In a recent advisory opinion, the FTC highlighted the potential violation of the FTC Act resulting from a seller’s failure to disclose his connection with an endorser. This advisory opinion has broad legal ramifications for blogging by corporate employees, even if the company is unaware of the employee’s activities on personal time.
Deceptive practices in business violate the FTC Act. The FTC Act defines a deceptive practice as one (1) that represents or omits information that would likely mislead “consumers acting reasonably under the circumstances”; and (2) “that representation or omission is material to consumers.” The FTC has repeatedly found that the seller’s failure to disclose a relationship that was likely to materially affect the weight a consumer granted to the seller’s claims was deceptive.
Of specific concern is the weight that a potential consumer gives to statements made by a sponsored endorser. The FTC’s Endorsement Guides state that “when there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement . . . such connection must be fully disclosed.” Typically, a connection exists where the seller pays the endorser or where the endorser is a “close business associate or relative of the seller.” Certainly, employees of a corporation constitute “close business associates.” As such, employers should be cognizant of potential liability and should take necessary steps to prevent what may be construed as deceptive advertising by warning enthusiastic employees about blogging. If an employee endorses or in any way promotes his employer’s product in a blog, the connection between the employee and the company associated with the product should be identified. By the same token, if an employee blogs negatively about a competitor’s products or services, the employee should disclose his/her employment status. Unless the employment relationship is clear from the context, the employee blogger’s failure to disclose the employment relationship might constitute a violation of the FTC Act. Problems arise when employees blog about issues of which they are not informed or are unauthorized to speak. Moreover, scathing remarks about competitors’ products can be harmful on a number of fronts. The age-old adage that personal blogging should stay personal and not relate to the business context is further confirmed by this recent ruling. Clearly, blogging authorized by an employer would implicate the corporate relationship. Employees should be advised to strictly abide by their employer’s blogging policy, and that if they blog about a product, they must identify their employment status.