What We're Reading - 'The FTC Has Stepped Up Regulatory Investigations on Social Media'

For millions of people around the world, social media has become an enormous and inescapable part of everyday life, for better or for worse.

Many people get their news and information from social channels like Facebook and Twitter, for instance. Others use apps like Instagram or Pinterest to begin the e-commerce process. Maybe you even came across this very article on one of your social feeds!

As social networks have grown in prominence and influence, more and more brands, from across industries, have turned to social media marketing to stir up buzz about their offerings. Unbeknownst to many organizations, however, is the fact that “the U.S. Federal Trade Commission (FTC) has increased its enforcement of consumer protection laws and regulations.”

That idea comes to us from Lexology, which recently published an interview between Hogan Lovells and senior associate James Denvil (originally published on hoganlovells.com). The article provides a great look at the FTC’s guidelines for online advertising, particularly when it comes to the thorny issue of endorsements.

As Denvil explains:

“As more and more companies use social media to advertise and distribute information, many are engaging endorsers — celebrities, in particular — to promote their products. The FTC is concerned that these endorsements may not provide consumers with material information that would help consumers make reasonably informed decisions about whether to purchase a product or engage with a service.”

As he notes, FTC guidelines for television and radio endorsements were updated to include social media in 2017. This is crucial because federal guidelines often serve to guide states, which have largely adopted consumer protection laws that “generally align with the federal FTC Act.”

So, what do businesses – and their paid endorsers – need to be conscious of before clicking “share” on that next social ad? Denvil brings up a few points worth keeping mind, regarding…

…What constitutes an endorsement

Denvil argues that the FTC would define an endorsement as a “message that consumers are likely to believe reflects an individual’s opinions, findings, or experiences.”

…What could make an endorsement deceptive

Per Denvil:

“According to the FTC, such an endorsement could be deceptive if there’s a material misrepresentation or omission. “Material” means it’s likely to influence a reasonable consumer’s decision to purchase the product. An endorser’s relationship with a brand, particularly a paid relationship, likely will be viewed as a material issue.

…How companies can comply with consumer protection laws while using social media endorsers

Denvil points out that FTC enforcement actions in recent years “provide some insight into reasonable compliance steps” for brands and endorsers. For instance, he says, the FTC expects brands and endorsers to “clearly and conspicuously disclose” any material connections between brands and endorsers, and that these disclosures “must be readily noticeable by a reasonable consumer” and “can’t be buried” (behind a “click to see more” link, for instance).

He also clarifies that both endorsers and brands are ultimately responsible for providing appropriate disclosures; in particular, company officials should bear in mind that they are going to be held responsible for “taking reasonable steps to confirm that endorsers are providing” disclosures, by providing guidance and education and regularly monitoring their content.

In all, this is a thorough, eye-opening read on a consumer protection matter that is only going to continue growing in importance in the years ahead. You can read the full piece here, via Lexology.


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Finn Law Group maintains this website exclusively for informational purposes. It is not legal or other professional advice and does not necessarily represent the opinion of Finn Law Group or its clients. Please carefully review our full disclaimer (link) before proceeding.