FTC Issues Revised Online Endorsement Guidelines

by Revision Legal
Contact

As many know, the Federal Trade Commission (“FTC”) regulates unfair and deceptive business practices including such practices on the internet. One of the more vexing recent issues has been business use of “consumer” reviews, “likes,” rating systems and similar types of product and service endorsements on websites and on social media. In September 2017, the FTC issued revised endorsement guidelines. See the FTC information page here.

FTC Endorsement Guidelines: Being Upfront With Consumers

The title of the FTC’s announcement is: “The FTC’s Endorsement Guides: Being Upfront With Consumers.” That really says it all; the FTC is highlighting the fact that any “consumer endorsement” or testimonial has to be truthful and not misleading. If you and your business and advertisers are upfront with your customers, you are probably going to satisfy the guidelines. If in doubt, disclose.

To What do the Guidelines Apply?

The FTC’s endorsement guidelines apply to endorsements and testimonials in every category of advertising:

  • Television
  • Print
  • Radio
  • Blogs
  • Word-of-mouth marketing

To Whom do the Guidelines Apply? Everyone

Most people probably think that “unfair” and “deceptive” business practices only apply to big businesses and giant corporations; or that the rules only apply to advertisers or promoters or marketers. That is false. The new guidelines make it clear that the consumer protection statutes apply to everyone, even individuals making endorsements on social media.

In April 2017, the FTC sent out warning letters directly to celebrities, athletes, and other individuals who were endorsing products through use of social media. The letters were directed to both marketers and to these so-called “influencers.” The letters reminded the individuals and marketers that they should conspicuously disclose any relationships to the brands/products when promoting or endorsing the brands/products through social media. The letters mark the first time that the FTC reached out directly social media influencers themselves.

In mid 2017, the FTC filed its first complaint against individual social media users. The case settled in September 2017

In that case, the individuals were alleged to have used social media to promote the online gambling company called CSGO Betting that they owned. For example, the company’s owner tweeted: “Made $13k in about 5 minutes on CSGO Betting. Absolutely insane.”

The FTC cited numerous other examples of tweets and instagram and other social media postings. None of the posts disclosed that the individuals owned the company. The FTC’s also alleged that the individuals had organized an “influencer program” and paid other gaming influencers between $2,500 and $55,000 to promote the CSGO website to their social media circles, while prohibiting them from saying anything negative about the site.

According to the FTC, the foregoing constituted unfair and deceptive business practices.

What is Conspicuous?

The FTC is particularly concerned with the issue of conspicuousness and the interplay with how certain social media platforms are normally viewed. For example, the FTC has taken note of the fact that instagram posts are most often viewed by consumers on mobile devices. Such consumers typically only see the first three lines of a longer post unless they click “more,” which many may not do. The FTC has made it clear that conspicuous means that any disclosure must be made above the “more” button.

The FTC also said the following is not considered conspicuous:

  • Strings of multiple tags, hashtags, or links — readers likely just skip over them
  • Multiple tags, hashtags or link when they appear at the end of a long post — readers often do not read to the end
  • Hashtags like “#sp,” “Thanks [Brand],” or “#partner” are not understood by consumers to mean a paid endorsement — disclosure must be clear
  • Including “AD” or “#AD” in a larger hashtag or tag — “AD” or “#AD” alone tells the consumer the post is an advertisement; but including “AD” in a larger hashtag might not be noticed or understood
  • Making the disclosure only in the audio portion of a video or snapchat “story” — many consumers do not turn on the sound

What is Unfair and Misleading?

In general, the same sort of practices that would be misleading and deceptive in regular advertising or in face-to-face marketing are going to be deemed misleading and deceptive when used in social media and on the internet. Here are some examples:

  • Talking about your experience with a product when you never used it
  • Testimonials not representative of what normal customers can expect (e.g., “I lost 100 pounds” when most consumers lose three pounds
  • Making claims about a product/service when such claim requires scientific proof that does not exist
  • Endorsing a product without disclosing a connection between the endorser and the marketer of a product that would affect how people evaluate the endorsement

What Must be Disclosed?

The biggest changes in the new guidelines relate to disclosures and, more specifically, disclosures that are needed for social media like twitter, instagram, and facebook. The basic idea is whether the consumer would give less credence to the review or endorsement if some fact or connection was disclosed. The guidelines suggest that, when in doubt, disclose. Among the things that should be disclosed:

  • That you were paid to provide the endorsement or review
  • That you received a free copy/sample of the product or service
  • Your dad is the owner of the company or you have some other family connection
  • You work for the company
  • You own the company

What is Endorsement?

  • You post a photo of yourself wearing some designer apparel and you include a tag of the designer’s brand name — that is an “endorsement” if you are paid or have any material connection to the designer product marketer
  • You provide Facebook “likes” in exchange for a coupon or a free sample — the FTC considers this an “endorsement” but since there is no practical way to disclose why you are providing the “like”, the FTC is likely to focus on the company providing the coupon or free sample and whether that marketing practice is unfair or deceptive
  • You “like” or “share” or retweet your company’s or boss’ post or blog — this is an endorsement and you should disclose that you are an employee of the company

Guidelines, Not Regulations

The new FTC endorsement guidelines are not official FTC regulations, so as the FTC says, “there are no civil penalties associated with them.” However, any business that ignores these guidelines — particularly if they ignore them egregiously — could face FTC investigation on whether the business has engaged in unfair or deceptive practices under Section 5(a) of the Federal Trade Commission Act.

If your business has “comments” sections, testimonials or reviews, it may be wise to review company policies and procedures. If you ask your employees to “share” or “like” a company blog or article, it may be wise to rethink how that is done. It may be wise to review the employee handbook if internet protocol is covered.

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.

© Revision Legal | Attorney Advertising

Written by:

Revision Legal
Contact
more
less

Revision Legal on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.