FTC Advertising Law Update: FTC Issues Updated FAQs to Endorsement Guides

On May 29, 2015, The U.S. Federal Trade Commission (“FTC”) issued an updated “Frequently Asked Questions” (“FAQs”) guide on advertisement endorsements. These FAQs include regulatory guidance on how endorsements may be made via social media. (To read the FTC’s announcement please click here.) Endorsements are advertising messages conveying third-party opinions or experiences and are used by advertisers to promote products or services to consumers. Like most advertising, endorsements are regulated by the FTC. The new FAQs, “What People Are Asking,” supplements FTC’s 2009 Endorsement Guide on the same subject in large to address social media advertising and address many of the same legal issues articulated in the 2009 Endorsement Guides. As made clear by FTC, first, all endorsements must meet the standard of “truthful and not misleading.” Second, disclosure of the relationship between the endorser and the company must be clear and conspicuous. Finally, if the endorser promotes an experience that is not backed by evidence or is not normally achieved, clear and conspicuous disclosure is needed. (To read the entire FAQs please click here.)

The FTC monitors the world of social media, including Facebook, Twitter, YouTube, and Instagram. Companies that promote products through the use of endorsements on social media must be acutely aware of how this type of advertising is regulated. The same Truth In Advertisinglaws that apply to traditional types of media such as television and magazines apply to social media as well. Per these laws, advertisements must be truthful, not misleading, and backed by evidence when appropriate. Companies engaging in a quid-pro-quo relationship with an endorser are subject to these same standards.

“What People Are Asking” is an updated compilation of answers to general questions the FTC has received since issuing the 2009 Endorsement Guides. The updated FAQs expand on topics previously addressed and offer advice on how to apply the Endorsement Guides to new forms of social media advertising. Here are a few points of emphasis:

• The FTC “is only concerned about endorsements that are made on behalf of a sponsoring advertiser.” Therefore, endorsements not solicited or where no relationship exists between the endorsee and the endorser are not subject to FTC’s guides. However, if an endorser works for an advertiser or receives something in exchange for the endorsement, then the Endorsement Guides apply.
• Social media platforms that allow individuals to “like” a product (i.e. Facebook) are not considered endorsement. However, a company buying fake “likes” could subject the company to enforcement action. Enforcement action may ensue from purchasing fake “likes” because advertisements account for a substantial portion of Facebook’s revenue, and if fake “likes” can be bought through a “click farm” the advertisement may be deemed to be deceptive and misleading and subject to an FTC enforcement action. (To read more on click farms please click here.)
• Platforms with character limits (i.e. Twitter) are not exempt from disclosure. The FTC “isn’t mandating specific wording for [endorsement] disclosures,” but suggests supplementing the endorsement with a hashtag like “#ad” or “Promotion” would be sufficient.
• YouTube is a platform that is primarily video based, and endorsements on YouTube must be clear and conspicuous. The FTC suggests multiple, periodic disclosures because a disclosure only at the beginning or end of the stream could easily be dismissed.
• Endorsements must reflect the honest opinions or experiences of the endorser. Endorsers cannot talk about an experience with a product if they have not tried it, and they cannot write a positive review if they thought the product was terrible.
• An employee of a company endorsing one of its products must disclose his/her relationship with the company.
• Companies need to have reasonable programs in place to train and monitor members of their network of bloggers and social media promoters. These programs should include explaining proper disclosure, explaining what can and cannot be said about a product, and searching their social media network periodically to monitor and remove what is being said.

Advertising on the internet and through social media can be tricky. Not only should companies follow FTC’s guidances, companies should be aware of the Federal Drug Administration’s (“FDA”) internet presence. Along with the FTC, the FDA too scours the internet searching for companies who are  impermissibly promoting or advertising drugs, medical devices, and the countless other products which fall within the FDA’s jurisdiction. (To read the FDA’s draft guidance document Internet/Social Media Platforms please click here.)

The FTC closely monitors endorsements on the internet. Companies using endorsements through social media should be aware of how to comply with FTC’s guidances to avoid penalties. Companies can comply by abiding by the Truth In Advertising Laws, the 2009 Endorsement Guides, and the updated FAQs while using social media and a third party to promote their products. Companies should ensure their advertisements either published in-house, or through endorsements, abide by FTC’s regulations and guides.

Fuerst Ittleman David & Joseph, PL will continue to monitor any developments with the FTC’s Endorsement Guides. The attorneys in our Food, Drug, and Life Sciences practice group are experienced in assisting regulated industry to ensure that products are marketed and advertised in compliance with all applicable federal laws and regulations. For more information, please call us at (305) 350-5690 or email us at contact@fidjlaw.com.