Recent statements and actions by the Federal Trade Commission, the Food and Drug Administration and the Consumer Financial Protection Bureau forewarn of additional regulatory enforcement of advertisements on social media.
For example, just a few months ago the FTC announced that in 2016 it intends to prioritize investigating the use of false online reviews, undisclosed material connections with reviewers, and prohibitions on negative reviews. Then in late December, it issued an enforcement policy statement and accompanying guidance regarding "native advertising." This refers to advertising that mimics the medium in which it is distributed, such as advertising that appears to be news on social media platforms, or advertising that is embedded in social media content such as in a YouTube video.
Under FTC rules, advertisers using social media are required to disclose any facts necessary to ensure their claims are accurate, honest and not misleading, including disclosing the existence of any material connection between an endorser and the product or its seller.
Like the FTC, the FDA recently released a long-awaited social media policy. The FDA’s policy clarifies that employees do not need permission or approval from FDA supervisors or agency management to use social media in a personal capacity. It does, however, limit information that can be shared regarding compensation, nonpublic information, and improper use of titles and authority, among other things. Lauded as a "strong" policy by industry, the policy also allows FDA scientists to obtain corrections for any social media comments made that rely on their science but are incorrectly broadcast. For example, last summer reality TV star Kim Kardashian West received a warning letter from the FDA after she posted a photo on Instagram endorsing a prescription drug for morning sickness without also talking about the drug’s dangerous side effects.
The CFPB seems ready to join in, as well. While the CFPB has not yet taken action directly related to social media marketing, last fall, the CFPB issued a policy statement in which it disclosed that as part of its efforts to regulate social media, "[t]he CFPB may collect or use a limited amount of Personally Identifiable Information when using social media to further its ability to interact with the public." It’s hard to imagine that the CFPB would disclose that it collects personal information on social media if it was not intending to ramp up enforcement efforts.
Federal agencies such as the FTC, FDA and the CFPB are predicable in that increased guidance in a particular area typically is followed by increased enforcement activities. More and more businesses are using social media to market their products and services. Customers follow companies on social media for a variety of reasons, such as finding information on new products, learning about discounts or promotions and reviewing or reading reviews on the company. But, companies that believe the informality of social media translates to informality in how they message their product may have a rude awakening. Thus, companies that advertise on social media—even if it is simply by having celebrities promote their products to their social media followers—should beware that those ads may be the subject of heightened governmental scrutiny.