Ftc guidelines


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Pubcon session on FTC Guidelines. This was Pubcon Vegas 2010

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Ftc guidelines

  1. 1. Legal Concerns in Social Media Presented by: David Mink www.dreamsystemsmedia.com
  2. 2. Legal Concerns in Social Media FTC Guidelines: Endorsements & Testimonials
  3. 3. 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
  4. 4. 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)
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. Who is Liable?
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. Best Practices for FTC Compliance 1. Become familiar with what your online marketing department or third party advertising and PR agencies are doing in relation to social media marketing 2. If “bloggers” are being incentivized, then the co. should institute and document a process for advising bloggers about their responsibilities (disclosure, substantiated claims, etc.) 3. Periodic monitoring of the resulting posts (tweets, facebook updates, etc.) to ensure compliance with the FTC endorsement guidelines 4. *If relationships with bloggers are being managed through a 3rd party agency, you should consider implementing a written contract that specifically addresses each party’s rights, obligations, etc.
  16. 16. 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)