Ftc guidelines

Legal Concerns in Social Media Presented by: David Mink www.dreamsystemsmedia.com

Legal Concerns in Social Media
FTC Guidelines: Endorsements & Testimonials

Truth In Advertising
Requirement that advertisements not make misleading, false, or deceptive claims.
Applies to advertising in any media
Mandated by law
State Laws
U.S. Federal Law – Lanham Act
World Wide – Every Developed Country

Truth in Advertising
What is advertising?
Any communication by a commercial entity made for the purpose of furthering its cause is considered commercial speech and therefore subject to truth in advertising
Did you know?
As an advertiser you are actually responsible for any claim or belief that a consumer takes away from your ad (literal or implied)

FTC Guidelines for Testimonials and Endorsements
Effective as of Dec. 1, 2009
First update to guidelines since 1980
What spurned this update?
Largely, the rise of social media use and the role the Internet plays in people’s buying decisions

Consumer Protection
The FTC cites people’s use of the Internet for product and service-provider research as the catalyst for the update… consumer protection is the goal of the update
Therefore, the FTC believes the consumer should be aware of any material connection between the endorser and the advertiser that would affect the credibility of the testimonial

What Was The FTC Concerned About Regarding Social Media?
With social media “you can’t always recognize an advertisement just by looking at it.”
Mary Engle
Associate Director
Bureau of Consumer Protection

When Do The Guidelines Apply?
Guidelines apply to social media activity if the social media endorser (blogger, tweeter, etc.) is being sponsored or incentivized
How do they determine if the social media user is “being sponsored”?
Facts and Circumstances Test

Primary Responsibilities of the Advertiser
Advertisers are responsible for advising bloggers of their responsibilities
Advertiser should monitor the statements made and make sure they are substantiated
Advertiser should establish procedures to guide endorsers into making necessary “clear and conspicuous” disclosures

Primary Responsibilities of Endorser
Truth in advertising – claims must be substantiated
Must disclose the “material connection” between the endorser and the advertiser
Network marketing program participants are likely to be considered as having a material connection

Who is Liable?

Social Media Example: Skin Care Advertiser
Hypothetical
Skin care product advertiser participates in a blog advertising service
Advertiser requests that bloggers try a new body lotion and write a review
Blogger endorses the lotion, claiming that it cures eczema
Advertiser makes no specific claims (regarding eczema, etc.) and blogger does not ask advertiser for substantiation
What do the new guidelines say?
Outcome
Both parties are subject to liability for the misleading or unsubstantiated representations made by the blogger’s endorsement
Blogger could also be liable for failing to disclose the material connection to the advertiser

Social Media Example: Gamer
Hypothetical
College student and video game expert has a video game blog
Console manufacturer sends him a free system and asks him to write a review (as they have done in the past)
He actually uses the system and writes a favorable review (what if this had been a negative review?)
What do the new guidelines say?
Outcome
Blogger should “clearly and conspicuously” disclose that he received the system for free
Manufacturer should advise the blogger to disclose the connection
Manufacturer should provide guidelines for the blogger, and have a procedure for monitoring the post for compliance

What Does This Mean to Social Media Users
Only applies if you are being paid or receiving products (i.e. being sponsored or incentivized)
Be straight forward and upfront about your connection/relationship to advertisers
FTC has indicated that its primary enforcement focus will be on advertisers rather than bloggers

Best Practices for FTC Compliance
Become familiar with what your online marketing department or third party advertising and PR agencies are doing in relation to social media marketing
If “bloggers” are being incentivized, then the co. should institute and document a process for advising bloggers about their responsibilities (disclosure, substantiated claims, etc.)
Periodic monitoring of the resulting posts (tweets, facebook updates, etc.) to ensure compliance with the FTC endorsement guidelines
*If relationships with bloggers are being managed through a 3 rd party agency, you should consider implementing a written contract that specifically addresses each party’s rights, obligations, etc.

Other Considerations
Sound too hard? Consider implementing policies that prohibit incentivizing social media endorsements
Consider a company wide social media and blogging policy (according to the guides company employees must also disclose relationships)

Ftc guidelines

by Dream Systems Media on Nov 15, 2010

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