Companies should revisit their policies for influencer programs for compliance with the updated guidance.
Online advertising and promotion first attracted the attention of the Federal Trademark Commission (FTC) in 2009. In that year, the FTC revised its longstanding Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides) to include guidance regarding online promotions and advertising. Recently, the FTC updated its guidance in the form of additions to the “What People Are Asking” section of the Endorsement Guides. As the FTC notes in its press release about the updated section, more than five years have passed since the initial release of the “What People Are Asking” section—“a lifetime in blog years.”
In the revised “What People Are Asking” section, the FTC provides answers to trending and topical questions that the Commission believes are on advertisers’ minds. Through this informal publication, the FTC reconfirms prior guidance and provides new guidance on a host of different topics, including endorsements that result from contests or employment, as well as the nature of the disclosure needed on newly popular formats.
Topics covered (and the FTC guidance provided) include:
The FTC also provides guidance about how to disclose relationships, while adhering to its prior advice that there is not a single form of disclosure that covers all of the Endorsement Guides; the disclosure required will be dictated by the actual circumstances of the endorsement.
Ultimately—regardless of the medium and its limitations—the FTC’s touchstone is transparency. There is a need to completely disclose what is received for any endorsement. If a product is provided for free and something more (such as a payment) is also made, it is not enough only to disclose the receipt of the product. Similarly, if a “sneak peak” of a product is provided and, in addition, payment for a review of the product is received, it is not sufficient only to disclose the “sneak peak.” Early access and payment both need to be disclosed. This full disclosure responsibility resides with the “poster” (blogger, reviewer, etc.), as well as with the company whose product is the subject of the endorsement.
Regarding videos, the FTC advises that a disclosure in the description of a video does not suffice. The disclosure needs to appear in the video itself—preferably at the beginning and repeated periodically throughout—since consumers can easily miss disclosures at the end of a video. Similarly, the FTC states that links to “Disclosures” on websites are not prominent enough to meet the standards outlined in the Endorsement Guides.
With respect to “tweets,” the FTC states that it does not consider the medium’s space limitations a bar to full disclosure. Even with its 140 character limitation, the FTC notes that effective disclosure may be made by beginning a sponsored tweet with “Ad:” or “#ad.” Thus, the use of three characters may suffice for compliance, depending on the accuracy of the disclosure.
Further, the FTC suggests that customers who are incentivized to post reviews about products through discounts or other means (even with incentives that may have only a subjective value) should be instructed to disclose the incentive they received. In all events, if there is a question about whether the incentive offered could affect the review, the best practice is to disclose the incentive.
The FTC’s “What People Are Asking” publication also reiterates that having a formal program that provides a policy for employees and others to assure compliance and identifies what is and is not allowed in terms of product endorsements is a critical element of compliance with the Endorsement Guides for any marketer.
Given this continued focus by the FTC on endorsements conveyed through online advertising, now is a good time for companies to review and update their social media policies and to confirm their compliance with the FTC’s updated guidance.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Carla B. Oakley