By: Olivera Medenica, Anna Radke
The Federal Trade Commission (FTC) is a federal agency tasked with preventing anti competitive or deceptive trade practices. See About the FTC. Federal Trade Commission. The FTC published special Endorsement Guides that apply to social media outlets such as blogs. The Guides are intended to provide an accessible framework outlining acceptable trade practices for marketing activities involving endorsements. While the Guides are not law, practices inconsistent with the Guides may result in law enforcement actions for violations of the FTC Act. See Federal Trade Commission Act, 15 U.S.C. §§ 41-58.
1. What are the legal implications?
If an endorser is promoting a brand, what she or he is saying is commercial speech. Commercial speech violates the FTC Act if it is deceptive. The FTC conducts investigations and brings cases involving endorsements under Section 5 of the FTC Act, which prohibits deceptive advertising. See What is the Legal Basis for the Guides?.
2. What is an endorsement?
When a brand furnishes an endorser with a product, and the endorser decides to use and write about the product, the nature of the relationship has to be disclosed to the public. It has to be disclosed even when the endorser writes about the product, but the brand has not expressly asked the endorser to do so. The FTC requires the endorsements to be honest and not misleading. As stated on the FTC’s website, “an endorsement must reflect the honest opinion of the endorser and can’t be used to make a claim that the product’s marketer couldn’t legally make.” See Contents, Federal Trade Commission.
3. Why is it important to disclose?
We follow bloggers and online influencers because we like them and we trust their opinions. Whenever we see a recommendation on their website or any of their social media accounts, we would like to know whether their opinion is honest and objective. As readers, we should receive all the necessary information so that we can understand whether what we are reading is an opinion or an ad. The FTC’s goal is to protect consumers; hence, it requires endorsement disclosure.
4. Disclosure standard: be honest and do not mislead.
Consumers should have no problems evaluating the connection between the endorser and the brand. For instance, if a post features an endorser who is a relative or employee of the brand, the ad is misleading unless the connection is disclosed. The reasoning behind this rule is that we, as consumers, value honest and objective opinions. The legal standard is as follows, “an act or practice is deceptive if it misleads ‘a significant minority’ of consumers.” See Isn’t It Common Knowledge That Bloggers Are Paid to Tout Products or That if You Click a Link on a Blogger’s Site to Buy a Product, the Blogger Will Get a Commission? Federal Trade Commission.
For some readers, the nature of the relationship might be obvious, but for many it is not. Therefore, it is crucial to disclose, even if a blogger writes about the product again in a different context or when he or she has to return it. Bloggers have to disclose even if they just mention the product in a broader article that is related to another topic. FTC requires bloggers to be open and transparent. See What if I Return the Product After I Review It? Should I Still Make a Disclosure? Federal Trade Commission.
According to the FTC, disclosures should be:
• close to the claims to which they relate;
• in a font that is easy to read;
• in a shade that stands out against the background;
• for video ads, on the screen long enough to be noticed, read, and understood;
• for audio disclosures, read at a cadence that is easy for consumers to follow and in words consumers will understand.
5. How to disclose?
Again, readers need essential information. Some effective statements include: “Company X gave me this product to try . . . ,“ “Company X sent me [name of product] to try, and I think it’s great,“ “Some of the products I’m going to use in this video were sent to me by their manufacturers.” Some complain that messages on some social media platforms are limited to 140 characters. As the FTC is not mandating the specific wording of disclosures, it is enough to write “Sponsored” and “Promotion,” or even “Ad” or “#ad” – which takes only 3 characters. See How Should I Disclose That I Was Given Something for My Endorsement? Federal Trade Commission.
The FTC created the Guides so that endorsers can be more clear and transparent, and avoid misleading consumers. This transparency, of course, ultimately hinders the scope of a blogger’s influence because the blogger’s influence is specifically based upon the organic marketability of the blog. Indeed, a consumer is drawn to purchase the product simply because the blogger likes it. But this social influence is severely hindered if it is revealed that the blogger likes the product because she got it for free, or got paid to say it, or got paid to post it, like it, retweet it, or whatever else she was supposed to do. Definitely not as cool in the eyes of a discerning public. So next time your “it” girl, or boy, raves about something, raise an inquisitive eyebrow and look for that disclosure hashtag.