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An FTC Violation in One Hundred and Forty Characters (or Less)

There are approximately one billion people use Facebook, and Twitter has moer than 500 million account holders. Add in all of the bloggers and it becomes crystal clear that social media is more than just a fad. Social media is being used worldwide to connect old acquaintances, make business referrals, and market and advertise products and services. Chances are a vast majority of a company’s employees, customers, potential customers, and competitors access a social media site on a daily basis. Because social networks amass such huge audiences, social media is quickly becoming a preferred way for businesses to tout products and services.
 
Q: Who regulates the use of social media as an advertising mechanism?
A: The Federal Trade Commission regulates the use of endorsements and testimonials in advertising through its published Guides Concerning the Use of Endorsements and Testimonials in Advertising. These endorsement guides, which have been in effect for more than 20 years, address endorsements by consumers, experts, organizations, and celebrities. In fact, FTC revised its endorsement guides in 2009 to include blogs and social networking sites.
 
Q: What qualifies as an endorsement?
A: Under the guides, an endorsement is “any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness, or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.” 
 
Q: What is the purpose of the FTC’s endorsement guides?
A: The FTC’s aim is to ensure that endorsements are truthful and not misleading. Under the guides, endorsements must reflect the honest opinions, findings, beliefs, or experiences of the endorser, and not the marketer of the product. To help further this principle, “material connections” between marketers and endorsers that might affect the weight or credibility of the endorsement, such as connections that consumers would not normally expect, must be disclosed.
 
Q: Don’t these updated regulations only apply when a sponsoring advertiser pays a blogger or spokesperson, like a famous celebrity, to tout its products online?
A: No. If there is any relationship between the endorser and the marketer of the product that might affect how consumers evaluate the endorsement, the FTC regulations apply and the relationship should be disclosed. For example, the regulations would apply if a company’s receptionist wrote on her personal Facebook page a glowing review of a new product just launched by the company. Because the connection between the endorser (the receptionist) and the seller of the product (the company) might affect the weight or credibility of the endorsement, the receptionist’s employment must be clearly and conspicuously disclosed on her page. If the receptionist fails to disclose her relationship with the seller, her post would violate the FTC’s endorsement guides.
 
Q: What can a business do to avoid violating the FTC’s endorsement guides?
A: To avoid violating FTC regulations, businesses should educate their employees about what they can and cannot say and do online. An easy way to educate employees on how to properly use social media for business purposes is to adopt a clear, well-written social media policy.
 
Q: Where can I go to get more information about the FTC’s Endorsement Guides?
A: Visit the FTC’s website business legal resources page at http://business.ftc.gov/legal-resources/5/33 for more information.
 
10/24/2013

This “Law You Can Use” column was provided by the Ohio State Bar Association (OSBA). It was prepared by Alan J. Hartman, a partner and head of the Technology Practice Group at Dressman Benzinger & LaVelle psc.
Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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