Editor’s Note: More than 93 million Americans—80% of Internet users—have searched online for a health-related topic.1 In response, healthcare companies are expected to spend $1 billion online over the next five years.2 Increasingly, healthcare marketers are implementing new approaches—such as influencer marketing and native advertising—to connect more effectively with their audiences.
As powerful as these new marketing options are, they also can pose serious pitfalls. Although they may not resemble traditional advertising—and they may not be created by the healthcare organization itself—influencer and content marketing are still subject to Section 5 of the Federal Trade Commission (FTC) Act prohibiting “unfair or deceptive acts or practices.” In a recent webinar, Manatt Health revealed how healthcare organizations can safely navigate today’s dramatically changing healthcare environment. In part 1 of our article summarizing the webinar, below, we examine the Federal Trade Commission’s (FTC) guidance on endorsements and native advertising, as well as recent regulatory developments. Watch for part 2 of our summary in July, examining key intellectual property (IP) issues in content marketing, Health Insurance Portability and Accountability Act (HIPAA) considerations and best compliance practices. Click here to view the full webinar free on demand—and here to download a free copy of the presentation.
The FTC’s Endorsement Guides: Disclosure
The FTC Endorsement Guides establish the rules around what companies can and cannot do concerning testimonials in advertising, based on the FTC’s truth in advertising principles. The Guides also provide concrete examples to follow, including many that are specific to the healthcare industry.
The FTC defines endorsement as “any advertising message (including verbal statements, demonstrations, depictions of a name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings or experiences of a party, other than the sponsoring advertiser....” This includes a broad range of activities people do every day. For example, if someone joins a concierge medical practice and posts a picture of himself or herself at the doctor’s office with a link to the practice or tags the practice in a photo, those actions can be considered endorsements.
Just the act of posting the endorsement doesn’t trigger any FTC rules. If there is any kind of material connection between the endorser and the advertiser, however, it must be disclosed by both parties. Most people understand that if the advertiser paid the endorser, that payment would need to be disclosed. The rule, however, goes beyond just direct payment to include any material connection.
Section 255.5 states that “[w]hen there exists a connection between the endorser and the seller of an 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 a connection must be fully disclosed….” There are examples provided in the Guides and—particularly for social media—in the accompanying FAQs. Key examples of a material connection include that:
The endorser receives a service or product for free or at a reduced cost, free travel, or monetary compensation.
The endorser has a family or employment relationship with the advertiser, such as a physician who endorses a provider organization of which he or she is a member.
Following is an actual example from Section 255.5 illustrating the type of information, beyond just monetary payment, that needs to be disclosed about the material connection between an advertiser and an endorser:
An ad for an anti-snoring product features a physician who says that he has seen dozens of products come on the market over the years and, in his opinion, this is the best. Consumers would expect that physician to be reasonably compensated for his appearance in the ad. Consumers are unlikely, however, to expect that the physician receives a percentage of gross product sales or that he owns part of the company, and either of those facts would materially affect the credibility that consumers attach to the endorsement. Accordingly, the advertisement should clearly and conspicuously disclose such a connection between the company and the physician.
FTC Endorsement Guides: Honesty
The FTC Endorsement Guides state that endorsements and testimonials must reflect the honest opinions, findings, beliefs or experiences of the endorser. If an ad represents that the endorser uses the endorsed product, he or she must have been a bona fide user at the time the endorsement was given. If a person represents himself or herself as a patient at a hospital, for example, he or she must, in fact, be a patient.
The advertiser has the responsibility to ensure that any claim made in a consumer endorsement is fully substantiated, just as if the advertiser made the claim. In addition, an endorsement relating to the experience of one or more consumers must be representative of what consumers will typically achieve. Otherwise, the typical or generally expected performance must be disclosed conspicuously.
FTC Endorsement Guides: Substantiation
It is critical for healthcare marketers making a claim about a treatment on a website, post or blog to be sure that the claim is clinically proven. Advertisers are held liable for any false or unsubstantiated statements made in endorsements. In section 255.1 (d), the FTC Endorsement Guides state, “Advertisers are subject to liability for false or unsubstantiated statements made through endorsements…. Endorsers may be liable for statements made in the course of their endorsement.”
The Guides include the following example to illustrate the liability issues for both the advertiser and the endorser when ads include unsubstantiated claims:
An ad for an acne treatment features a dermatologist who claims that the product is “clinically proven” to work. Before giving the endorsement, she received a write up of the clinical study in question, which indicates flaws in the design and conduct of the study that are so serious that they preclude any conclusions about the efficacy of the product. The dermatologist is subject to liability for the false statements she made in the advertisement. The advertiser is also liable for misrepresentations made through the endorsement.
Social media adds to the complexity. If a consumer endorses a provider on his or her own Facebook page without receiving any payment from the provider, there is no material connection and there are no issues of disclosure or substantiation. If the provider decides to feature the positive review on its own website, however, it becomes a type of advertising—and the advertiser becomes responsible for ensuring the statements are both fully substantiated and typical of the experience other consumers would have. That responsibility exists even though the provider did not pay the consumer for the review.
FTC Endorsement Guides: Experts
The Endorsement Guides define an expert as “an individual, group, or institution possessing, as a result of experience, study or training, knowledge of a particular subject, which knowledge is superior to what ordinary individuals generally require.” If an ad represents, even by implication, that the endorser is an expert with respect to the endorsement message, then the endorser must actually be a qualified expert.
In healthcare, physicians would be considered experts. It is critical to remember, however, that being a physician does not make someone an expert in all areas of medicine from an FTC standpoint. The example below from the Guides illustrates how just using the term “doctor” can be considered misleading:
An endorser of a hearing aid is simply referred to as “Doctor” during the course of an advertisement. The ad likely implies that the endorser is a medical doctor with substantial experience in the area of hearing. If the endorser is not a medical doctor with substantial experience in audiology, the endorsement would likely be deceptive. A non-medical “doctor” (e.g., an individual with a Ph.D. in exercise physiology) or a physician without substantial experience in the area of hearing can endorse the product, but if the endorser is referred to as “doctor,” the advertisement must make clear the nature and limit of the endorser’s expertise.
As this example illustrates, when using physicians or other healthcare practitioners as endorsers, it is critical to ensure they have expertise specific to the relevant specialty or therapeutic area. If the endorser does not have the appropriate credentials to make him or her an expert, that information must be clearly disclosed in the advertisement.
The FTC’s Native Advertising Guide and Enforcement Policy Statement
According to the FTC Native Advertising Guide, native advertising is “content that bears a similarity to the news, feature articles, product reviews, entertainment, and other material that surrounds it online.” The key is that the material has to be advertising content to be defined as native advertising. Not all content marketing or all marketing funded by an advertiser would be considered native advertising. To be considered native advertising, the content must contain an advertising or promotional message. Examples of native advertising include an advertiser’s blog, advertorials, and documentary-style content that features an advertiser or its products or services. White papers may or may not be categorized as native advertising, depending on whether they include a promotional message.
There are two FTC documents that provide guidance on native advertising—Native Advertising: A Guide for Businesses and .com Disclosures. The FTC also has issued an “Enforcement Policy Statement on Deceptively Formatted Advertisements.” The guidance came out in 2016 at a time when there was a lot of discussion around the increasing amount of content marketing that was being used to advertise—but that wasn’t clearly marked as advertising. The FTC wanted to make sure that advertisers were not presenting advertising content as anything but advertising.
Native Advertising: When and How to Disclose
The FTC provides clear guidelines on making disclosures in the digital world. According to the FTC, an ad or promotional message should not imply to consumers that the content is anything other than an ad. If an advertiser pays for an article that includes positive features of the advertiser’s product—even if the article is based on research—the advertiser must disclose that the article contains commercial content before a consumer clicks to read it. Unless ads are obviously commercial in nature so that consumers would not be misled, ads should be labeled as ads.
The FTC primarily considers the net impression that content has on readers or viewers. If an ad is clearly an ad—such as in an obvious display ad—there is no need to disclose that it is commercial content. If, however, the ad can give the impression that it is something other than advertising—such as an article on health and wellness on a content website—then the advertiser must disclose that the content is promotional.
Advertisers cannot use “deceptive door openers” to induce consumers to view advertising content. Deceptive door openers are thumbnail images, short descriptions, links or other lead-ins to content that disguise the content’s commercial nature. The FTC does not want people to click on links without realizing they are connecting to promotional content.
Once an advertiser decides if it needs to disclose that content is commercial, it needs to consider how best to make that disclosure. Advertising disclosures must comply with specific FTC guidelines. Disclosures must be in clear and unambiguous language, in a font and color that are easy to read, and in a shade that stands out from the background. For a video ad, the disclosure must be on the screen long enough to be noticed, read and understood. Audio disclosures must be read at a cadence that’s easy for consumers to follow and use words that consumers can easily understand. Finally, disclosures must appear clearly and prominently on all devices and platforms on which they might be viewed.
Recent Regulatory Developments
There have been some key regulatory developments around influencer marketing over the past couple of years:
In 2017, the FTC settled charges with Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, two social media influencers in the online gaming industry, for deceptive endorsement of the online gambling service CSGO Lottos, including failure to disclose their joint ownership of the company. As discussed above, any relationship with an advertiser—whether as a paid endorser, an employee or an owner—must be disclosed.
In April 2017, FTC staff sent out more than 90 letters to influencers and advertisers stating that influencers should clearly and conspicuously disclose their relationship to brands in their social media posts. Several months later, the FTC sent follow-up warnings to 21 of the influencers previously contacted. Before those letters, it was commonly thought that the FTC would go after advertisers and not necessarily influencers. By sending the letters, however, the FTC made a clear statement that it holds both parties—advertisers and influencers—responsible for disclosing their relationship.
In March 2019, Truth In Advertising (TINA) filed a formal complaint with the FTC, having collected over 1,400 examples of influencers promoting more than 500 companies. Even with all the guidance that the FTC has provided, it still has taken enforcement actions against several companies for violating the disclosure guidelines. TINA has been monitoring to ensure compliance with disclosure requirements.
In February 2019, the FTC entered into two consent orders with Creaxion Corporation and Inside Publications. Creaxion partnered with Inside Gymnastics magazine to obtain athlete endorsers and to otherwise promote Creaxion’s mosquito repellant. The FTC charges included the failure of the athlete influencers to disclose their paid relationship with Creaxion, as well as publication of paid ads in Inside Gymnastics that were disguised as articles. This is a clear example of the FTC holding companies responsible for violating both the Endorsement Guides and the Guide on Native Advertising.
Note: Watch for part 2 of our summary in July, covering key IP issues in content marketing, Health Insurance Portability and Accountability Act (HIPAA) considerations, and best compliance practices.
1 Pew Internet and American Life Project.
2 Juniper Research.