Understanding the FTC’s Endorsement Guide Updates

Recently the FTC (Federal Trade Commission) updated their Endorsement Guide: What People Are Asking. Their original message was essentially any material relationship between a brand and an endorser must be disclosed. However such a broad statement, left a large amount of confusion on marketers part around what level of disclosure was necessary, and how must the disclosure be presented. As a result the guide has been updated to provide social marketers with additional guidance on issues which were not as prevalent when the guide was last updated in 2010. One of the reasons this update is so important, is it serves as the FTC’s official notice to all brands and marketers. Moving forward brands and endorsers found in violation of this guide will not receive a warning letter, but rather legal action from the FTC.

In order to avoid potentially running afoul of the FTC and risk legal action, here is a breakdown on what and how your company should be disclosing information around endorsements and promotions in your social marketing efforts.

Contests/Sweepstakes

One area which the update focuses on is contest and sweepstakes. Often marketers leverage social media for contests or sweepstakes; offering their followers the chance to win a prize by retweeting, or mentioning the brand in a post. The FTC views these mentions as endorsements and as such require the individual to include a notice such as #contest or #sweepstakes in their post.

To summarize: If your company is running an online promotion which has followers engaging in any activity which might be considered an endorsement of your product or brand, the responsibility lies with you to ensure there is a clear indication the individual engaging in the contest may potentially be compensated for it.

Paying for Fake “Likes”

Another area where the FTC is cracking down is around “fake” likes. Most savvy marketers today are aware there are various services which can be leveraged to pay for “likes” or shares across social platforms. While this practice has typically been one which above board marketers have avoided, the FTC has made a point to include in in their update. Whether these “likes” are on Facebook or any other social platform, the message is clear: if you are paying for endorsements and are not disclosing the information (which would be very difficult for “likes), you risk receiving an action letter from the FTC.

Celebrity Endorsements

Whether it is a celebrity or an individual who is famous for their influence on social networks, leveraging their follower count to promote products/services/brands has been rampant over the past few years. In some cases rather than being paid directly by the brand, the celebrity promotes a product which they are invested in directly. The guidelines from the FTC have been updated to address these issues directly, stating any relationship (which may not be known to the reader) must be disclosed. While many individuals may be aware Tiger Woods is a spokesperson for the brand Nike, as others may not be, any post by Tiger Woods about the brand must include a notice disclosing he has a relationship with Nike.

The rule of thumb now exists, if there is any monetary gain for the endorser, whether it be through a direct payment or they will see a return as a result of the post, they must disclose their relationship with the company.

What Constitutes Disclosure

The update also included language around clarifying what type of disclosure is required. As mentioned earlier, if the post is for a contest or sweepstakes, leveraging a hashtag of #contest or #sweepstakes is enough. However shortening the disclosure in a way which may cause confusion to its meaning is not allowed, #sweeps rather than #sweepstakes would be an example of an alteration which would now run afoul of the FTC guidelines.

While this can pose a challenge on some social media networks such as Twitter which has a limited number of characters available, the FTC has made clear this is not an excuse. Starting a post with a message as simple as #ad, makes it clear the post reflects an endorsement the issuer may gain from and provides coverage against any future FTC action.

For videos, the FTC makes a note the disclosure cannot only reside in the details section or at the end of the video. In fact they state the disclosure must be made at the beginning of the video, to ensure the viewer is aware of the relationship between the content and the advertiser.

While these new updates may seem onerous, for many marketers they actually represent a relief. The knowledge that disclosures on brand relationships must be made is not new, but with the growth of social media how exactly brands should handle this disclosure had drifted into a grey area. These new updates provide marketers with the information they need to ensure their campaigns are done correctly and do not put themselves or their brands at risk of legal action.

About author

Joseph Brady
Joseph Brady 21 posts

Joseph Brady has been involved in growing businesses since 2004. Focused on improving their marketing efforts both on and offline, he has spent considerable time working as a search engine marketing consultant assisting business increase both the quantity and quality of web traffic.

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