For companies that have been trying creatively to comply with the Federal Trade Commission’s new endorsement guidelines (effective December 1, 2009), help may have arrived this week. The Word of Mouth Marketing Association released a guide on complying with the FTC guidelines on February 17, 2010. See http://womma.org/ethics/disclosure/.
The FTC’s recent revisions to its endorsement guidelines were intended to clarify its enforcement stance regarding advertising and marketing done through the Internet. With increased consumer/brand interaction through blogs, Facebook, Twitter, and other social media sites, the FTC decided to provide guidance on how to avoid running afoul of its deceptive advertising rules in these new venues. The FTC was especially concerned about content that does not appear to be paid-for advertising but for which the speaker or author receives a material benefit that could affect the credibility that consumers give to the author’s statements.
The new guidelines require disclosure of “material connections,” such as being employed, being paid, or being given free goods, services, or special privileges in connection with commenting about a company or its products or services online.
The key points for businesses in the new guidelines are:
- If a company employee posts something favorable about the company or its products or services online, the fact of employment must be disclosed.
- Bloggers must “clearly and conspicuously” disclose if they are paid or get a free product or service that they mention in a blog post or other online comment.
- A company that pays or provides a free product or service to a blogger will be liable for any false statements made by that blogger. The company also has a duty to instruct the blogger on the appropriate notice the blogger must give about being paid or receiving a free product or service and the need for truthfulness and substantiation of claims. The company also must monitor the blogger’s compliance with the endorsement guidelines.
- When paid or given free products or services, bloggers will be liable for false or unsubstantiated statements they make about the company that paid them or its products.
- If consumers are given points or some other reward for passing along a marketing message to their contacts, they must disclose that they are receiving a reward, and the advertiser must take steps to ensure that the disclosures are being provided.
See http://ftc.gov/os/2009/10/091005revisedendorsementguides.pdf for the updated FTC endorsement guidelines.
This sounds straightforward, but in a world in which many posts contain fewer than 140 characters, there isn’t much room for disclaimers and disclosures. Over the last few months, companies have been designing compliance policies, educating their employees and marketing groups about the new rules, and trying to figure out what form the disclosures should take.
On February 17, 2010, the Word of Mouth Marketing Association released a guide which may begin to set some industry standards for how to provide appropriate disclosures (in not too many characters). Examples include:
- I am an employee [or representative] of company name.
- I received product or sample from company name to review.
- I was paid by company.
- For microblogs such as Twitter, include the hashtags #spon, #paid, or #samp.
The social media world continues to evolve very quickly and surely corporate compliance with the new FTC endorsement guidelines will evolve as well. Dorsey & Whitney LLP will strive to keep you up-to-date on important developments in this area.