Late last month, the Federal Trade Commission (“FTC”) revealed that it has finalized the revisions to its Endorsement Guides, a set of guidelines that aim to enable advertisers to ensure that their use of endorsements or testimonials – including online reviews, social media campaigns, and influencer endorsements – complies with the FTC Act. Among some of the key updates/additions are: a definition for “clear and conspicuous” (“difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers”); a focus on online consumer rating and reviews of products/services; an explicit note that both advertisers and endorsers, as well as relevant third-parties (ad agencies, public relations firms, etc.) can be liable for deceptive advertising; and an expanded definition of “endorsement” (simply tagging a brand could constitute an endorsement), etc.
In addition to publishing the final version of its revised Endorsement Guides, the FTC released a lengthy guide to “What People Are Asking,” which provides insight into what “advertisers, ad agencies, influencers, bloggers, and others” are most concerned about in the realm of endorsements. These range from questions about “aspirational” endorsements and monitoring endorsers’ content to disclosures in videos, such as on TikTok, and particularly interesting due to enduring brand/influencers scandals (think: Kanye and adidas), what are an advertiser’s responsibilities are for what others say on social media.
It is worth noting that the FTC continues to take the stance that just because it is arguably well-known that influencers and other endorsers are routinely paid to promote products, that does not mean that “material connections” between endorsing parties and the companies behind the products/services they are promoting do not need to be disclosed. The FTC’s formal position here is that “if there is a connection between an endorser and the marketer that a significant minority of consumers wouldn’t expect and it would affect how they evaluate the endorsement, that connection should be disclosed clearly and conspicuously.”
The agency elaborates, stating that “it may be common knowledge that some of them get paid this way, but others may have no connection to marketers whose products they mention. They may not get a commission or anything else for their recommendations, which they may be making only because they believe in those products.” The short of it: “The existence of financial arrangements between some content creators and advertisers may be apparent to some people, but not to everyone.”
Against the background, some of the FTC Endorsements Guide centric questions and answers worth noting …
– What is an endorsement?
According to the dictionary, an endorsement is a recommendation of something or an expression of approval or support for something, but the Endorsement Guides are talking about a particular type of endorsement. As used in the Guides, an endorsement is an advertising message that consumers are likely to believe reflects the opinions or beliefs of someone other than the sponsoring advertiser. So, if the message isn’t an advertising message by or on behalf of a marketer, it isn’t an endorsement.
– A celebrity has millions of followers on Instagram. Many people know that the celebrity regularly charges advertisers to mention their products in posts. Does the celebrity have to disclose being paid for a particular post about a product?
It depends on the extent to which people reading the celebrity’s posts understand that a particular post is a paid endorsement. Many followers may know generally about the celebrity’s connections to advertisers, but, for any one post, if a significant minority of readers don’t know it was paid, a disclosure may be needed. Again, determining what readers know can be tricky, so we recommend disclosure.
– I’m an influencer and a company sent me a free product which I posted about. If I buy more of the product with my own money and continue using it, can I post about it without disclosing that the company once sent it me for free?
If you have an ongoing relationship with a brand, you should still disclose that relationship even if you buy the brand’s product yourself.
If you received nothing but a free product to try and are now buying it with your own money, it seems unlikely that your viewers would care that you initially received the product for free. That said, transparency with your viewers is always a good choice, e.g., “A couple of months ago, XYZ gave me a free ABC, and I loved it so much that I keep buying it with my own money.”
– I’m a skincare influencer and I have an endorsement deal with a brand. If I post negative comments about a competing brand, do I have to disclose my endorsement deal?
Yes. If you criticize a competitor of a brand that you are paid to endorse, you should disclose your paid relationship. It would likely affect the weight and credibility that your audience gives to your negative comments.
– An influencer creates their own brand and sells their product through their social media accounts and website. Do they need to disclose anything?
If it is obvious from an influencer’s endorsement that that the brand is the influencer’s own, no disclosure is necessary. If it’s not clear or sometimes not clear that it’s the influencer’s brand, that fact should be disclosed.
– If I post a picture of myself to Instagram and tag the brand of dress I’m wearing, but I don’t say anything about the brand in my description of the picture, is that an endorsement? And, even if it is an endorsement, wouldn’t my followers understand that I only tag the brands of my sponsors?
Tagging a brand you’re wearing is an endorsement of the brand. Just like any other endorsement, it could require a disclosure if you have a relationship with that brand. Some influencers only tag the brands of their sponsors, some tag brands with which they don’t have relationships, and some do a bit of both. Followers might not know why you’re tagging a dress. Some might think you’re doing it just because you like the dress and want them to know.
– If I don’t tag the dress, is a picture of me wearing it while at a restaurant an endorsement that makes a disclosure necessary?
Probably not. In an analogous situation, one of the examples in the Endorsement Guides says that no disclosure is required because no representation is being made about the clothes in this context.
– Say a car company pays a blogger to write about wanting to buy a certain new electric sports car. The post includes a link to the company’s site, but it doesn’t say that the blogger is actually going to buy the car or has even driven it. Is the post still an endorsement subject to the FTC’s Endorsement Guides?
Yes. An endorsement can be aspirational. In this case, it’s an endorsement because the blogger is expressing – at least implicitly – positive views about the car (e.g., “I want it”). If the blogger was paid, it should be disclosed.
– I’m a vlogger who lives in London. I create sponsored videos on YouTube for products that are also sold in the U.S. Do I need to tell my viewers that I’ve been paid to endorse the products even though I don’t live in the U.S.?
If it’s reasonably foreseeable that your YouTube videos will be seen by and impact U.S. consumers, U.S. law would apply and you would need a disclosure. Also, the U.K. and many other countries have similar laws and policies relating to endorsements. So, you’ll want to check those, too.
– The social media platform I use has a built-in feature that allows me to disclose paid endorsements. Can I just rely on that tool?
Not necessarily. It’s good that some platforms offer these tools, and we don’t want to dissuade you from using them. But just because a platform offers this feature is no guarantee that it’s an effective way for influencers to disclose their material connection to a brand.
– Is “Gifted” a sufficiently clear disclosure?
No. The word “Gifted,” by itself without a brand reference, is likely to be ambiguous. However, “Gifted by XYZ” (when XYZ is a brand name) should be sufficient when all you’ve received is a free product.
– Is a personalized discount code an adequate disclosure?
When an influencer uses a clearly personalized and unique discount code for a brand’s products (e.g., one matching the influencer’s Instagram name with the percentage savings, such as iammike20%), that probably conveys that a relationship exists between the influencer and the brand. Whether it conveys that they have a financial relationship is less clear. If a significant minority of readers doesn’t understand that the influencer gets paid when people use the personalized discount code, there should be a clearer disclosure. When it’s not obvious what consumers understand, we recommend erring on the side of disclosure.
– Is there anything wrong with contacting customers who left negative reviews and trying to make them happy? If I succeed, can I ask them to change their reviews?
You’re welcome to contact unhappy customers and respond to their concerns. You can also ask them if they’ll add updates to their reviews. However, asking them to change or delete their initial negative reviews could mislead readers.
– Our company uses a social media network 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. For example, a network devoted to the sale of health products may require more supervision than a network promoting, say, a new fashion line.
Here are some elements every program should include: (1) Given an advertiser’s responsibility for substantiating objective product claims, explain to members of your network what they can (and can’t) say about the products – for example, a list of the health claims they can make for your products, along with instructions not to go beyond those claims; (2) Instruct members of the network on their responsibilities for clearly and conspicuously disclosing their connections to you, including exactly how you want them to make the disclosures; (3) Periodically search for what members of your network are saying; and (4) Take appropriate action if you find questionable practices.
It’s unrealistic to expect you to be aware of every single statement made by a member of your network. But it’s up to you to make a reasonable effort to know what participants in your network are saying. That said, it’s unlikely that the activity of one rogue influencer would be the basis of a law enforcement action if your company has a reasonable training, monitoring, and compliance program in place.
If your company pre-approves your influencers’ paid social media posts, you should review the posts for truth-in-advertising compliance, including any disclosure responsibilities. If your company doesn’t have a pre-approval process like that, consider starting one. It’s much easier to review posts before they’re posted than to search for them afterwards.
– You say to periodically search for what our endorsers are saying. How often do we need to do that? Can you give us a standard, like monitoring of X% of our influencers every week or every month?
There’s no one-size-fits-all standard. If regular monitoring is too much for you, you should probably switch to pre-approval of posts.
– How can my company be expected to monitor ephemeral or short-lived endorsements like those on Instagram Stories or Snapchat?
There is probably no practical way to monitor those posts in real time. That’s why you should require that paid posts aren’t made without you approving them in advance.
– My company recruits influencers for marketers who want product endorsements. We pay and direct the influencers. What are our responsibilities?
You could be liable if you play a role in creating or disseminating endorsements containing representations you know or should know are deceptive. You may also be liable if endorsements fail to disclose unexpected material connections, whether by disseminating advertisements without necessary disclosures or by hiring and directing endorsers who fail to make necessary disclosures. Like an advertiser, your company needs to have reasonable programs in place to train and monitor the influencers you pay and direct.
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