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June 4th, 2015
FTC Updates Endorsement Guide FAQs
Six years ago the FTC updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the "Guides") and issued FAQs to explain the impact of the changes on new marketing channels and techniques. Last week, the FTC again updated its guidance through a new set of FAQs. The revised FAQs re-affirm the underlying truth-in-advertising principles of the Guides: endorsements must be honest and properly substantiated and any disclosures of material connection between the endorser and the advertiser must be clear and conspicuous. Drawing on recent FTC enforcement actions, the new FAQs reveal the FTC's current thinking about a number of very common marketing techniques. Marketers should review the new guidance with counsel. Here's a summary of important points.
- "Liking" on Social Media Sites: First, the FAQs remind us that the purchase and sale of fake "likes" is "clearly deceptive." But the FAQs also make a more controversial point: a marketer that incentivizes users to "like" its page when there is no place for the user to include a disclosure of material connection may violate the Guides, even though the FTC doesn't "know at this time how much stock social network users put into 'likes' when deciding to patronize a business." It concludes that "[a]dvertisers shouldn't encourage endorsements using features that don't allow for clear and conspicuous disclosures."
- Disclosures in Video Content: A new FAQ states that when an endorser uploads a video to YouTube (or, presumably, to any video platform), any important information related to an endorsement, such as the material connection between the endorser and the company, should appear on-screen in the video itself. Disclosure in the video description alone is insufficient. The FAQ also states that the disclosure should appear at the beginning of the video and, for very long videos, periodically throughout, to ensure viewers will see it regardless of when they tune in to watch.
- Social Media Contests: When users post content online to enter a contest, the FAQs recommend that the advertiser require entrants to use "contest" or "sweepstakes" in a hashtag to make it clear that the posts were incentivized. Here, the FTC is reiterating guidance from its Cole Haan investigation that giving someone a sweepstakes entry in exchange for posting content about the brand is a material connection requiring disclosure. The FAQs say "#sweeps" is not good enough, because "it is likely that many people would not understand what that means."
- Wording and Placement of Disclosures: Consistent with its updated .Com Disclosures, the FAQs provide additional guidance on making clear and conspicuous disclosure of material connections. The FTC cautions that, depending on what a blogger actually received, a disclosure such as "I got the product for free" or "I got a sneak peak of the game," may not be sufficient if the disclosure does not fully describe the benefit he or she received. For example, if a blogger got the product for free, and $100 for a positive review, it's not enough to merely say the product was free.
- Celebrities, Brand Ambassadors, Hired Experts, and Employees of Brands and Ad Agencies: What do these people have in common? The FTC reiterates that, when someone is speaking on a brand's behalf, his or her material connection to the brand must be disclosed if the affiliation is not apparent to a reasonable person. The FTC says that, when in doubt, disclose. There are specific FAQs on celebrity social media posts, and what is expected of a "brand ambassador" who makes unofficial public comments about the brand's products or services while technically "off the clock." There are also specific FAQs about employees of brands, employees of ad agencies hired by brands, and expert endorsers hired by brands or agencies.
- Who is Ultimately Responsible? A new FAQ reminds us that the advertiser is responsible when engaging others to post endorsements on its behalf, or engaging agencies or networks to do so. The FTC also says that intermediaries, such as agencies, are also responsible if they recruit and direct influencers who endorse company products. The FTC reiterated that companies should have appropriate social media policies; should train their spokespersons; and must monitor results.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018