The Federal Trade Commission (“FTC”) recently announced its long awaited proposed changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”). The Endorsement Guides were first enacted in 1980 and are intended to help businesses ensure that their endorsement and testimonial advertising conforms with Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” The proposed changes to the Endorsement Guides reflect the FTC’s continued focus on ensuring that endorsements and testimonials are not misleading to consumers.
Under the proposed changes, endorsements and testimonials would be subject to the same truth-in-advertising principles that apply to other forms of marketing. Endorsements would have to be honest and not misleading, and testimonials would have to reflect the typical consumer’s experience. In addition, the FTC is proposing new disclosure requirements for endorsements and testimonials that are made through social media platforms such as Twitter, Facebook, and Instagram. These disclosures would need to be made clearly and conspicuously, in close proximity to the endorsement or testimonial.
Some of the huge changes that will likely change how we think about social media marketing:
1. Under the new guidelines, any time a user posts content on a social media platform that features a branded product, that will be considered an endorsement. The FTC is concerned that many users are not aware of this practice and could be unknowingly endorsing products. For example, if a user posts a photo on Instagram of themselves using a certain brand of makeup, that would be considered an endorsement. If you tag a brand, that is an endorsement. The guidelines state that endorsements must be honest and transparent, and that users should disclose any relationship they have with the brand in question.
2. They really pushing that that bloggers and others who receive free products or other forms of compensation in return for positive reviews must now disclose such arrangements “clearly and conspicuously.” Disclosure of sponsorships must be “difficult to miss and easily understood by ordinary people.” FTC’s new guidelines are in response to concerns that such disclosures are often buried in lengthy terms and conditions documents or placed in a location on a website where they are easily missed.
3. In recent years, there has been an increase in the use of middle-man vendors, such as advertising agencies and public relations firms, to create and place ads. While these vendors can be a valuable resource for businesses, they also pose a risk. In particular, middle-man vendors may be liable for not disclosing that their ads are paid. This is because the Federal Trade Commission (FTC) requires that all paid ads be clearly and conspicuously disclosed.
4. Businesses should not distort or misrepresent reviews from customers or clients about their products or services. Although some businesses may be tempted to do this in order to make themselves look better, it ultimately damages their credibility and can lead to legal consequences.
5. Many platforms have introduced tools to help improve transparency, such as the paid partnership label on Instagram. However, it seems that according to the FTC, this is likely “not enough” as it doesn’t disclose the exact nature of the relationship, what was recieved, and so on. The FTC’s proposed changes to the Endorsement Guides are significant, and will require companies to take a closer look at how they use endorsements and testimonials in their advertising.
If you are currently using endorsements or testimonials in your advertising, or if you plan to do so in the future, you should carefully review the proposed changes and make sure that your marketing materials comply with them.