FTC 101The Federal Trade Commission aims to prevent business practices that are anticompetitive, deceptive or unfair to consumers and its regulations affect businesses trading in every industry. One of its most sweeping regulations is Section 5 of the Federal Trade Act, which addresses appropriate commercial speech to help put an end to deceptive advertising. The FTC has evolved its rules under the act to apply to the ever-evolving world of online advertising. What many companies, review sites, bloggers, and celebrities don’t realize is that if they share content with commercial messages that convey personal enjoyment of a product/service with followers and get compensated for it, their actions are considered endorsements. These endorsements require clear disclosures of the relationship with the product/service provider. To provide guidance on complying with these rules, The FTC released the Guides Concerning the Use of Endorsements and Testimonials in Advertising to serve as a framework for complying with the relevant FTC regulations. Here is an overview of some expectations:
- Endorsements apply to social media and new technology as it evolves. For Twitter, with a 140 character count limit, the use of hashtags #ad #paidad can be sufficient.
- Disclosures for videos are not sufficient in the video descriptions or only at the beginning of the video. Disclosures must be displayed throughout the video for all to see at any point they tune in.
- Social media contests that require entrants to tweet or share for a chance to win must incorporate disclosures as part of the contest share messaging and contest terms.
- Free products given to customers for online reviews (positive or negative) are considered endorsements. This should be mentioned on review pages.