The Federal Trade Commission (FTC) recently issued an updated version of its Endorsement Guides, which includes important information about the FTC’s current thoughts on when and how material connections between brands and endorsers should be disclosed. In this post, I’ll summarize some of the key points from the FTC’s guidance on when disclosures should be made. Check back tomorrow for more information about how an appropriate disclosure should be made online and whether the FTC is paying attention to influencers (hint – the answer is yes).
But first, here’s some background information to help frame the discussion:
As marketers and influencers are undoubtedly aware, the FTC regulates advertising, sponsorships and endorsements across various mediums, including online and on social media. Basically, if you’re compensated in some way in exchange for promoting a brand, this applies to you. For more information on some of the legal issues associated with endorsements and sponsorships online, check out my previous post on the Lancaster Law Blog, FTC Cracking Down on Social Media Sponsorships.
The goal of an appropriate disclosure is to avoid deceptive advertising practices and promote truth-in-advertising, so that if someone is compensated in some way for a review or endorsement of a product or service, the general public will be made aware of that fact so they can properly evaluate the review or endorsement.
The updated Endorsement Guides weigh in on a number of common issues involving influencers that I see every day on social media. As an influencer or brand, you should review and understand the Endorsement Guide in its entirety, but here is a summary of a few key points relating to when a disclosure is required:
If you are given something of value in exchange for mentioning a product or brand, FTC rules apply to you, and you must disclose the relationship.
That means if you are paid, are given a free (or discounted) product, or even merely given a $1.00 off coupon or entered into a contest in exchange for mentioning the brand name, you must disclose the relationship with the brand. If you are given a discount code and receive a financial payment or discounted products as a result of others using that code, the relationship must be disclosed.
Even if you believe your review or endorsement of a product is not influenced by the fact that you were given something of value, you must still disclose.
From the FTC’s perspective, your opinion is immaterial – it’s whether your audience would believe that what you say about the product may be influenced by receiving something of value.
If you have a financial connection to a company, you must disclose the relationship when making statements about the company’s products.
The FTC gives the example of being hired as a “brand ambassador” to promote an upcoming conference through social media for only five hours per week. If someone reaches out to you online in your off time and asks you about the conference and you respond, you must still disclose the financial relationship.
There’s a similar analysis if you are an owner of a company, if you deceptively endorse a product or service without disclosing the relationship, you will likely run afoul of FTC law that requires disclosure of a material connection. The FTC recently pursued its first law enforcement action against individual online influencers. In that case, the owners of an online gambling site deceptively endorsed the site through their YouTube channels.
Are you working with brands to help promote products or services online? If so, make sure you understand when a disclosure is appropriate and if you have questions about how these rules apply to you, please contact an attorney who can provide guidance for your unique circumstances.