This document discusses legal concerns regarding social media use and advertising. It summarizes FTC guidelines on endorsements and testimonials which were updated in 2009 due to the rise of social media. The guidelines aim to protect consumers by requiring disclosure of any material connection between an endorser and advertiser that could affect the endorsement's credibility. Both advertisers and endorsers can be liable for misleading claims or failing to disclose relationships. The document provides examples and best practices for complying with these FTC guidelines when using social media for advertising purposes.

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

2. Legal Concerns in Social Media
FTC Guidelines:
Endorsements & Testimonials

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. 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. 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. 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. 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. 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. 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. 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. Who is Liable?

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. 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. 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. 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. 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)