The Federal Trade Commission (FTC) through its Acting Chairman, Maureen K. Ohlhausen, has been both vocal and transparent over the FTC’s more relaxed approach to certain regulations, taking a cue from the new administration. However, the FTC continues to aggressively pursue retailers of consumer goods and services for misleading advertisements in social media. This includes failures by influencers on social media to disclose their connections to the brands they endorse.
In a press release issued April 19, 2017, the FTC disclosed that it had “sent out more than 90 letters reminding influencers and marketers that influencers should clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.”
Putting aside for now the question of how the FTC managed to select 90 influencers and marketers from thousands, what is meant by (1) “clearly and conspicuously”, (2) “relationships” and (3) “promoting or endorsing”?
Let us examine them here (in reverse order).
“promoting or endorsing”
According to the FTC, an endorsement means “any advertising message . . . that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”
In other words, any reference to your company, your goods or your services, by anyone other than your company and through their social media account, is an endorsement. Note that even a neutral reference would still be an endorsement, according to the FTC. This is likely because the FTC recognizes that consumers could nonetheless be persuaded even by an influencer making a neutral reference to your company’s goods or services.
A relationship is any “material connection” between your company and its endorser that could “materially affect the weight or credibility of the endorsement”. This essentially means that any connection that might reasonably be perceived by a consumer to affect the impartiality of an influencer is a “relationship” that should be disclosed – even if the influencer was sincerely not influenced by the relationship.
Either monetary or in-kind compensation is sufficient to form a relationship that must be disclosed. This includes your provision to the influencer of free samples of your goods or services.
“clearly and conspicuously”
In the event your company does indeed have a relationship with an influencer who is promoting or endorsing your goods or services through his or her social media account(s), then your FTC liability can only be reduced by requiring the influencer to clearly and conspicuously disclose that relationship.
What your company instructs the influencer as to how to disclose the relationship depends on a variety of factors and your legal adviser’s good judgment. However, here are four points that will help guide you to a clear and conspicuous disclosure:
- “#Ad” or “#Sponsored” must be referenced clearly and frequently. Cryptic abbreviations (e.g. “#Sp”) or ambiguous alternatives (e.g. “#Promotion”) must be avoided.
- Disclosures must not be buried within a multitude of other hashtags.
- Disclosures must be made repeatedly if your influencer is engaged in a dialogue over social media. As the exchange continues over social media, your influencer must regularly make the disclosure as new participants join and prior disclosures get buried.
- Disclosures should not require any additional clicking. For example, your influencer’s followers should not have to click on “more” in order to reveal the disclosure.
Think early, clearly and often when it comes to disclosures on social media.
©2017 Fabio R. Silva. All Rights Reserved.