IP: FTC advertising enforcement on social media

Three recent examples highlight a need for vigilance.

Since the Federal Trade Commission’s revised “Guides Concerning the Use of Endorsements and Testimonials in Advertising” went into effect in December of 2009, the onus is clearly on advertisers to both monitor endorsers on social media forums and to ensure that endorsers very clearly disclose any material connection with the advertiser.

The FTC’s revised Guides reflect the concern that social media promotions, such as promotions through blogs, sometimes confound the public’s ability to distinguish between unbiased opinions and advertising, creating greater risks for consumer deception and confusion. Accordingly, the Guides apply to "any advertising message ... that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser," and require the disclosure of “material connections” among endorsers and a seller. If a connection, such as employment or other compensation, “might materially affect the weight or credibility of the endorsement” and the connection would not be “reasonably expected by the audience,” then it must be disclosed.

The FTC found the reviews would create the false impression that they originated from ordinary users of the software rather than compensated parties working on the behalf of the software developer, and the commission considered this undisclosed relationship material to consumers’ purchasing decision. Accordingly, it required Reverb to take reasonable steps to remove the endorsements and barred it from publishing reviews of any product where a material connection exists unless the connection is “clearly and prominently” disclosed.  

The FTC set forth the standard for “clear and prominent” disclosure with reference to various media.  In text communications, the disclosure must be “sufficiently noticeable” for an “ordinary consumer” to read and comprehend. The same standard applies to disclosures in video advertisements with the additional requirement that disclosures appear for a sufficient time on screen. For audio communications the disclosure must be of sufficient volume and cadence for an ordinary consumer to hear and understand. Similarly, disclosures in interactive media advertisements, such as Internet and software, must be “unavoidable” and consistent with the requirements for text, audio and video disclosures.


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Christopher Dolan

Christopher Dolan is a shareholder in Brinks Hofer Gilson & Lione’s Chicago office and a member of its Trademark Practice Group. His practice focuses on...

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