By: Philip Nulud, Esq.

Social media can be used in a multitude of ways for savvy brands to promote their products. A popular approach is providing “celebrity bloggers” with free or discounted items in exchange for a picture, post, tweet or “shout-out”, which creates “organic” exposure for their brand. While social media has its own methods of operation, the Federal Trade Commission (FTC) rules must be taken into account when handling these promotions.

Under Section 5 of the FTC Act, 15 U.S.C. § 45, the FTC is given the power to direct persons and companies away from using unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in affecting commerce. This includes advertising and social media.

One of the FTC’s main concerns is that consumers may be misguided into believing that an endorsement is the honest opinion of an endorser when in actuality there is a relationship between an endorser and a company and/or marketer. If relationship exists or an agreement has been made, the FTC requires that the endorser disclose this information.

It is common practice for companies or advertisers to provide products, services or discounts to individuals who have a broad reach on social media. For example, celebrity bloggers who have Instagram accounts with hundreds of thousands of followers are often given free merchandise and/or compensation in exchange for posting pictures of the product or themselves using the product to their accounts. The FTC is concerned that consumers are being deceived by these posts. As a result, the FTC has released guidelines that advise the endorsers, marketers and companies that they must disclose a relationship if the relationship is not apparent to consumers. (https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#contests) Thus, if a blogger is writing a review, they must disclose whether the product was provided to them by a certain manufacturer or to at least disclose their relationship (i.e. if they’re sponsored or employed by the manufacturer).

In some forms of social media such as Twitter, Pinterest and Instagram, there is a limited amount of space in which one can post something, which makes disclosing this information more difficult. Further, the FTC has not mandated the specific wording of disclosures. However, it advises that inserting short statements such as “#sponsored”, “#promotion”, “paid ad” or even “ad,” may be enough to disclose a connection between the endorser and company.

Many bloggers and social media users feel that having such tags or wording would make their social media accounts feel non-organic or worse, they would be labeled a “sell-out.” While the FTC may choose who they would like to pursue, their rules still apply to bloggers. However, as a practical matter, the FTC has indicated that their enforcement efforts will focus on the companies and/or marketers whose products are the subject of the blogs.

Thus, while it certainly takes away from their organic publicity, companies should make an effort to advise their endorsers that they must disclose their relationship or if they received a particular item from the company or its marketing firm. Particular hash-tags such as “#sponsored” can be used, or even perhaps much more obvious hash-tags such as “ProvidedToMeBy[insertcompanyname]forfree”.

Companies and marketers know that they cannot control what is said on social media and that their endorsers may not follow these guidelines, but they must be mindful of these FTC guidelines in order to prevent being subject to an enforcement action by the FTC. The FTC advises that companies educate and instruct endorsers of such guidelines, make periodic attempts to search for what is said and if there is a problem, follow-up on it. Thus, at a minimum, companies should make a concerted effort to expressly communicate to endorsers that they must adequately disclose the relationship to consumers. The companies should then monitor the posts. Further, if the company re-tweets, re-grams, or re-pins an endorsed post, they need to also disclose the relationship.

Thus, companies and marketers should take note of the FTC’s guidelines and integrate them into their marketing plans and make the appropriate disclosures.