Section 5 of the FTC Act generally prohibits deceptive advertising. An endorsement must reflect the honest opinion of the endorser and cannot be used to make a claim that the marketer of a product could not legally make. The FTC’s Endorsement Guides apply to:
- Ad agencies
They also apply to all media, such as social media, blogs, YouTube, television and radio.
At its core, the FTC’s Endorsement Guides reflect the basic truth-in-advertising principle. The Guides require the clear and conspicuous disclosure of “material connections” between advertisers and endorsers that reasonable consumers would not expect and would affect how much weight to give the review.
A material connection can include, without limitation:
- Friendship or family relationships with the company that sells the product
- Employment with the company that sells the product
- Being paid by the company to promote the product
- Being given something of value to promote the product
The Guides provide insight into what the FTC thinks about various marketing activities involving endorsements. While they do not have the force of law, inconsistent practices often result in investigations and enforcement actions seeking disgorgement of money received from the violations.
The FTC actively polices disclosures in social media endorsements. Material relationships to brands must be clearly and conspicuously disclosed.
Depending upon the circumstances, clicking a button or sharing a link to show what you are a fan of a particular product or service may or may not be considered an endorsement. As a general rule, if you are doing it as part of a sponsored campaign and it involves any compensation (e.g., a discount) then a disclosure is required.
In 2017, the FTC filed its first complaint against individual social media users. In that case, the individuals were alleged to have used social media to promote a company without disclosing that they, in fact, owned the company. The FTC’s also alleged that the individuals had organized an “influencer program” and paid other influencers to promote its website throughout social media. Digital marketing lawyer
Social media lawyer Richard B. Newman was recently featured by Leading Internet Case Law as a legal source on the FTC’s action against social media influencers.
The Federal Trade Commission has also recently sent out warning letters reminding influencers and marketers that influencers should clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.
Although regulatory enforcement focus has traditionally been on advertisers and ad agencies, the FTC does monitor bloggers and individual endorsers for violations of Section 5 of the FTC Act, such as the failure to make required disclosures. Paying for a product yourself or getting a free sample is not, by itself, an issue.
Endorsements made on behalf of a sponsoring advertiser are a different story. For example, a blogger that is given something of value in exchange for mentioning a product.
If a consumer knowing about a gift or incentive would affect the weight or credibility readers could give to a recommendation, disclosure is necessary. The incentive need not necessarily have financial value to trigger the Guides. The FTC recommends that disclosures on blogs be made at very close to, or part of, the endorsement to which it relates.
Testimonials claiming specific results are usually interpreted to mean that the endorser’s experience reflects what others can also expect. Advertisements that feature endorsements from people that achieved above average results are typically utilized in conjunction with weight-loss product advertising campaigns.
An advertiser must be able to substantiate that the endorser’s experience represents the generally expected results. Statements like “results not typical” or “individual results may vary” are insufficient.
Advertisers must either have proof to substantiate express and implied representations that the results are typical, or properly disclose the generally expected performance.
Example: An advertisement ad in which a woman says, “I lost 30 pounds in 6 months with WeightBeGone.” If consumers cannot generally expect to achieve such results, the advertisement must state how much weight consumers can expect to lose in similar circumstances. E.G., “Most women who use WeightBeGone for 6 months lose at least 10 pounds.”
The Guides offer dozens of examples involving various endorsement scenarios.
Photos and Videos
Just posting a picture of a product in social media or a video depicting use of a product could potentially convey approval thereof. Words are not always necessary to convey a positive message and the FTC considers opinions or beliefs about a product to be endorsements when there exists a relationship with the sponsoring advertiser.
Disclosure Language and Placement
There is no magic wording for disclosures.
The important thing is to provide material information in plain language. For example, “Company X gave me [name of product] to try . . .” Disclosures should also be clear and conspicuous and placed where consumers cannot miss them.
Hyperlinks are also unlikely to be sufficient to convey the importance, nature and relevance of the information to which it leads. They are frowned upon by the FTC when it comes to disclosures, especially the relatively brief “material connection” disclosures.
Disclosures should always be made in plain and unambiguous language. They should find consumers and, in general, be:
- Close to the claims to which they relate
- In a font that is easy to read
- In a shade that stands out against the background
- For video ads, on the screen long enough to be noticed, read, and understood
- For audio disclosures, read at a cadence that is easy for consumers to follow and in words consumers will understand
Continuous audio and text disclosures, or multiple, periodic disclosures during videos are recommended by the FTC.
Disclosures should always be placed where they are unavoidable and will grab a users’ attention. Influencers and brands are both potentially liable for failing to properly disclose a material connection.
Snapchat, Instagram and Twitter
The guidelines focus heavily on disclosures for social media like Instagram, Facebook and Twitter.
The FTC states that disclosures may be superimposed on Snapchat or Instagram Stories as long as it is easy to notice and read in the time that followers have to look at the image. When assessing how much time followers should be given to look at the image, consider:
- How much competing text exists
- The size of the disclosure
- How the disclosure contrasts against the image
FTC guidance provides that the same general disclosure principles apply, without regard to real estate limits such as those on Twitter. The words “Ad,” “#ad,” “Paid ad,” “Sponsored” or “Promotion” are unambiguous and would likely be effective. The FTC also recommends that the disclosures be placed at the beginning of a post, or at least where it will be easily noticed and understood.
- When making endorsements on Instagram material connections should be disclosed above the “more” button
- Consumers will likely not understand a disclosure like “#sp,” “Thanks [Brand],” or “#partner” in an Instagram post to mean that the post is sponsored
- Tagging a brand, even without further description or praise for the product, is an endorsement if there exists a relationship with that brand
- Hashtags should be used that make relationships clear
The FTC has stated that the following are not considered to be conspicuous:
- Strings of multiple tags, hashtags, or links
- Multiple tags, hashtags or links when they appear at the end of a long post
- Hashtags like “#sp,” “Thanks [Brand],” or “#partner” are not understood by consumers to mean a paid endorsement
- A disclosure in the audio portion of a video or snapchat “story” only (consumers may not turn on the sound
Affiliate marketers that are compensated for purchases made via their links must clearly and conspicuously disclose relationships with third-party product or service providers. Updated guidance states that using the term “affiliate link” or “buy now” is insufficient to explain the relationship.
Before and After Photos
Before and after photos are considered endorsements. Photos have to be true and cannot be deceptive or false.
Photos must depict what consumers can accurately expect from using the product. If photos are not accurate representations of typical results, advertisers will need to include a clear and conspicuous disclosure regarding same and as to what most consumers can expect to achieve from use of the product or program. If the photos are not an accurate representation of typical results, advertisers will need to include a clear and conspicuous disclosure as to what most consumers can expect to achieve from use of the product or program.
To the extent the photos reflect a claim of what the product/program will deliver, this can be considered a representation as to the efficacy of the product and advertisers should have some way to substantiate the claim. If an advertiser has no substantiation that attested results are representative – it must clearly and conspicuously disclose that consumers should not expect to experience the attested results and disclose the generally expected results. If an advertiser cannot do that, they no testimonials should be used, including photos.
There are numerous ways that a testimonial can be deceptive. For example, an endorser may not have experienced the reported result, the reported result may be attributable to other factors, or if a testimonial claims extreme and atypical results but presents it as typical and ordinary, it is likely to be deceptive without a proper indication of the more modest results of that the typical user would experience.
False or misleading claims can be conveyed in words and in before-and-after images. Stock photography images of models to advertise a product are considered to be deceptive if the images are of people other than the verified users.
Testimonials may be acceptable as long as they are verified users, and advertisers possess a testimonial affidavit and a release form which may include use of images.
Training and Monitoring
Advertisers are responsible for what third-parties do on their behalf. The FTC recommends that advertisers implement reasonable social media programs and policies to train and monitor influencers, bloggers and other brand endorsers.
Advertisers should consider:
- Explaining what endorsers can and cannot represent
- Explaining endorsers’ responsibilities
- Audit what endorsers are saying
- Take remedial action in the event of violations
- Requesting operational reports
The design and implementation of a reasonable training, monitoring and compliance program by an experienced FTC advertising regulation compliance attorney can make the difference between a warning letter and a formal investigation or enforcement action.
The Federal Trade Commission continues to signal that compliant endorsements on social media and review websites remain a high priority.
The Guides apply to both marketers and endorsers. An endorsement has to represent the accurate experience and opinion of the endorser. An endorsement from someone that has not tried a product will be considered deceptive.
- Clearly disclose when you have a material connection, including, but not limited to, a financial or family relationship with a brand
- Ensure your sponsorship disclosures are difficult to miss
- Treat sponsored tags, including tags in pictures like any other endorsement
- On image-only platforms like Snapchat, superimpose disclosures over the images
Practices to Avoid:
- Do not assume followers know about all your brand relationships
- Do not assume disclosures built into social media platforms are sufficient
- Do not use ambiguous disclosures like “thanks,” #collab, #sp, #spon or #ambassador
- Do not rely on disclosures that people will see only if they click “more”
Additionally, endorsements will not substantiate express or implied advertising claims. Claims about a product that would require proof that the advertiser does not possess cannot be made. Endorsers are potentially subject to liability for making claims without having a reasonable basis for them.