Influencing the Influencers: FTC Updates Its Endorsement Guide FAQs

Advertising Law

On Sept. 7, 2017, the Federal Trade Commission (FTC) updated its answers to a series of frequently asked questions, in its “Endorsement Guides: What People Are Asking” (the Updated FAQs), about its “Guides Concerning the Use of Endorsements and Testimonials in Advertising” (the Guides). Although the Updated FAQs address a wide array of endorsement-related issues on social media, including how influencers should make disclosures on Snapchat and Instagram Stories, the fundamental requirement of the Guides remains the same: Influencers must disclose their material connections (i.e., payments or free products) to brands and advertisers regardless of the media format.

The FTC Endorsement Guides, the Original FAQs and the 2015 Update

In 2009, the FTC updated the Guides to ensure that they applied to new media formats, such as blogs and social media. At the time, the revised Guides represented the most sweeping changes in almost 30 years to endorsement and testimonial advertising. In 2010, the FTC published its first answers to frequently asked questions about the Guides (the Original FAQs). While they addressed general questions involving bloggers and social media, the Original FAQs did not place a special emphasis on either endorsements on specific social media platforms or the technological challenges with disclosing endorsements on social media platforms.

On May 29, 2015, almost five years after releasing its original FAQs, the FTC announced, through a post on its blog, significant updates to the FAQs (the 2015 Update). In its 2015 Update, the FTC took a “deeper dive” into forms of social media promotion that were in their infancy when the Guides were revised in 2009—for example, further elaborating on an elusive question: How can I make a disclosure for a platform like Twitter, when a message is limited to 140 characters? Now, two years later, the Updated FAQs provide even more guidance on how those disclosures should be made on Snapchat and Instagram Stories, given that no written text accompanies these types of social media communication tools.

Taking into account the widespread use of social media endorsements, which include celebrities, individual consumers, bloggers, employees, experts and organizations endorsing products and services on the Internet, the Updated FAQs provide several new examples of real-world scenarios to address the current ways advertisers connect with consumers and to discuss how the FTC would potentially evaluate those situations. A comparison of the 2015 Update against the Updated FAQs produces the following summary of the newest examples and tips from the FTC.

What’s New in the Updated FAQs

  • The first new question the Updated FAQs addresses is whether the Guides are triggered if a company makes a donation to charity anytime someone reviews the company’s product. The FTC indicates that since “some people might be inclined to leave a positive review in an effort to earn more money for a charity . . . [t]he overarching principle remains: If readers of the reviews would evaluate them differently knowing that they were motivated in part by charitable donations, there should be a disclosure. Therefore, it might be better to err on the side of caution and disclose that donations are made to charity in exchange for reviews.”
  • In the second new question in the Updated FAQs, the FTC addresses the issue of asking family and friends to provide reviews of a product or service. The example is “served up” in the form of the opening of a new restaurant. To get feedback on the food and service, you invite your family and friends to eat for free. If they talk about their experience on social media, is that connection something that should be disclosed? The FTC notes that this fact pattern raises two issues: “First, 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. Second, if you are giving free meals to anyone and seeking their endorsement, then their reviews in social media would be viewed as advertising subject to FTC jurisdiction. But even if you don’t specifically ask for their endorsement, there may be an expectation that attendees will spread the word about the restaurant. Therefore, 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.”
  • In the next new question in the Updated FAQs, the FTC focuses on giving advice to YouTubers. The example provided involves a YouTube channel that focuses on hunting, camping and the outdoors. Sometimes on this channel, the YouTuber will provide a product review. The question is: “Knife manufacturers know how much I love knives, so they send me knives as free gifts, hoping that I will review them. I’m under no obligation to talk about any knife, and getting the knives as gifts really doesn’t affect my judgment. Do I need to disclose when I’m talking about a knife I got for free?” The FTC responds that even if the influencer doesn’t think it affects his or her evaluation of the product, knowing that the influencer got the product for free might affect the viewer’s perspective on that evaluation. Whether the influencer is required to review every product he or she receives is not relevant. The point is, viewers who know the influencer got the product for free may assess a review differently, so the FTC advises disclosing that fact.
  • Next, the FTC focuses on one of the unique features of the Instagram platform, whereby individuals can tag the brand of an item of clothing (or any other product) in a photo they post of themselves wearing that item. Does that action alone constitute an endorsement? The FTC notes that tagging a brand in a photo by itself is an endorsement of the brand. Thus, if the Instagram poster has a relationship with that brand, this endorsement could require disclosure, just as any other endorsement would. Whether the influencer tags only the sponsor’s brand or tags brands outside of any sponsor relationships—or does both—followers might not know why the item is tagged. Some might think the influencer simply wants them to know he or she likes the clothing. In such cases, a disclosure is necessary.
  • The FTC doesn’t specifically identify in the Updated Guides which questions and answers are newly included, so here is a quick list of all the other new FAQs added by the FTC in its recent update.

    • Say a car company pays a blogger to write that he wants to buy a certain new sports car, and he includes a link to the company’s site. But the blogger doesn’t say he’s going to actually buy the car—or even that he’s driven it. Is that still an endorsement subject to the FTC’s Endorsement Guides? Yes, an endorsement can be aspirational. It’s an endorsement if the blogger is explicitly or implicitly expressing his or her views about the sports car (e.g., “I want this car”). If the blogger was paid, it should be disclosed.
    • I’m a book author, and I belong to a group where we agree to post reviews in social media for each other. I’ll review someone else’s book on a book review site or a bookstore site if he or she reviews my book. No money changes hands. Do I need to make a disclosure? It sounds like you have a connection that might materially affect the weight or credibility of your endorsements (that is, your reviews), since bad reviews of each other’s books could jeopardize the arrangement. There doesn’t have to be a monetary payment. The connection could be friendship, family relationships or strangers who make a deal.
    • I’m a video blogger who lives in London. I create sponsored beauty videos on YouTube. The products that I promote are also sold in the U.S. Am I under any obligation to tell my viewers that I have been paid to endorse products, considering that I’m not living in the U.S.? To the extent it is reasonably foreseeable that your YouTube videos will be seen by and affect U.S. consumers, U.S. law would apply and a disclosure would be required. Also, the U.K. and many other countries have similar laws and policies, so you’ll want to check those, too.
    • What about a disclosure in the description of an Instagram post? When people view Instagram streams on most smartphones, descriptions more than four lines long are truncated, with only the first three lines displayed. To see the rest, you have to click “more.” If an Instagram post makes an endorsement through the picture or the first three lines of the description, any required disclosure should be presented without having to click “more.”
    • The social media platform I use has a built-in feature that allows me to disclose paid endorsements. Is it sufficient for me to rely on that tool? Not necessarily. Just because a platform offers a feature like that is no guarantee it’s an effective way for influencers to disclose their material connection to a brand. It still depends on an evaluation of whether the tool clearly and conspicuously discloses the relevant connection. One factor the FTC will look to is placement. The disclosure should catch users’ attention and be placed where they aren’t likely to miss it. A key consideration is how users view the screen when using a particular platform. For example, on a photo platform, users paging through their streams will likely look at the eye-catching images. Therefore, a disclosure placed above a photo may not attract their attention. Similarly, a disclosure in the lower corner of a video could be too easy for users to overlook. Second, the disclosure should use a simple-to-read font with a contrasting background that makes it stand out. Third, the disclosure should be a worded in a way that’s understandable to the ordinary reader. Ambiguous phrases are likely to be confusing. For example, simply flagging that a post contains paid content might not be sufficient if the post mentions multiple brands and not all of the mentions were paid. The big-picture point is that the ultimate responsibility for clearly disclosing a material connection rests with the influencer and the brand—not the platform.
    • How can I make a disclosure on Snapchat or in Instagram Stories? You can superimpose a disclosure on Snapchat or Instagram Stories just as you can superimpose any other words over the images on those platforms. The disclosure should be easy to notice and read in the time that your followers have to look at the image. In determining whether your disclosure passes muster, factors you should consider include how much time you give your followers to look at the image, how much competing text there is to read, how large the disclosure is and how well it contrasts against the image. (You might want to have a solid background behind the disclosure.) Keep in mind that if your post includes video and you include an audio disclosure, many users of those platforms watch videos without sound. So they won’t hear an audio-only disclosure. Obviously, other general disclosure guidance would also apply.
    • You just talked about putting “#ad” at the beginning of a social media post. What about “#ad” at or near the end of a post? We’re not necessarily saying that “#ad” has to be at the beginning of a post. The FTC does not dictate where you have to place the “#ad.” What the FTC will look at is whether it is easily noticed and understood. So, although we aren’t saying it has to be at the beginning, it’s less likely to be effective in the middle or at the end. Indeed, if #ad is mixed in with links or other hashtags at the end, some readers may just skip over all of that stuff.
    • What if we combine our company name, “Cool Stylle” with “ad” as in “#coolstyllead”? 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.” Disclosures need to be easily noticed and understood.
    • Is it good enough if an endorser says “thank you” to the sponsoring company? No. A “thank you” to a company or a brand doesn’t necessarily communicate that the endorser got something for free or that they were given something in exchange for an endorsement. The person posting in social media could just be thanking a company or brand for providing a great product or service. But “Thanks, XYZ, for the free product” or “Thanks, XYZ, for the gift of ABC product” would be good enough—if that’s all you got from XYZ. If that’s too long, there’s “Sponsored” or “Ad.”
    • What about saying, “XYZ Company asked me to try their product”? Depending on the context of the endorsement, it might be clear that the endorser got the product for free and kept it after trying it. If that isn’t clear, then that disclosure wouldn’t be good enough. Also, that disclosure might not be sufficient if, in addition to receiving a free product, the endorser was paid.
    • I provide marketing consulting and advice to my clients. I’m also a blogger and I sometimes promote my clients’ products. Are “#client” [and] “#advisor” and “#consultant” all acceptable disclosures? Probably not. Such one-word hashtags are ambiguous and likely confusing. In blogs, there isn’t an issue with a limited number of characters available. So it would be much clearer if you say something like, “I’m a paid consultant to the marketers of XYZ,” or “I work with XYZ brand” (where XYZ is a brand name). Of course, it’s possible that that some shorter message might be effective. For example, something like “XYZ-Consultant” or “XYZ-Advisor” might work. But even if a disclosure like that is clearer, no disclosure is effective if consumers don’t see it and read it.
    • Would “#ambassador” or “#[BRAND]-Ambassador” work in a tweet? The use of “#ambassador” is ambiguous and confusing. Many consumers are unlikely to know what it means. By contrast, “#XYZ-Ambassador” will likely be more understandable (where XYZ is a brand name). However, even if the language is understandable, a disclosure also must be prominent so it will be noticed and read.
    • I’m a blogger, and XYZ Resort Company is flying me to one of its destinations and putting me up for a few nights. If I write an article sharing my thoughts about the resort destination, how should I disclose the free travel? Your disclosure could be just, “XYZ Resort paid for my trip” or “Thanks to XYZ Resort for the free trip.” It would also be accurate to describe your blog as “sponsored by XYZ Resort.”
    • Where in my blog should I disclose that my review is sponsored by a marketer? I've seen some say it at the top and others at the bottom. Does it matter? Yes, it matters. A disclosure should be placed where it easily catches consumers’ attention and is difficult to miss. Consumers may miss a disclosure at the bottom of a blog or the bottom of a page. A disclosure at the very top of the page, outside of the blog, might also be overlooked by consumers. A disclosure is more likely to be seen if it’s very close to, or part of, the endorsement to which it relates.
    • A company is giving me a free product to review on one particular website or social media platform. They say that if I voluntarily review it on another site or on a different social media platform, I don’t need to make any disclosures. Is that true? No. If you received a free or discounted product to provide a review somewhere, your connection to the company should be disclosed everywhere you endorse the product.
    • Does it matter how I got the free product to review? No, it doesn’t. Whether they give you a code, ship it directly to you or give you money to buy it yourself, it’s all the same for the purpose of having to disclose that you got the product for free. The key question is always the same: If consumers knew the company gave it to you for free (or at a substantial discount), might that information affect how much weight they give your review?
    • My company wants to get positive reviews. We are thinking about distributing product discounts through various services that encourage reviews. Some services require individuals who want discount codes to provide information allowing sellers to read their other reviews before deciding which reviewers to provide with discount codes. Other services send out offers of a limited number of discount codes and then follow up by email to see whether the recipients have reviewed their products. Still others send offers of discount codes to those who previously posted reviews in exchange for discounted products. All of these services say that reviews are not required. Does it matter which service I choose? I would prefer that recipients of my discount codes not have to disclose that they received discounts. Whichever service you choose, the recipients of your discount codes need to disclose that they received a discount from you to encourage their reviews. Even though the services might say that a review is not “required,” it’s at least implied that a review is expected.
    • On her own initiative and without us asking, one of our employees used her personal social network simply to “like” or “share” one of our company’s posts. Does she need to disclose that she works for our company? Whether there should be any disclosure depends upon whether the “like” or “share” could be viewed as an advertisement for your company. If the post is an ad, then employees endorsing the post should disclose their relationship to the company. With a share, that’s fairly easy to do: “Check out my company’s great new product …” Regarding “likes,” see what we said above about “likes.”
    • My company XYZ wants to tell our employees what to disclose in social media. Is “#employee” good enough? Consumers may be confused by “#employee.” Consumers would be more likely to understand “#XYZ-Employee.” Then again, if consumers don’t associate your company’s name with the product or brand being endorsed, that disclosure might not work. It would be much clearer to use the words “my company” or “employer’s” in the body of the message. It's a lot easier to understand and harder to miss.

Why it matters: Following up on more than 90 educational letters the FTC staff sent to Instagram influencers and brands in April of this year, along with the FTC’s major update of its FAQs, the FTC sent follow-up letters to 21 of those original 90 Instagram influencers previously contacted, since they apparently didn’t learn their lesson the first time around. These follow-up letters, combined with the Updated FAQs, clearly signal the FTC’s continued interest in endorsements and testimonials as consumer, celebrity, employee and influencer marketing strategies are now regularly incorporated into almost all social media marketing campaigns, including when consumers are asked to promote sweepstakes and contests for additional entries and loyalty programs that reward consumers for sharing brand promotional messaging. Thus, advertisers are advised to review their advertising and promotion practices to ensure full compliance with the provisions of the numerous laws governing promotional marketing as well as with compliance guides that are issued from time to time by the FTC.

The FTC has required in its recent settlements addressing compliance failures with the Guides that companies have a reasonable training and monitoring program in place for ensuring compliance with the Guides. These simple compliance steps can, in certain circumstances, serve as a potential safe harbor, making it is unlikely that the activity of a rogue blogger will be used as the basis of an FTC enforcement action. Thus, implementing training and monitoring programs, and having campaigns reviewed by an advertising attorney experienced with these issues prior to launching a social media marketing campaign, is a modest investment compared with the cost of a regulatory action or a lawsuit, which can impact not only the advertiser, but also any co-promotion partners or agencies involved in the campaign.



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved