FTC Guidelines & Social Media Advertising

Susan D. Brienza, Esq., Ryley Carlock & Applewhite 

Most people believe that for the good of the marketplace and fair commerce, we all need truth in advertising. The Federal Trade Commission (FTC) is our federal agency dedicated to consumer protection-to shield the American consumer from false, misleading, or unsupported claims. Many promotional claims are in the form of Endorsements-including expert or celebrity endorsements-- including many of them paid. How can truth in advertising be safeguarded on the Internet, with all sorts of bloggers writing rave reviews for $5?

Because this is an important aspect of advertising, the FTC prepares a Guide solely on Endorsements, and especially recommending disclaimers or disclosures for the consumer that are necessary to prevent the Endorsement from being misleading or deceptive. The FTC certainly realized a few years ago that social media advertising and promotional networking had exploded. Since the last Guide on Endorsements was in 1980, in June 2010, FTC updated this Guide, to include: Facebook, blogs, Twitter, social networking.

One easy general rule or guideline is that the same law and legal principles apply, regardless of the medium:  

1. All endorsements must be truthful, accurate, not misleading.
2. If there is a connection between the endorser and the marketer of the product that would affect how the buyer would evaluate the endorsement, then it should be disclosed.
3.  If the advertiser has no proof that the endorser’s experience represents what the average consumer will achieve by using the product, then the ad must disclose the generally expected results in those circumstances.  Note:  “Your experience my vary.” is Not an effective disclaimer.
4.  All disclosures and disclaimers must be clear and conspicuous (not merely readable fine print or what the FTC calls “mouseprint”!).  

Examples from Social Media Advertising:

1. If you read a glowing review of a resort hotel on someone’s blog, you would want to know if that blogger were an employee of the hotel owner, or if the blogger had just been given a 2-week free vacation at that hotel.
2. If most consumers know that a particular blogger is a sales rep for a company, or has some other financial relationship with the company, is there any duty to disclose the affiliation?  Yes, even though industry insiders are familiar with the affiliation.
3. If a book or a movie is reviewed in a personal blog or on a social networking page, and if there is some relationship between the reviewer and the advertiser, the reader will need some disclosure of that relationship to decide how to weigh the positive review. 
4. If a famous athlete is well-known as a spokesperson for a particular sports product, and he has thousands of followers on Twitter, he does not necessarily need to disclose he is paid every time he tweets about the product—because this is common knowledge.

What about enforcement of advertising violations on social media promotions?  First, there is no fine for not complying with an FTC guide.  But social media advertisers can be liable for violations of the Federal Trade Commission Act, and various advertising regulations.  Note that it is the advertiser/ the marketer who is liable, not the blogger or the Facebook writer. The FTC does not monitor bloggers, but does respond to consumer and industry complaints about violations—investigating them on a case by case basis.  There have been a few cases in the past year involving social media advertising.  So stay tuned.

Other sources of further information:

• Endorsement Guide in the June 2010 Federal Register, with 35 examples
• Summary of the Guide in the June 2010 pamphlet “The FTC’s Revised Endorsement Guides:  What People are Asking,” in the series called FTC FACTS for Business.
• Video clips of examples on www.ftc.gov
• Send your specific questions to endorsements@ftc.gov.
• Call toll-free 1-877-FTC-HELP (1-877-382-4357)

Susan will be providing future articles on industry-related topics and legislature. 

Disclaimer: This article is not meant, and should not be construed, as a legal opinion or as legal advice, but rather is intended to provide general information and some examples as to one aspect of FTC law.