be considered advertising. That means that disclosures will be required, including disclosure of the employee’s relationship to the advertiser. Such disclosure may not have been an issue in the example above, because LinkedIn profiles usually prominently disclose an employee’s connection to the employer as part of the profile.  However, advertisers should be wary of employee statements on less formal platforms such as Facebook, where the connection may not be so obvious, and for which FTC guidelines recommend express disclosures.

  1. Can hashtags be trademark infringement or false advertising?

Short answer: yes. Many arguments have been advanced that hashtags should not give rise to trademark infringement or other advertising liability because social media users understand that hashtags are functional mechanisms for categorizing posts, not substantive assertions of fact or source identifiers.  As convincing as many of these arguments are, however, that’s not the way the case law is going. In Public Impact v. Boston Consulting, the District of Massachusetts held that a Swiss non-profit’s use of the “#publicimpact” hashtag to describe its non-profit activities could be confused with a Boston consulting firm called “Public Impact,” where both parties were in the education field.  As similar conclusion was reached by the Southern District of Mississippi in Fraternity Collection v. Fargnoli, where a competitor of the plaintiff clothing maker was using the plaintiff’s name as a hashtag (“#fraternitycollection”) in its tweets.

Similarly, NAD has found that certain hashtags can communicate false messages. In Case #5357 (2011), the advertiser claimed to be the “#1 Ball Fitter in Golf” and issued tweets with the “#1BallFitter” hashtag from its Twitter account: “@1BallFitter.”  The advertiser argued that NAD did not have jurisdiction over the hashtag because Twitter users would understand it as a mere categorization tool, not a product claim. NAD rejected this argument, finding that consumers would reasonably understand “#1BallFitter” to be a claim of superiority (which, in that case, the advertiser ultimately was able to substantiate).   Similarly, in Case #5773 (2014), NAD found that the hashtag “#100%ornothing,” in the context of a tweet about odor protection, communicated the product claim that the advertiser’s antiperspirant delivered “total odor protection.”

  1. Can I Link To Social Media Pages From a Children’s Websites?

Online marketers of products aimed at children under 13 should already be familiar with the Children’s Online Privacy Protection Act and the Self-Regulatory Program for Children’s Advertising administered by the Children’s Advertising Unit (CARU; another ASCR entity), which prescribe rules and best practices for age verification, online privacy protection and the mixing of editorial and advertising content.

Even if you are compliant with these measures, however, your website may end up linking to sites that are not compliant, and this may include social media sites for general audiences.  Earlier versions of the CARU guidelines expressly stated that “advertisers should not knowingly link to pages of other sites that do not comply with CARU’s guidelines.” For example, in Case #4511 (2006), CARU recommended that a children’s videogame company remove from its “Contact Us” page a hyperlink to its MySpace page, on which adults were posting materials that would not be appropriate for children.  More recently, in Case #5575 (2013), CARU expressed concern where a children’s website encouraged kids to “Follow Us!” on Twitter and Pinterest, because those two social medial platforms did not conduct age-screening (a link to Facebook, which does conduct age screening, did not cause similar concerns).

The most recent iteration of CARU’s guidelines no longer contains the express language on which the foregoing decisions were based, and instead provides that it is not a per se violation of the guidelines to link to a general audience website. However, the guidelines still caution against links to sites that advertise products or portray behavior that is inappropriate for children.  The specific question of links to social media sites without age screening processes does not yet appear to have been addressed under the new guidelines.

  1. How fast must I fix problems?

One of the great advantages of social media advertising (compared to say, a television commercial or product packaging) is that you can quickly conceive of, execute and start to reap the benefits from an advertising campaign in days or even hours. But this also means that you are expected to perform at similar speeds when taking remedial measures to bring advertising into compliance, whether the need for the fix is recognized during routine monitoring by the advertiser or as the result of an FTC or NAD proceeding. As the NAD has stated, “the timeframe for modifications to advertising depends on the medium in which the advertising appears.” See Case #5885 (2015).

The cases cited in this article as “Case #_____” refer to the case numbers in the online archive of NAD, CARU and ERSP matters maintained by the Advertising Self-Regulatory Council of the Better Business Bureau. The archive is available here through subscription.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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