Commission guidance document tackles nuances of company/endorser relationships

Inquiring Minds

As we’ve reported previously, the Federal Trade Commission (FTC) is taking an increasingly active interest in the activity of endorsers and influencers. A recent spate of “educational” letters to a number of endorsers was followed by specific warning messages in September of this year. This, in turn, was followed by the FTC’s first-ever action against individual influencers.

In the interest of creating clarity and definition around endorsement relationships, the Commission has assembled a helpful guidance document featuring the most common questions it receives on the topic and the FTC’s answers.

Blog Slog

Blogs get up-front attention in the document, beginning with a question about the assumed reimbursement of bloggers in product endorsements. “Isn’t it common knowledge that bloggers are paid to tout products or that if you click a link on a blogger’s site to buy a product, the blogger will get a commission?” No, says the FTC – even if the majority of a blog’s readership understands an implied financial relationship, even “a significant minority” of readers who do not understand will render the blog endorsement deceptive.

In addition, the FTC clarified that it is not especially monitoring bloggers or holding them to a higher standard than traditional media outlets. However, the unique nature of blogs, as opposed to a newspaper or television advertisement, may cause the viewer to misconstrue the relationship the blogger has with a company when the blogger discusses the company’s products.

Getting Paid

The FTC addressed the many different flavors of perks, reimbursements and gift giving. For the Commission, the weight of the question is on the credibility of the endorser. Even absent any sort of financial arrangement, endorsers often receive free items and discounts, and even donations to charity in the endorser’s name. What care should the endorser take with these other forms of remuneration?

“The question you need to ask,” says the FTC, “is whether knowing about that gift or incentive would affect the weight or credibility your readers give to your recommendation. If it could, then it should be disclosed.” Throughout the FAQs, the Commission consistently emphasized the importance of transparency as a best practice.

In Real Life

The FTC also tackled a number of in-the-weeds, highly specific questions that deal with the nuances of what constitutes an endorsement. For instance, one question reads: “Do I actually have to say something positive about a product for my posts to be endorsements covered by the FTC Act?” The Commission’s answer should give every endorser pause: “You don’t necessarily have to use words to convey a positive message.”

Here, the FTC has touched on a recurring theme: If you have a relationship with the company marketing a product, and your audience thinks what you communicate about a product reflects your opinion about it, it’s an endorsement under the FTC Act. Therefore, proper disclosure is required.

The Takeaway

Our summary includes only a small sample of the overall guide, which covers subjects such as television product placements, how “liking” a product on social media may constitute endorsement, and other guidelines for online endorsements. The guide also has a lengthy discussion of disclosure rules, advertiser responsibilities for what others say in social media, and more.

It’s a must read for advertisers, ad agencies, bloggers, online personalities and other social influencers – and anyone soliciting or providing an endorsement. Based on the FTC’s growing scrutiny of influencers and endorsements on social media, any individual contemplating an endorsement relationship should exercise caution and be as transparent as possible when potentially endorsing products.