FTC Issues New Endorsement Guides, Takes Hard Line On Disclosures

Social media users who have any relationships with the businesses or people they endorse -- even friendships or family ties -- should disclose those connections when writing reviews, posting on Instagram and tweeting, the Federal Trade Commission advises in newly updated guidance.

The FTC has recommended since at least 2009 that online endorsers disclose material connections between themselves and companies that wouldn't otherwise be apparent to consumers. In its newest update, issued this week, the agency continues to take a broad view of the types of connections that require disclosures.

For instance, the FTC discusses a scenario where the owner of a new restaurant invites family and friends to eat for free. If those people discuss the restaurant on social media, they should say that they ate for free, and also that they have a relationship with the owner, the FTC advises.



"It may be relevant to readers that people endorsing your restaurant on social media are related to you. Therefore, they should disclose that personal relationship," the FTC writes. "If someone who eats for free at your invitation posts about your restaurant, readers of the post would probably want to know that the meal was on the house."

Jeff Greenbaum, an advertising lawyer with Frankfurt Kurnit Klein & Selz, says the new guidance indicates that to a surprising extent, endorsements on social media remain a high priority.

"I think that many people didn't expect influencers to be such a high priority under the new administration," he says.

He adds that the new recommendations reflect a hard-line position regarding online endorsements.

"The FTC is taking a pretty strict view," he says. "In most cases, the FTC believes the right answer is disclosure."

David Mallen, an advertising lawyer with Loeb & Loeb, adds that marketers' increased reliance on social media may be spurring the agency's continued activity.

"This is, in a way, the future of advertising, and of engaging with consumers, and so the FTC has decided it's really important to be active in this space," he says.

The new guidance comes the same week that the FTC announced it sent warning letters to 21 online influencers.

Another example provided by the FTC in its latest update involves book authors who belong to a group that posts reviews in social media for each other, for free. The agency says that although no one is being paid for the reviews, people should still disclose their connections to the authors. "There doesn’t have to be a monetary payment," the agency writes. "The connection could be friendship, family relationships, or strangers who make a deal."

The FTC also offered some specific guidance about the types of disclosures it is recommending on platforms like Twitter, where space is limited. While the agency says it isn't mandating the use of any particular words, it also says that starting a tweet with #ad "would likely be effective."

The FTC's new guidelines specifically advise bloggers against using some words or phrases for disclosures, including #client, #advisor and #consultant.

"Such one-word hashtags are ambiguous and likely confusing," the FTC writes. "It would be much clearer if you say something like “I’m a paid consultant to the marketers of XYZ."

In addition, the use of #ambassador in Twitter is too ambiguous to convey that a tweet is an ad, the FTC says.

Mallen says that companies sometimes attempt to "use some magical term that doesn't have the word 'advertisement' in it" -- like ambassador, or thank you, in order to avoid potential problems with the FTC.

"It's an attempt to satisfy the FTC rule, but obviously there's a reluctance to do what FTC considers the safe harbor -- which is just call it an advertisement," he says.

The agency also specifically advises against combining company names with the word "ad" at the end in Twitter hashtags. "There is a good chance that consumers won’t notice and understand the significance of the word 'ad' at the end of a hashtag, especially one made up of several words combined like '#coolstyllead,'" the guides say.

People who make endorsements on Snapchat or Instagram Stories should superimpose the disclosure over images, the FTC recommends. "The disclosure should be easy to notice and read in the time that your followers have to look at the image."

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