It is advisable to develop and share social media guidelines with employees and update them regularly, and also to pay attention to what is being said about the company in the social realm. Additionally, a company should select the right people to be its “voice” on blogs and in social media.
In connection with developing corporate policies, many businesses have embraced the use of blogs for promoting their products virally. Companies should be aware of new Federal Trade Commission (FTC) regulations and guidelines governing the use of blogs and social media, generally, for advertising purposes.
The FTC is the primary agency charged with enforcing federal advertising laws. Where a sponsoring advertiser is making a claim about its own products, the FTC Act provides that: (i) advertising must be truthful and non-deceptive; (ii) advertisers must have evidence to back up their claims; and (iii) advertisements cannot be unfair (e.g., they cannot cause or be likely to cause substantial consumer injury which a consumer could not reasonably avoid and are not outweighed by the benefit to consumers). 15 U.S.C. § 45.
With respect to endorsements and testimonials, the regulations are more stringent. The FTC has issued advisory Guides Concerning the Use of Testimonials and Endorsements in Advertising (the “Guides”), which interpret the FTC Act (but are not binding law themselves) and offer practical advice on endorsements and testimonials of consumers, celebrities and experts.
Under the Guides, an “endorsement” means “any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser.” 16 CFR § 255.0(a).
In short, “all endorsements must reflect the honest experience or opinion of the endorser. Endorsements may not contain representations that would be deceptive, or could not be substantiated, if the advertiser made them directly.” 16 CFR § 255.1(a); “Frequently Asked Advertising Questions: A Guide for Small Business,” available at http://www.ftc.gov/bcp/edu/pubs/business/adv/bus35.shtm. To this end, “advertisers must disclose any material connection between a person endorsing a product and the company selling the product. A “material connection” is defined as “a relationship that might affect the weight or credibility of the endorsement.” 16 CFR § 255.5.
Where an endorser is a well-known celebrity or an expert, the Guides do not require disclosure as long as the advertiser does not represent that the endorsement was given without compensation. However, where the endorser is not represented as an expert or is not well-known to a significant portion of the viewing public, “the advertiser should clearly and conspicuously disclose either the payment or promise of compensation prior to and in exchange for the endorsement or the fact that the endorser knew or had reasons to know or to believe that if the endorsement favors the advertised product some benefit, such as an appearance on TV, would be extended to the endorser.” 16 CFR § 255.5.