FTC Defense Attorney Alert: FTC Updates Guidance to Influencers and Marketers
As part of its crackdown on social media influencers, the Federal Trade Commission has recently updated its version of The FTC’s Endorsement Guides: What People are Asking, a staff guidance document that answers frequently asked questions. Previously revised in 2015, the newly updated version includes more than 20 additional questions and answers addressing specific questions social media influencers and marketers may have about whether and how to disclose material connections in their posts.
The new information covers a range of topics, including tags in pictures, Instagram disclosures, Snapchat disclosures, obligations of foreign influencers, disclosure of free travel, whether a disclosure must be at the beginning of a post, and the adequacy of various disclosures like “#ambassador.”
- Disclose material connections between advertisers and endorsers. If here is a connection between an endorser and the marketer that consumers would not expect and it would affect how consumers evaluate the endorsement, that connection should be disclosed.
- Endorsements must be honest and not misleading.
- An endorsement must reflect the honest opinion of the endorser and cannot be used to make a claim that the product’s marketer could not legally make.
- For ads that feature endorsements from people who achieved exceptional, or even above average results, the advertiser must possess proof that the endorser’s experience represents what people will generally achieve using the product as described in the ad or the ad featuring that endorser must make clear to the audience what the generally expected results are. Testimonials claiming specific results usually will be interpreted to mean that the endorser’s experience reflects what others can also expect. Statements like “Results not typical” or “Individual results may vary” won’t change that interpretation.
- The Endorsement Guides apply to social media.
- It is not necessarily common knowledge that bloggers are paid to tout products or that if you click a link on a blogger’s site to buy a product, the blogger will get a commission. Material connections between some bloggers and advertisers may be apparent to industry insiders, but not to everyone else who reads a particular blog. Under the law, an act or practice is deceptive if it misleads “a significant minority” of consumers. Even if some readers are aware of these deals, many readers are not. That is why disclosure is important.
- The FTC does not generally monitor bloggers. However, if concerns about possible violations of the FTC Act come to the Commission’s attention, it will evaluate them case by case. If law enforcement becomes necessary, the agency’s focus usually will be on advertisers or their ad agencies and public relations firms. Action against an individual endorser, however, might be appropriate in certain circumstances, such as if the endorser has continued to fail to make required disclosures despite warnings.
- The FTC conducts investigations and brings cases involving endorsements made on behalf of an advertiser under Section 5 of the FTC Act, which generally prohibits deceptive advertising. The Guides are intended to give insight into what the FTC thinks about various marketing activities involving endorsements and how Section 5 might apply to those activities.
- The Guides themselves don’t have the force of law. However, practices inconsistent with the Guides may result in law enforcement actions alleging violations of the FTC Act. Law enforcement actions can result in orders requiring the defendants in the case to give up money they received from their violations and to abide by various requirements in the future.
- If you mention a product you paid for yourself, there is not an issue. Nor is it an issue if you get the product for free because a store is giving out free samples to its customers. The FTC is only concerned about endorsements that are made on behalf of a sponsoring advertiser. For example, an endorsement would be covered by the FTC Act if an advertiser – or someone working for an advertiser – pays you or gives you something of value to mention a product. If you receive free products or other perks with the expectation that you will promote or discuss the advertiser’s products in your blog, you are covered. Bloggers who are part of network marketing programs, where they sign-up to receive free product samples in exchange for writing about them, also are covered.
- The question you need to ask is whether knowing about a material connection, gift or incentive would affect the weight or credibility readers give the recommendation.
- Even an incentive with no financial value might affect the credibility of an endorsement and would need to be disclosed.
- Some platforms – like Facebook’s “like” buttons – do not allow you to make a disclosure. Advertisers should not encourage endorsements using features that do not allow for clear and conspicuous disclosures. Whether the Commission may take action would depend on the overall impression, including whether consumers take “likes” to be material in their decision to patronize a business or buy a product.
- There is no special wording that you have to use to disclose a material connection or that you were given something for your endorsement. The point is to give readers the essential information.
- A single disclosure on your home page that many of the products you discuss on the site are provided to you free by manufacturers does not really do it because people visiting your site might read individual reviews or watch individual videos without seeing the disclosure on your home page.
- I you upload a video to YouTube and that video requires a disclosure, you cannot just put the disclosure in the description that you upload together with the video. Consumers can easily miss disclosures in the video description. Many people might watch the video without even seeing the description page, and those who do might not read the disclosure. The disclosure has the most chance of being clear and prominent if it is included in the video itself. That is not to say that you could not have disclosures in both the video and the description.
- When people view Instagram streams on most smartphones, descriptions more than four lines long are truncated, with only the first three lines displayed. To see the rest, you have to click “more.” If an Instagram post makes an endorsement through the picture or the first three lines of the description, any required disclosure should be presented without having to click “more.”
- A button that says DISCLOSURE, LEGAL, or something like that which links to a full disclosure is not sufficient. It does not convey the importance, nature, and relevance of the information to which it leads and it is likely that many consumers will not click on it and therefore will miss necessary disclosures. The disclosures the FTC is talking about are brief and the agency believes that there is no space-related reason to use a hyperlink to provide access to them.
- If the social media platform you use has a built-in feature that allows you to disclose paid endorsements, that may not necessarily be sufficient. Just because a platform offers a feature like that is no guarantee it is an effective way for influencers to disclose their material connection to a brand. It depends on an evaluation of whether the tool clearly and conspicuously discloses the relevant connection. One factor the FTC will look to is placement. The disclosure should catch users’ attention and be placed where they are not likely to miss it. A key consideration is how users view the screen when using a particular platform. Disclosures should use a simple-to-read font with a contrasting background that makes it stand out. They should be worded in a way that is understandable to the ordinary reader. The big-picture point is that the ultimate responsibility for clearly disclosing a material connection rests with the influencer and the brand – not the platform.
- You can superimpose a disclosure on Snapchat or Instagram Stories just as you can superimpose any other words over the images on those platforms. The disclosure should be easy to notice and read in the time that your followers have to look at the image. In determining whether your disclosure passes muster, factors you should consider include how much time you give your followers to look at the image, how much competing text there is to read, how large the disclosure is, and how well it contrasts against the image. You might want to have a solid background behind the disclosure. Keep in mind that if your post includes video and you include an audio disclosure, many users of those platforms watch videos without sound. So they will not hear an audio-only disclosure. Other general disclosure guidance would also apply.
- The FTC is not mandating the specific wording of disclosures, including on Twitter. However, the same general principle – that people get the information they need to evaluate sponsored statements – applies across the board, regardless of the advertising medium. The words “Sponsored” and “Promotion” use only 9 characters. “Paid ad” only uses 7 characters. Starting a tweet with “Ad:” or “#ad” – which takes only 3 characters – would likely be effective.
- The FTC does not dictate where you have to place the “#ad.” What the FTC will look at is whether it is easily noticed and understood. So, although the FTC is not saying it has to be at the beginning, it is less likely to be effective in the middle or at the end. Indeed, if #ad is mixed in with links or other hashtags at the end, some readers may just skip over all of that stuff. Disclosures need to be easily noticed and understood.
- The use of “#ambassador” is ambiguous and confusing. Many consumers are unlikely to know what it means. By contrast, “#XYZ-Ambassador” will likely be more understandable (where XYZ is a brand name). However, even if the language is understandable, a disclosure also must be prominent so it will be noticed and read.
- The Guides say that disclosures have to be clear and conspicuous. To make a disclosure “clear and conspicuous,” advertisers should use plain and unambiguous language and make the disclosure stand out. Consumers should be able to notice the disclosure easily. They should not have to look for it. In general, disclosures should be: close to the claims to which they relate; in a font that is easy to read; in a shade that stands out against the background; for video ads, on the screen long enough to be noticed, read, and understood; and for audio disclosures, read at a cadence that is easy for consumers to follow and in words consumers will understand.
- A disclosure that is made in both audio and video is more likely to be noticed by consumers. Disclosures should not be hidden or buried in footnotes, in blocks of text people are not likely to read, or in hyperlinks. If disclosures are hard to find, tough to understand, fleeting, or buried in unrelated details, or if other elements in the ad or message obscure or distract from the disclosures, they do not meet the “clear and conspicuous” standard. With respect to online disclosures, see the FTC’s Dot Com Disclosure Guidance.
- A disclosure should be placed where it easily catches consumers’ attention and is difficult to miss. Consumers may miss a disclosure at the bottom of a blog or the bottom of a page. A disclosure at the very top of the page, outside of the blog, might also be overlooked by consumers. A disclosure is more likely to be seen if it’s very close to, or part of, the endorsement to which it relates.
- You cannot talk about your experience with a product if you have not tried it. If you were paid to try a product and you thought it was terrible, you can’t say it is terrific.
- You cannot make claims about a product that would require proof the advertiser does not have.
- Advertisers need to have reasonable programs in place to train and monitor members of their network. The scope of the program depends on the risk that deceptive practices by network participants could cause consumer harm – either physical injury or financial loss. Here are some elements every program should include: given an advertiser’s responsibility for substantiating objective product claims, explain to members of your network what they can (and cannot) say about the products – for example, a list of the health claims they can make for your products, along with instructions not to go beyond those claims; instruct members of the network on their responsibilities for disclosing their connections to you; periodically search for what your people are saying; and follow up if you find questionable practices.
- It is unrealistic to expect you to be aware of every single statement made by a member of your network. But it is up to you to make a reasonable effort to know what participants in your network are saying. That said, it is unlikely that the activity of a rogue blogger would be the basis of a law enforcement action if your company has a reasonable training, monitoring and compliance program in place.
- Your company is ultimately responsible for what others do on your behalf. You should make sure your public relations firm has an appropriate program in place to train and monitor members of its social media network. Ask for regular reports confirming that the program is operating properly and monitor the network periodically. Delegating part of your promotional program to an outside entity doesn’t relieve you of responsibility under the FTC Act.
- If you recruit, pay and direct “influencers” for marketers who want them to endorse their products, like an advertiser, your company needs to have reasonable programs in place to train and monitor the influencers you pay and direct.
- If you are an affiliate marketer with links to an online retailer on your website, you must disclose your relationship to the retailer clearly and conspicuously on your site so readers can decide how much weight to give your endorsement.
- In some instances – like when the affiliate link is embedded in your product review – a single disclosure may be adequate. When the review has a clear and conspicuous disclosure of your relationship and the reader can see both the review containing that disclosure and the link at the same time, readers have the information they need. You could say something like, “I get commissions for purchases made through links in this post.” But if the product review containing the disclosure and the link are separated, readers may not make the connection.
- As for where to place a disclosure, the guiding principle is that it has to be clear and conspicuous. The closer it is to your recommendation, the better. Putting disclosures in obscure places – for example, buried on an ABOUT US or GENERAL INFO page, behind a poorly labeled hyperlink or in a “terms of service” agreement – is not good enough. Neither is placing it below your review or below the link to the online retailer so readers would have to keep scrolling after they finish reading. Consumers should be able to notice the disclosure easily. They should not have to hunt for it.
- An “affiliate link” by itself is not an adequate disclosure. Nor is a “buy now” button. Consumers might not understand that “affiliate link” means that the person placing the link is getting paid for purchases through the link.
- The FTC wants you to be open and transparent with your readers.
The foregoing are just a handful of issues set forth in the Guides. The Guides have numerous examples that discuss various endorsement and disclosure scenarios. Please review them carefully and consult with an advertising lawyer if you are a social media influencer or marketer with questions about whether and how to disclose material connections.
Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.
ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.