Transcript FTC Endorsement Guidelines: Managing the Legal Risks

FTC Endorsement Guidelines: Managing the Legal
Risks Presented By Social Media
Daniel T. Rockey
Bullivant Houser Bailey PC
San Francisco
[email protected]
The Rise of Social Media and its Use in
Marketing
• Social media (Blogs, Twitter, Message Boards, You
Tube, etc.) as a marketing tool
• PayPerPost, Izea
• Blurring the line between what is advertising and
what is simply expression of opinion
FTC: Background
• FTC Act gives the FTC broad power to regulate "unfair
or deceptive acts or practices in or affecting
commerce”
• Power to impose civil penalties, fines, obtain
injunctions
FTC Guidelines Concerning Use of Endorsements
and Testimonials in Advertising
• FTC issues Guidelines (16 CFR Part 255 et seq.) in
October 2009; effect. December 1, 2009
• Covering “any advertising message . . . that
consumers are likely to believe reflects the opinions,
beliefs, findings, or experiences of a party other than
the sponsoring advertiser”
FTC Guidelines Concerning Use of Endorsements
and Testimonials in Advertising
• In general, prohibits false or unsubstantiated claims
• Requires disclosure of “material connections”
– A connection “that might materially affect the weight or
credibility of the endorsement”
• “Practices inconsistent with these Guides may result
in corrective action taken by the Commission”
FTC Endorsement Guidelines: Examples
• Must disclose when connection is “not reasonably
expected by the audience”
Example:
• Physician appears in ad for anti-snoring device
• Paid for appearance: no disclosure required
• Paid per unit of sales: disclosure required
FTC Endorsement Guidelines: Examples
Example:
• Sports figure touts laser eye center in magazine ad
• No disclosure required
• Same sports figure touts laser eye center in
interview, on Twitter
• Must disclose relationship
FTC Endorsement Guidelines: Social Media
Example:
• Cosmetics company uses social marketing service (e.g.,
PayPerPost or Izea) to identify blogger to try out new
lotion
• Blogger touts lotion in blog, claims it cured her eczema
FTC:
• Company is liable for false, unsubstantiated claims made
by blogger
• Blogger is liable for unsubstantiated claims, failure to
disclose relationship
FTC Endorsement Guidelines: Social Media
Example:
• College student writes popular blog on video games,
systems
• System maker provides free machine to blogger, who touts
machine on blog
FTC:
• Company is liable for false, unsubstantiated claims made
by blogger
• Blogger is liable for unsubstantiated claims, failure to
disclose freebie
FTC Endorsement Guidelines: Social Media
Example:
• Employee of company that makes MP3 players posts
comment on message board devoted to MP3’s, devices
FTC:
• Employee must disclose employment relationship
• Company liable for statements of employee, failure to
disclose?
FTC Endorsement Guidelines: Protecting Yourself
and Your Company
• Companies must carefully manage new media
marketing efforts
• Advise ad partners, endorsers of obligation to disclose
and make record of disclosures
• Actively monitor statements by endorsers and take
prompt corrective action
• Monitor employees’ use of social media
• Implement and enforce company-wide policy re use of
social media by employees