The Federal Trade Commission has long regulated the use of endorsements and testimonials in advertising. Both concepts may be defined as advertising messages of any kind that consumers are likely to believe reflect the opinions, beliefs, findings or experiences of a party other than the sponsoring advertiser. The FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, 16 CFR Part 255, were last revised in 2009 and provide detailed descriptions of limitations on the use of endorsements and testimonials, as well as illustrative examples of proper and improper use of these advertising techniques, including through online communications. Recent activity by the FTC and other enforcement agencies suggests that social media activity that might be construed as an “endorsement” has come under additional scrutiny, in sometimes unexpected ways, and serves as a reminder that social media is not exempt from established rules and regulations applicable to other forms of advertising.
FTC: Pinning Is an Endorsement; Contest Participation Creates a Material Connection
On March 20, 2014, the FTC sent a “closing” letter to counsel for a shoe retailer, warning that the retailer’s operation of a promotional contest on social media site Pinterest may have violated Section 5 of the FTC Act (15 USC §45) where it required entrants to create pinboards including pins showing the retailer’s shoes, but did not require entrants to label the boards and pins “to make it clear that they had pinned [the retailer’s] products as part of a contest.” While the contest’s rules required the use of a hashtag with the name of the promotion, the FTC determined that the hashtag did not adequately communicate the financial incentive (i.e., the chance to win a prize) that led an entrant to create the pinboard. The FTC asserted in the letter that the entrant’s “pinning” of the retailer’s shoe pins constituted an endorsement of the shoes, and the failure to state explicitly that the pins were placed in furtherance of a contest entry was a failure to disclose a “material connection” and financial incentive between the entrant and the retailer. The FTC concluded that “entry into a contest to receive a significant prize in exchange for endorsing a product through social media constitutes a material connection that would not reasonably be expected by viewers of the endorsement.”
While the FTC declined to recommend an enforcement action against the retailer – noting that the matters raised were of first impression – it is apparent that the FTC is unlikely to withhold enforcement activity against future promotion sponsors operating similar promotions.
FDA: Liking of Facebook Comments Is an Endorsement
The FTC is not alone in regulating social media comments and actions that in its view constitute endorsements or testimonials. On July 3, 2014, the FDA issued a warning letter to a dietary supplement maker for its practice of “liking” comments (apparently made by consumers) on the company’s Facebook and Twitter pages that suggested the products could treat medical ailments, including cough and sleep problems. The FDA concluded that the company’s liking of comments regarding medical claims constituted an “endorsement” of product uses not approved by the FDA and that the company’s likes had the effect of creating testimonials promoting the non-drug products for medical uses. While the letter focuses on the promotion of relatively unregulated nutritional supplements and does not explicitly reference the FTC’s Guides, it is clear that federal regulators have drawn a connection between a company’s like of a consumer statement and the creation of a “testimonial” or “endorsement” within the meaning of the Guides. It remains to be seen whether the FTC may take this position.
How Should Social Media Users Respond?
In light of recent regulatory activity, social media users, especially businesses, should take care to ensure that even seemingly innocuous activity stays within the bounds of the FTC’s guidelines for endorsements and testimonials, including:
- Disclosing material or meaningful connections between advertisers and those giving endorsements or testimonials (such as payments or other financial incentives)
- Relying on available scientific substantiation for performance claims in endorsements and ensuring that claimed product experiences in endorsements represent general results of product use
- Ensuring proper expertise and testing for any testimonial or endorsement identified as coming from a purported expert or organization
In addition to considering their own posted content, social media users involved in selling goods or services should consider the implications of liking others’ content or taking other actions that may be construed as having adopted that content and utilized it (perhaps unwittingly) as an endorsement or testimonial. Those sponsoring promotions on social media sites should also be attentive to the need to clearly identify when social media postings occur because of a promotion or contest.