Last week, the FTC announced that it would review its Endorsement Guides. The Guides – last updated in 2009 – help influencers, endorsers, celebrities, and companies navigate the FTC’s regulatory scheme. Although the Guides are advisory, they explain when the FTC might bring an action under Section 5 of the FTC Act, which generally prohibits deceptive advertising.
Reading through the Endorsement Guides is a must for any company advertising on social media or using influencers and endorsers. Upon first glance, their relevance on a business’s marketing campaign should be obvious. For example, the Guides define endorsements and testimonials broadly, to mean “any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser.” The Guides explain that such endorsements must “reflect the honest opinions, findings, beliefs, or experience of the endorser,” and must not “contain any representations that would be deceptive, or could not be substantiated, if made directly by the advertiser.”
The Guides also advise that any advertisement utilizing an endorsement on a “central or key attribute” of a product will “be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve.” If the company does not have sufficient evidence to substantiate that claim, then the advertisement should contain a clear and conspicuous disclosure. The Guides go on to explain that if an add represents that the endorsement is from an actual customer, then the company must either use an actual customer or clearly disclose that the endorser is not a customer. Similarly, companies must disclose any connections with the endorser than might “materially affect the weight or credibility of the endorsement.”
As startups and small businesses pour more money into social media advertisements, the impact of the FTC’s Endorsement Guides will only grow.
The FTC is currently accepting comments from the public to help guide its review. In its Federal Register notice, the FTC is seeking input on 22 specific questions, including:
- What burdens or costs, including costs of compliance, have the Guides imposed on businesses and on small businesses in particular?
- What benefits, if any, have the Endorsement Guides provided to consumers?
- Do the Guides impose any significant costs on consumers?
- What impact, if any, have the Guides had on the flow of truthful or deceptive information to consumers?
- What changes, if any, should be made to the Endorsement Guides to increase their benefits to consumers? And how would these changes affect consumer benefits or business costs?
- What changes, if any, should be made to the Guides to reduce the burdens or costs imposed on businesses or endorsers?
In a separate statement, FTC Commissioner Rohit Chopra explained that he is in favor of taking “bold steps to safeguard” the digital economy from “lies, distortions, and disinformation.” He favors developing requirements to which technology platforms, like Instagram and YouTube, must adhere, and advocates for tougher remedies for violators.
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This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.