Written by: Michael A. Albert and Justin N. Fielkow
Whether you follow prominent TV personalities or famous athletes on Twitter, you’ve probably noticed that they sometimes begin their tweets with #ad. You can thank the Federal Trade Commission for that #disclosure.
The Federal Trade Commission (FTC) can bring charges and levy civil penalties against those engaging in “deceptive or misleading” advertising. An endorsement is deceptive or misleading if (1) the influencer is paid or given something of value by the advertiser to endorse the product; and (2) the influencer fails to clearly and conspicuously disclose the nature of the relationship between himself and the advertiser in said endorsement.
An act or practice is deceptive if it misleads a “significant minority” of consumers. So even if you tell the FTC that most of your Twitter followers understand which of your tweets are advertisements, chances are that explanation alone won’t cut it.
An endorsement, however, likely will only draw the FTC’s ire if an advertiser pays or gives something of value to the influencer for mentioning the product. In addition to monetary payments, other forms of compensation — such as free products, free entry into a contest, or even the opportunity to appear in a TV commercial — may be considered “something of value.” If an influencer has no relationship to the advertiser and merely wants to express his or her honest opinion, that’s likely fine. But when the influencer has a relationship with the advertiser, that’s when things get muddy.
HOW DO I MAKE SURE A PAID ENDORSEMENT IS NOT DECEPTIVE OR MISLEADING?
In a word: disclosure.
The FTC publishes its Endorsement Guides, which offer some guidance to influencers and advertisers on how to endorse products without violating the FTC’s basic “truth-in-advertising” rules. According to the FTC, the key is to disclose the endorser-advertiser relationship in the endorsement. In order to make sure an endorsement is not deceptive or misleading, endorsers and advertisers need to ask themselves a critical question: if a consumer knew the influencer was compensated for promoting the advertiser’s product, would that affect the consumer’s view of the influencer’s endorsement? If yes, then the relationship should be disclosed.
The FTC wants consumers to know if there is an ulterior motivation to an influencer’s product endorsement. Failing to disclose such a relationship to the consumer is what is considered deceptive and misleading and a violation of truth-in-advertising principles. The FTC takes its role in protecting consumers seriously. In fact, the FTC recently sent out more than 90 letters to various celebrities, athletes, marketers and social media influencers, reminding them of their responsibility to clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.
HOW DO I MAKE A PROPER DISCLOSURE?
There are no magic words to making a proper disclosure. All the FTC requires is that the disclosure be “clear and conspicuous” such that the reader “understands the reviewer’s relationship to the company whose products are being recommended.” On Twitter, for example, starting the tweet with #Ad, #PaidAd, #Promotion, #Sponsored, #SponsoredContest, or #SponsoredSweepstakes would likely be sufficient to a let a reader understand the nature of the influencer-advertiser relationship. For example, a tweet reading: “After a long work out, I drink Company X protein shakes to recover. #BrandSlogan #ad” would likely be a sufficient disclosure because the reader could likely understand the nature of the tweeter’s relationship with Company X. On the other hand, starting a tweet with #promo, #spon, or #sweeps would probably not be sufficient because the disclosure is unclear.
Additionally, the FTC provides a general guide on what it considers a “clear and conspicuous” disclosure:
- Easy to read font in a shade that stands out and is easily noticed.
- Clear and unambiguous language.
- For video ads, it must be on the screen long enough to be noticed and understood.
- For audio disclosures, it must be read in a tone and inflection that is easy to follow and communicated with words that are easy to understand.
Burying a disclosure in a footnote, in the middle of a long paragraph, or in a hyperlink is likely not clear and conspicuous, and could be considered deceptive or misleading.
WHAT ABOUT FACEBOOK “LIKES” OR TWITTER “RETWEETS”?
The FTC notes in its Endorsement Guides that an endorser cannot realistically make a disclosure when it simply “likes” a post or a tweet. Thus, at this time, failing to disclose an incentive received for simply “liking” a post or “retweeting” a tweet “might not be a problem.” Still, where possible, it is always safer to disclose the nature of the advertiser-endorser relationship.
ANYTHING ELSE AN ENDORSER/INFLUENCER SHOULD DISCLOSE?
In addition to disclosing the advertiser-endorser relationship, the endorser must also be truthful about her experience with an advertiser’s product. For instance, if an endorser has never actually used the product, the endorser can’t talk about her experience with that product. Likewise, if an endorser was paid to try a product but thought it was terrible, the endorser cannot then tell consumers that she thought it was terrific.
ARE ADVERTISERS RESPONSIBLE FOR WHAT THEIR ENDORSERS SAY ON SOCIAL MEDIA?
You bet. Per the FTC, “[y]our company is ultimately responsible for what others do on your behalf.” That includes deceptive or misleading advertising. The FTC recommends a four-step plan for making sure your advertising policies comply with federal law and regulation:
- Explain to members, influencers, and endorsers what they can (and can’t) say about the products – for example, a list of health-related claims about the product;
- Provide instructions to your endorsers/influencers on their responsibilities to disclose their connection to your business;
- Periodically check what your endorsers/influencers are saying; and
- Follow up on questionable practices.
The FTC’s evaluation of deceptive and misleading advertising is conducted on a case-by-case basis, and the interpretation and application of FTC regulations can be incredibly fact specific. Both advertisers and endorsers individually could be at risk of prosecution for deceptive and misleading advertising. As such, whether you’re an advertiser or endorser, it would be wise to consult with an attorney when implementing or participating in a paid endorsement marketing and media strategy.