In 2009, the Federal Trade Commission (FTC) released its Guides Concerning the Use of Endorsements and Testimonials in Advertising ("Guidelines"). (16 CFR Part 255). These regulations were created as a supplement to Section 5 of the FTC Act (15 USC 45), which addresses unfair or deceptive practices in advertising. Specifically, the supplemental Guidelines focus on the use of endorsements in advertising, and generally require openness, honesty, and transparency on the part of companies. For example, among other things, the Guidelines require that endorsements be the honest and accurate reflection of the endorser's true opinion, and also that "expert" endorsers must have the necessary qualifications for such a distinction. This QuickCounsel will address the role of social media in adhering to these guidelines.
Section §255.5 of the Guidelines covers disclosure of material connections between the endorser and the company selling the product, if such a connection exists. Under the section, companies are required to inform the public that a particular endorser has a material incentive (such as payment or the promise of future payment) to favorably promote the product.
With the increased use of social media, both by consumers and companies alike, advertisement has entered into a new realm in which consumers are taking an active role in the production of media and advertisement for the products they use. Through sites like Facebook, Pinterest, Twitter, Instagram, and YouTube, one can create photographic representations of, and make statements about, various products before hundreds or thousands of "followers". Positive reviews of products via social media can be great free advertisement for companies and their products.
But what happens when the lines of consideration are blurred and "free" is not as free as it may seem?
In March 2014, the FTC issued a letter to Cole Haan addressing its Pinterest-based "Wandering Sole" contest. Participants were asked to create a Pinterest board containing images from the company's own Pinterest board, along with photos of the participant's "favorite places to wander" for a chance to win a $1000 shopping spree. In order to be entered into the contest, the hashtag "#WanderingSole" had to accompany the board. The FTC determined that social media contest entries such as this one can be considered advertisements, and warned Cole Haan for its failure to disclose the material connection created by the contest to the public.
The FTC chose only to issue a warning because it had never previously stated that acts such as "pinning", "retweeting", and "liking" may be considered acts of endorsement. However, now that the FTC has officially addressed the issue, Corporate Counsel should educate their employees of these guidelines to avoid a similar issue. A simple solution might be to require participants to include words such as "contest" "sweepstakes" "giveaway" or "entry" in the hashtag or as a part of the post to denote that the endorsement was made as a contest entry. The FTC's intent seems to be that companies structure these contests so that the public can easily understand that each endorsement was created with some degree of incentive. Therefore, as long as a viewer may read the tweet or look at the pin and see something along the lines of "contest," it should not matter much whether the hashtag is formatted #[ContestName]Contest or #[ContestName] #Contest.
Similar acts such as requiring users to "retweet," "follow," or "like" something tied to a company or its products in exchange for the chance to win something may be of concern following the FTC's official statement. Companies should ensure that any acts that may be considered endorsements in light of the FTC's statement clearly follow the Guidelines. Companies should carefully review all instances of soliciting endorsements from social media users as well as reposting unsolicited endorsements.Other Potential Concerns regarding the Guidelines and Social Media.
Other Potential Concerns regarding the Guidelines and Social Media
§255.1 of the Guidelines requires that:
a) endorsements honestly and accurately reflect the opinions and beliefs of the endorser;
b) the endorsement cannot be presented out of context;
c) the endorser must actually be a user or consumer of the product they are endorsing; and
d) advertiser may be liable for false statements made via an endorsement.
§255.1 and Social Media
- If you choose to post testimonials on any of your social media sites, be sure that any excerpts accurately reflect the overall message. On sites like Twitter, "retweeting" a user's comment about a particular product or service may constitute an advertised endorsement. In connection with subsection a, be careful to ensure that by retweeting a particular tweet, that user's comment is not taken out of context in such a way that portrays a message about your company's products that the user did not intend.
Example 1: A user tweets that "It's great that Product X doesn't contain Harsh Chemical Y. But when I read the label, I saw that it contains an even worse chemical." It would be problematic to quote that user as having said "It's great that Product X doesn't contain Harsh Chemical Y."
Example 2: If that user posted 2 separate tweets: 1) "It's great that Product X doesn't contain Harsh Chemical Y" and 2) "But when I read the label, I saw that it contains and even worse chemical" it could similarly be problematic to retweet only the first of the two messages because it takes the comment out of context.
§255.2 of the Guidelines requires that:
a) Advertisers must have information to substantiate claims made by consumers via endorsements;
b) A consumer's endorsement regarding a central attribute of the product/service is likely to be interpreted as representing the general experience of consumers using that product/service. If the general experience differs from that of the endorser, the advertiser must disclose what most consumers can expect to experience;
a. It is not enough to say "Results not typical" or the like. The advertiser must affirmatively state what the typical results are; and
c) Advertisements containing "actual consumers" (whether explicitly stated, or implied) should use actual consumers in both the audio and video, or clearly state that the individuals are not actual consumers.
§255.2 and Social Media
- Monitor postings made to company social media pages that may be viewed as an endorsement. False statements about products should be removed or clarified.
Example: A company asks users to post their favorite thing about a line of protective cell phone cases to the company's Facebook wall. User A writes, "I love that these cases are durable without being too bulky. I dropped my phone into a puddle and it was completely fine, there wasn't even water damage." Unless the company has information substantiating their products' ability to protect cell phones from water damage, it may be best to remove posts that state otherwise.
Â§255.4 of the Guidelines requires that:
a) Company must ensure that an organization's endorsement accurately reflects the views of the organization as a whole, rather than the views of any one particular individual; andb) If that organization is considered an "expert" organization, a qualified expert within the organization must judge the merits of the particular product.
§255.4 and Social Media
Use the proper channels to ensure that any endorsements made by social media accounts associated with organizations accurately reflect the views of the organization as a whole.
Example: Organization A tweets "Is Player X out for the remainder of the game? All he needs is a little Medicine Brand B." Company B, the maker of Medicine Brand B, should not retweet or in any way use this endorsement as advertisement without first making sure that the organization as a whole shares this view. If Organization A is involved in the sports medicine industry, or may otherwise be considered an expert on this topic, Company B must also ensure that the views expressed in the tweet are based on the judgment of an actual expert within the organization.
In this age of innovation and technology, social media can be a great tool for companies. The ease with which consumers can communicate their satisfaction or disappointment with a company and its products on a public platform promotes greater accountability on the part of the companies. It can also work as a resource for free advertisement. However, it is important to consider laws governing advertisements and endorsements, even in this less formal scenario.
http://business.ftc.gov/documents/bus71-ftcs-revised-endorsement-guideswhat-people-are-asking http://www.ftc.gov/news-events/media-resources/truth-advertising/advertisement-endorsements http://www.ignitesocialmedia.com/social-media-promotion/contest-hashtags-follow-ftc-guidelines/ http://www.acc.com/legalresources/quickcounsel/Blogs-and-Social-Media-Marketing.cfm http://www.acc.com/legalresources/resource.cfm?show=1351515