Social media marketing and promotions have become a popular way for companies to increase word of mouth about their brand, products and services. However, the Federal Trade Commission (“FTC”), recognizing the power of word of mouth marketing, has issued guidelines for fair practices and has brought actions against companies that have not ensured that those that speak for them disclose their connection to the company, the most recent resulting in a $250,000 settlement.

Now a leading marketing trade organization has followed suit with guidelines and requires its members to have a compliant social media policy. The FTC likewise encourages such a policy and has let companies off the hook for lack of disclosures by bloggers where it had a policy requiring them to disclose. However, complicating things, the National Labor Relations Board (“NLRB”) has brought actions against companies who have FTC-compliant social media policies for limiting employee free speech. Looking at all of this together, companies can develop social media policies that balance the need to protect consumers from deception and the right of employees to be free to speak about the terms and conditions of their employment.

On August 14, 2012, the Word of Mouth Marketing Association (WOMMA) released an updated version of its Social Media Marketing Disclosure Guide (“WOMMA Guide”). In light of the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (“FTC Guide”), the WOMMA Guide is designed to help marketers comply with the FTC’s requirement that individuals clearly disclose any material connection they have to a company whose products or services they review. The WOMMA Guide translates the FTC’s legalese into everyday language, and it provides examples that help when trying to comply in practice. A number of significant changes were made to WOMMA’s guidance to address changes in technology, platforms, uses and regulation in the areas of word of mouth and social media marketing and the FTC’s evolving treatment of social media marketing. The WOMMA Guide outlines five key responsibilities marketers have related to how advocates make disclosures. Marketers must:

  1. educate advocates about their responsibilities;
  2. monitor campaigns to ensure compliance;
  3. take steps to correct failures to comply;
  4. ensure that agencies who engage advocates on the marketer’s behalf comply with the policies; and
  5. ensure that employees make appropriate disclosures when they talk about the marketer’s products or services.

The WOMMA Guide provides specific examples of how disclosures should be made in different contexts, including personal blogs, comments in online forums, video reviews, and microblogs (e.g., Twitter) where the space for disclosures can in some instances be limited. The FTC has been active in challenging companies and bloggers when advocates fail to make disclosures or material connections. See FTC Bringing Madness to March.

Furthermore, the WOMMA Guide requires marketers to institute a company-wide social media policy that takes these responsibilities into account for their own employees and ensures that their agencies, partners, networks and vendors have policies that are in alignment with the marketer’s policy or guidelines ensuring that advocates are educated, monitored and supervised accordingly. Not only are social media policies recommended by WOMMA, but they can help stave off FTC enforcement actions. The FTC suggested in its own guidance regarding endorsement and social media that even if some bloggers failed to make required disclosures it would likely not prosecute companies that had proper social media policies and required bloggers to comply with them and the company actively monitored the bloggers posts. The FTC has already exercised such prosecutorial discretion in one case where the company could establish such facts and dropped its investigation in another where the company agreed to institute such a policy. Accordingly, companies that fail to have and enforce social media policies that meet WOMMA/FTC requirements do so at their peril.

If your company already has a social media policy designed to comply with the FTC Guide, beware that over the course of this year the National Labor Relations Board (NLRB) has issued a series of warnings that various provisions commonly found in social media policies are unlawful to the extent they limit employee’s ability to organize or engage in “concerted activity,” and have brought several enforcement actions. See detailed discussion in our prior client alert on the subject ("Employers Need to Review and Revise Social Media, Blogging and Privacy Policies after NLRB General Counsel Report"). If you haven’t updated your social media policy in light of the NLRB’s position, it is quite likely your company’s social media policy includes obligations that fail to comply with the NLRB’s requirements. We have been actively working with companies to reexamine their social media policies in light of the NLRB’s report.

Additional Resources:

WOMMA Social Media Disclosure Guide

WOMMA Ethics Code and other ethical resources

Additional information on Best Practices Regarding Social Media Disclosures