FTC Updates Endorsement Guides

FTC Endorsement Guidelines In 2009, the FTC revised its Endorsement Guides.  Following that, the FTC buttressed those revisions with “What People Are Asking,” which was intended to answer advertisers’ questions.  Now, just recently, the FTC announced that it has updated the FTC’s Endorsement Guides: What People are Asking to cover growing trends in advertising and to better answer questions about the FTC’s Endorsement Guides.  The updates issued by the FTC clear up questions related to a variety of endorsement-related issues, including special wording, Twitter disclosures, social media “like” buttons, affiliate marketing, employee endorsements, uploading, videos, and a host of others.

As it relates to special wording, the FTC reiterated its previous guidance that no special wording is needed to make sufficient endorsement disclosures.  However, the FTC has added that it will “usually be effective” to include a simple disclosure that “Company X gave me free product to try.”  

On the Twitter front, the FTC said that “[s]tarting a tweet with “Ad:” or “#ad” – which takes only 3 characters – would likely be effective.”  This is a change from the previous version, which said that such a disclosure only “might be effective.”  Additionally, the FTC reiterated its previous guidance that there is no specific wording necessary for Twitter disclosures.  There, the FTC explained that it will assess the sufficiency of a disclosure based on the broad principle that the consumer must receive the necessary information to evaluate the sponsored statement.

The updated FAQs also add a completely new section regarding employee endorsements, again refusing to mandate specific disclosure words for employees, including employees of related agencies and PR firms.  Even still, the FTC said that it explicitly requires the employment relationship be disclosed when an employee is making and endorsement.  The FAQs further indicate that a company is not expected to monitor every employee post, but that the company “should establish a formal program to remind employees periodically of your policy, especially if the company encourages employees to share their opinions about your products.”  As a result of the addition of the previous language, it is now more important than ever for advertisers to adopt a social media policy.

Turning to the topic of social media “like” buttons, the FTC took aim at what has been termed “Like-Gating,” where a company requires a consumer to “like” their application page before they are able to enter a contest, receive coupons or other rewards, or to access content on the company’s application page.  With “Like-Gating” in mind, the new FAQ’s add a section on social networking sites, stating consumers are allowed to write about their love of a product without making disclosures – as long as they are not being “rewarded.”  However, the FAQs state “if you’re doing it as part of a sponsored campaign or you’re being compensated – for example, getting a discount on a future purchase or being entered into a sweepstakes for a significant prize – then a disclosure is appropriate.”  The guidance acknowledges that it is unclear at this time “how much stock social network users put into ‘likes,’” and giving incentives for “likes” in fact “might not be a problem.”  However, the FAQs add that “[a]n advertiser buying fake ‘likes’ is very different from an advertiser offering incentives for “likes” from actual consumers.”  If the likes are from people who are not consumers, they are clearly deceptive.

The updated FAQs give additional guidance to remind companies engaging social media contest that they must disclose clearly that the post is being made as part of a sweepstakes or contest.  Thus, simply stating “#XYZ_Rocks” is not sufficient without a hashtag disclosure of “contest” or “sweepstakes.”  The FTC has said that the words contest or sweepstakes should not be abbreviated because many people not understand that “Sweeps” was short for sweepstakes.

In light of the fact that affiliate marketing practices continue to grow, the FTC has edited is affiliate marketing guidance in the updated FAQs.  The FTC has expanded it previous FAQs, which stated that an affiliate marketer had to disclose the relationship to any online retailers clearly and conspicuously on its website so consumers can “decide how much weight to give [the] endorsement.”  Specifically, the FAQs clarify that merely including the “affiliate link” by itself or a “buy now” button will not be a sufficient disclosure, as consumers may not know it means the “person placing the link is getting paid for purchases through the link.”

The updated FAQs also add questions about what information must be disclosed in addition to the obligatory phrase, “I got a product for free.”  The FAQs explain it depends on what the blogger received.  If the endorser was compensated in way that could impact the credibility of their endorsements, it must be disclosed.  This likely means that anyone who was paid for their review or use of a product must disclose that they were paid.  Similarly, the FTC expanded its guidance related to online reviews, adding a section in the FAQs that provides examples for when a website with online reviews must provide disclosures.  If a retailer sends the reviewer a product, it must be disclosed.

Finally, the FTC made minor changes to its guidance on social media influencers.  The updated FAQs clarify that companies using a network of bloggers should instruct members of the network on their responsibilities for disclosing connections, “periodically search for what people are saying,” and generally make a “reasonable effort” to know what people in the network are saying.  Therefore, as a best practice, each advertiser should adopt a social media influencer policy to ensure it has effective processes to comply with this guidance.

FTC’s Endorsement Guides: What People are Asking