FTC Updates Endorsement Guidance

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Update: Visit this page to see a compilation of all of the updated information from the FTC on Disclosure.

The FTC put out one release today that was chock full of disclosure information. It contained information about a first-ever settlement with individual social media influencers, a description of warnings sent to 21 Instagram influencers, and notice of over 20 new frequently asked questions and answers.

You can read about the CSGOLOTTO settlement here and see sample warning letters sent to Instagram influencers here. Of note in the settlement is that it is the first time I have seen Twitch mentioned specifically with regard to disclosure. In that case, it appears that the merchant is being held liable. With regard to the Instagram letters, it appears that the influencers are going to be held liable if they continue to ignore the express instructions of the FTC.

More pertinent to affiliate marketing, I want to draw your attention to some of the FAQ. I can’t remember for certain which of these were in the original set and which are new in this revision, but all of the questions and answers below are things that I see being violated in my Facebook and Twitter streams on a daily basis. They are all worth reading and understanding no matter your role in affiliate marketing.

• I’m a book author and I belong to a group where we agree to post reviews in social media for each other. I’ll review someone else’s book on a book review site or a bookstore site if he or she reviews my book. No money changes hands. Do I need to make a disclosure? It sounds like you have a connection that might materially affect the weight or credibility of your endorsements (that is, your reviews), since bad reviews of each others’ books could jeopardize the arrangement. There doesn’t have to be a monetary payment. The connection could be friendship, family relationships, or strangers who make a deal.
• I’m a video blogger who lives in London. I create sponsored beauty videos on YouTube. The products that I promote are also sold in the U.S. Am I under any obligation to tell my viewers that I have been paid to endorse products, considering that I’m not living in the U.S.? To the extent it is reasonably foreseeable that your YouTube videos will be seen by and affect U.S. consumers, U.S. law would apply and a disclosure would be required. Also, the U.K. and many other countries have similar laws and policies, so you’ll want to check those, too.
• What about a disclosure in the description of an Instagram post? When people view Instagram streams on most smartphones, descriptions more than four lines long are truncated, with only the first three lines displayed. To see the rest, you have to click “more.” If an Instagram post makes an endorsement through the picture or the first three lines of the description, any required disclosure should be presented without having to click “more.”
• The social media platform I use has a built-in feature that allows me to disclose paid endorsements. Is it sufficient for me to rely on that tool? Not necessarily. Just because a platform offers a feature like that is no guarantee it’s an effective way for influencers to disclose their material connection to a brand. It still depends on an evaluation of whether the tool clearly and conspicuously discloses the relevant connection. One factor the FTC will look to is placement. The disclosure should catch users’ attention and be placed where they aren’t likely to miss it. A key consideration is how users view the screen when using a particular platform.
• How can I make a disclosure on Snapchat or in Instagram Stories? You can superimpose a disclosure on Snapchat or Instagram Stories just as you can superimpose any other words over the images on those platforms. The disclosure should be easy to notice and read in the time that your followers have to look at the image. In determining whether your disclosure passes muster, factors you should consider include how much time you give your followers to look at the image, how much competing text there is to read, how large the disclosure is, and how well it contrasts against the image.
• You just talked about putting “#ad” at the beginning of a social media post. What about “#ad” at or near the end of a post? We’re not necessarily saying that “#ad” has to be at the beginning of a post. The FTC does not dictate where you have to place the “#ad.” What the FTC will look at is whether it is easily noticed and understood. So, although we aren’t saying it has to be at the beginning, it’s less likely to be effective in the middle or at the end. Indeed, if #ad is mixed in with links or other hashtags at the end, some readers may just skip over all of that stuff.
• Is it good enough if an endorser says “thank you” to the sponsoring company? No. A “thank you” to a company or a brand doesn’t necessarily communicate that the endorser got something for free or that they were given something in exchange for an endorsement. The person posting in social media could just be thanking a company or brand for providing a great product or service. But “Thanks XYZ for the free product” or “Thanks XYZ for the gift of ABC product” would be good enough – if that’s all you got from XYZ. If that’s too long, there’s “Sponsored” or “Ad.”
• Would “#ambassador” or “#[BRAND]-Ambassador” work in a tweet? The use of “#ambassador” is ambiguous and confusing. Many consumers are unlikely to know what it means. By contrast, “#XYZ-Ambassador” will likely be more understandable (where XYZ is a brand name). However, even if the language is understandable, a disclosure also must be prominent so it will be noticed and read.
• Where in my blog should I disclose that my review is sponsored by a marketer? I’ve seen some say it at the top and others at the bottom. Does it matter? Yes, it matters. A disclosure should be placed where it easily catches consumers’ attention and is difficult to miss. Consumers may miss a disclosure at the bottom of a blog or the bottom of a page. A disclosure at the very top of the page, outside of the blog, might also be overlooked by consumers. A disclosure is more likely to be seen if it’s very close to, or part of, the endorsement to which it relates.
• Our company uses a network of bloggers and other social media influencers to promote our products. We understand we’re responsible for monitoring our network. What kind of monitoring program do we need? Will we be liable if someone in our network says something false about our product or fails to make a disclosure? Advertisers need to have reasonable programs in place to train and monitor members of their network. The scope of the program depends on the risk that deceptive practices by network participants could cause consumer harm – either physical injury or financial loss.
• My company recruits “influencers” for marketers who want them to endorse their products. We pay and direct the influencers. What are our responsibilities? Like an advertiser, your company needs to have reasonable programs in place to train and monitor the influencers you pay and direct.

As you can see, the FTC is trying to make sure that EVERYONE understands their responsibilities–merchants, affiliates, recruiters, networks, etc. While none of the new FAQ come as a surprise, they do show that the FTC is paying attention to new technologies and is getting questions from people in our industry with regard to how to be compliant. Combined with the new settlement and the warning letters, it is clear that the FTC is continuing to be vigilant about proper disclosures.

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What do you think about this new information regarding influencers? Do you think the FTC will continue to crack down?