FTC Regulatory Trends in Social Media Marketing and Consumer Reviews

Masters of Advertising Law Conference attendees: Scroll down for CLE materials

This panel featured diverse perspectives from industry veterans and Serena Viswanathan, associate director in the FTC's Division of Advertising Practices. The panelists examined regulatory trends in social media marketing and online disclosures, as well as what marketers can expect given the FTC's proposed updates to the Endorsement Guides.

The panel examined a variety of topics from consumer reviews to endorsements directed to children and what these changes mean for practical compliance and how best to manage risk, as well as what these proposals indicate about the FTC's priorities and interests going forward.

Key Takeaways

For marketers, being clear is important when it comes to product reviews, endorsements, and influencer collaborations. Otherwise, it can get legally sticky very easily. For instance, Section 5 of the FTC Act prohibits deceptive or unfair practices; this includes material that could mislead consumers, cause injury, not reasonable avoided, or outweighed by competition. It's important to note that many states have analogous "mini–FTC Acts" which some allow private lawsuits.

Advertisers must have appropriate evidence to back up their claims, such as saying a product can do something when it can't (for instance: a wrinkle cream that permanently gets rid of fine lines). It's important to separate this from endorsements, which must always be disclosed.

Endorsements are any advertising message that consumers are likely to believe reflects the opinions of a party other than the advertiser. These can be from social media influencers, celebrities, and consumers via reviews.

A material connection is a connection between the endorser and the seller that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience).

Action Steps

It's important to understand what information to include in a disclosure. Disclosures must effectively communicate to the audience the material connection between the advertiser and the endorser. Moreover, endorsers don't need to list the details of everything they've received, but any information that would affect the weight a viewer gives to the endorsement should be disclosed.

Proposed updates to the endorsement guides include:

  • "Endorsement" definition now includes "tags"
  • "Clear and conspicuous" defined consumer reviews
  • New guidance on consumer reviews and star ratings obligations of advertisers
  • Provide training, monitor network, and follow-up if needed
  • Disclose connection when reposting influencer posts Liability of Intermediaries
  • New section on the liability of intermediaries like PR and marketing firms

Equally as important is making disclosures clear and conspicuous on social media:

  • For Instagram and Facebook, don't hide disclosures below "more." For stories, superimpose the disclosure
  • For YouTube, disclose in the video, not just the description.
  • For Twitter, don't bury disclosures in a string of hashtags.

Most of all, don't rely on social media disclosure tools. When posts are shared or reposted, include the disclosure.

For influencer, disclose when you have any financial, employment, personal, or family relationship with a brand. Financial relationships aren't limited to money. Disclose the relationship if you got anything of value to mention a product. If posting from abroad, U.S. law applies if it's reasonably foreseeable that the post will affect U.S. consumers. Foreign laws might also apply.

CLE Materials

Source

"FTC Regulatory Trends in Social Media Marketing and Consumer Reviews." Laura M. Kim, partner and chair of advertising and consumer protection practice at Covington & Burling LLP; Alicia Mew, associate general counsel of regulatory at The Wonderful Company; Andrew Smith, partner at Covington. 2022 ANA Masters of Advertising Law Conference, 11/9/22.

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