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Social Media Endorsement Regulations

Do you promote your brand or company on social media? Do you have endorsements for your brand or company on Instagram or Twitter? That’s great for your business, but may be a minefield when it comes to consumer protection regulations. The Federal Trade Commission (FTC) has been active in patrolling social media for deceptive advertising and endorsements, and then issuing flurries of warning letters and guidance documents, and also bringing enforcement actions. This federal agency is more hip than you might think.

Most recently, in April 2017, the FTC sent more than 90 letters to celebrities, marketers, and other “influencers” warning them to “clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.” This resulted from the FTC’s review of Instagram posts, where the agency found murkiness when it comes to who is getting paid for endorsing products, who is employed by companies producing these products, who is getting free stuff from these companies, and the like. The FTC explains that “if there is a material connection between an endorser and an advertiser, that connection should be clearly and conspicuously disclosed unless it’s already clear from the context of the communication.” And the FTC is working on its catchy #clearandconspicuous, #disclosures, and #materialconnection campaigns.

Last year, the FTC made a big splash by settling an enforcement action against Lord & Taylor. (#disclosure: That’s where I buy my dresses.) The FTC charged that Lord & Taylor did not disclose that it was paying for native advertisements, including one in an on-line magazine and another on Instagram. This type of ads can seem indistinguishable from the media where they appear, which make them particularly tricky for consumers. The FTC also charged that the retailer failed to disclose that it gave 50 on-line fashion “influencers” the same dress to wear and then paid them to post Instagram pictures of themselves in that dress.

Also last year, the FTC settled a high-profile enforcement action against Machinima, an on-line gaming network, for failing to disclose that it paid “influencers” to post YouTube videos and other on-line endorsements of Microsoft’s Xbox One gaming system and certain games. The FTC claimed that it was deceptive for Machinima to engage in this type of campaign without disclosing its financial stake.

What’s the lesson in all this? When in doubt, DISCLOSE. And make sure that it’s easy to see -- not hidden in a hyperlink or in small print or accessible only after scrolling down.


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