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FTC Clarifies Online Marketing Guidelines in Latest Update

June 2, 2015

WASHINGTON D.C. — The Federal Trade Commission’s recently updated guidance on endorsements and testimonials calls into question common advertising tactics, including strategies that employ social media and online reviews.

The last time the FTC revised its Endorsement Guidelines was in 2009. But on May 29, the agency released a “What People Are Asking” section, an updated FAQ page that now addresses topics such as Twitter endorsements, Facebook Likes and YouTube videos. Much of the FTC”s update centered on the use disclosures when a product is being endorsed through seemingly organic means.

According to the “What People Are Asking” page, the FTC will not mandate specific wording for endorsement disclosures on Twitter. However, the agency said the same principles governing sponsored statements apply to Twitter endorsements, regardless of the 140-character limitation. The FTC suggests using words like “Sponsored” or “Promotion” within the tweet or starting a tweet with “Ad:” or “#Ad.”

The FTC also provided an outline of its policy regarding social media “Likes.” The agency said it is still evaluating how effective a “like” is as an endorsement tool on social media. Failure to disclose an incentivized “like” might not be a problem, the FTC said, but advertisers buying fake “likes” would be viewed differently.

When “likes” are coming from a paid source that has no knowledge or experience with a product, the FTC considers it deceptive. And according to its guidance, the purchaser and the seller of fake “likes” could face enforcement action.

The FTC also requires the disclosure of video reviews on websites like YouTube when a reviewer is given a product from an advertiser vs. paying for it out of pocket. Specific elements of the endorsement, such as the amount paid to a reviewer, are not required, but the FTC does believe a simple disclosure regarding the relationship between the reviewer and the marketer should be made. The agency also said the that the disclosure should be made within the video rather than in the video description, as viewers might miss the statement.

Employee endorsements were also addressed by the FTC’s updated guidance. It recommends that all employees check with their employers before posting about their company’s products on social media to make sure they aren’t breaking any policies. Even if an employer approves an employee’s request to post a review, the FTC wants the employee to disclose his or her relationship to the marketer. This is especially true for online reviews sites, where readers might not know the the employee/employer relationship.

The FTC said it doesn’t expect employers to keep track of all employee activities with respect to endorsements and testimonials, but it does recommend that employers establish a formal program that makes clear their policy regarding such activities, especially if employees are encouraged to share opinions on company products.

For a comprehensive look at the FTC’s updated guidelines, check out its online FAQs page.

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