The FTC Speaks Out Again On Social Media

By Lisa Dubrow

1. The FTC updated its guidelines and FAQs on testimonials and endorsements (again).
2. The FTC settles its first case against two individual social media influencers.
3. The FTC sends out warning letters to a group of social media influencers for failure to comply with the FTC guidelines’ requirements.

Details are below.

1. Updated Guidelines and FAQs

The updated FAQs address specific requirements for disclosing connections between advertisers and social media reviewers. It also provides guidelines for making effective disclosures including on specific social media platforms such as Snapchat and Instagram. The FAQs added over 20 additional questions and answers including:

• The FTC stated that any compensation, including free or discounted products, travel or accommodations, even charitable donations, must be disclosed. Also, advertisers should disclose next to any average or other summary rating that it includes reviewers who were given free products.
• The FTC noted that negligible compensation may not need to be disclosed if it would not affect the weight that readers would give a review.
• Built-in features on social media platforms allowing users to disclose paid endorsements may not be sufficient if the connection is not clearly and conspicuously disclosed. The disclosure should catch users’ attention and be placed where they aren’t likely to miss it. A key consideration is how users view the screen when using a particular platform.
• Tagging a brand in a post is an endorsement of the brand and could require a disclosure if the endorser has a relationship with that brand.
• Disclosures in Instagram posts should be present in the picture or within the first three lines of the description.
• For Instagram and Snapchat Stories, any required disclosure should be superimposed over the video or image in a manner that is noticeable and easy to discern.
• Wording of social media disclosures. Using “#ad” or “#sponsored” can constitute a sufficient disclosure of sponsored content but merely saying “thank you” to a sponsoring company or brand may not constitute adequate disclosure without further clarification.
• “#ambassador” in a tweet is ambiguous and confusing unless combined with the full name of the sponsoring brand (e.g., “#[BRAND]Ambassador”).
• “#employee” alone does not disclose the material connection between the endorser and the brand. Although a hashtag combining the name of the company and “employee” (e.g., “#[COMPANY]Employee”) may suffice depending on context.

2. The First FTC Settlement Against Individual Social Media Influencers

The FTC settled its first enforcement action against individual social media influencers as opposed the brands or agencies that engage them. The complaint was filed against two social media influencers who co-owned CSGO Lotto, and alleged that the influencers deceptively endorsed CSGO Lotto without disclosing their ownership interests in the company or that they paid other influencers to promote CSGO Lotto on social media without requiring any sponsorship disclosures.

3. FTC Issues Influencers Warning Letters

Last April, the FTC sent over 90 letters to prominent social media influencers advising them to clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media. The FTC sent follow up letters to 21 of the social media influencers previously contacted. The warning letters explain why specific social media posts may not comply with the Guides and include requests that the recipients respond to the FTC.

Takeaway:

The FTC has been quite clear that it feels influencers are persuasive and therefore, in order to protect consumers, disclosures of material connections are critical. It has again clarified its expectations and no entity in the “advertising food chain” should be relying on anyone else for compliance.

Lisa Dubrow

Lisa Dubrow counsels clients on legal issues surrounding the advertising and marketing of goods and services, including consumer protection issues, the security and privacy of consumer databases, state and federal compliance with all methods of sales, including e-commerce, direct mail and telemarketing, negative option sales, “back end issues” related to consumer payment, privacy of consumer information, behavioral marketing and informational capture, licensing arrangements and affiliate sales arrangements, negotiations with vendors, agencies, telemarketers, fulfillment and talent, and any and all issues pertaining to bringing goods and services to market.  She also regularly counsels clients on how to properly implement competitions, sweepstakes, contests and other promotional events.

Lisa works directly for clients through her own law firm, and also consults for law firms as a freelance lawyer through Montage Legal Group.