The Federal Trade Commission (“FTC” or the “Commission”) has released its updated Endorsement Guides for 2023. The FTC Guidelines “at their core, reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading.”
The FTC Guidelines concerning the use of endorsements and testimonials in advertising require that “[i]f there’s a connection between an endorser and the marketer that a significant minority of consumers wouldn’t expect and it would affect how they evaluate the endorsement, that connection should be disclosed clearly and conspicuously.”
While the FTC Guidelines themselves have no legal force, practices inconsistent with the Guidelines may result in law enforcement action under Section 5 of the FTC Act.
Responsibilities For Those Covered by the FTC Guidelines
The FTC Guidelines make clear that they apply to endorsers, influencers, advertisers, marketing agencies, bloggers, and certain everyday people. Marketing agencies and advertisers are responsible for policing their influencers and are required to have “reasonable” policies and procedures in place to train and monitor members of their network.
The Commission’s rules apply regardless of what platform and what type of media is used. All social media platforms are, therefore, covered, including Facebook, Instagram, Twitter, TikTok, Snapchat, LinkedIn, and YouTube.
Examples of When A Disclosure is Required
- A prominent disclosure is required if the poster is paid or given something of value (free products, free trips, perks, opportunity to enter giveaways, etc.) in exchange for mentioning a product, sharing a product, or sharing a product link. It does not matter whether the subject poster says positive or negative things about the product.
- A prominent disclosure is required if a viewer’s opinion would be impacted by knowing that the poster received something in exchange for the post.
- A prominent disclosure is required if an endorser posts a negative review about the competitor of a brand that an endorser is paid to endorse or work with.
- A prominent disclosure is required on all social media platforms on which an endorser posts about a product, even if the endorser is only paid to post on specific platforms.
Examples of When A Disclosure is NOT Required
- No disclosure is required if the endorser mentions or posts about a product that he/she paid for him/herself.
- No disclosure is required if a brand is answering administrative questions about a product in the comments section of a post that contains an adequate disclosure.
- No disclosure is required if the viewer’s opinion would not change if he/she knew about the poster’s relationship with the brand.
- No disclosure is required if an endorser posts about one company, while coincidentally using the product of another company (wearing an item of clothing, e.g.). In this instance, a disclosure is not required for the product that is not being featured or tagged in the post.
- No disclosure is required if while on a sponsored trip, an endorser posts about a product or store that is unrelated to the company that sponsored him/her.
Rules About Reviews
- A brand may ask a customer about his/her experience with a product and feature the comment in its advertisements if the customer had no reason to expect compensation or other benefit at the time that he/she provided the review.
- A brand may not selectively ask certain customers to provide reviews knowing that those customers are more likely than not to provide positive reviews. Additionally, businesses cannot organize reviews to appear in order of best reviews to worst reviews.
- A brand may not use endorsements to tout results that do not reflect the typical consumer experience without prominently disclosing what the typical consumer experience is.
What Constitutes A Sufficient Disclosure According to the FTC Guidelines?
The FTC does not set forth specific requirements for what constitutes a sufficient disclosure. Nor is there special wording required. However, the FTC Guidelines do provide the following disclosure framework:
- The disclosure must be in words that are easy to understand.
- Disclosures may not be misleading and must contain only truthful information.
- Posters need not disclose the dollar amount of how much they were paid to endorse.
- A disclosure is required with each new post, blog, and video.
- The disclosure should appear in the beginning and/or middle of a post, not at the end.
- A disclosure cannot appear in the comments section of a post.
FTC Crackdown Continues
As social media continues to grow by leaps and bounds, so does the rise in state and federal regulatory investigations. While the rules apply to everyone, businesses that hire others to post about their brands must pay special attention to the FTC Guidelines. Faced with the prospect of significant fines and penalties for regulatory violations, companies and social media influencers should retain counsel that can properly advise them on how to comply with ever-changing rules and regulations.
If you are interested in learning more about this topic or need to review your advertising practices and procedures, please email us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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