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FTC Puts Social Media Marketers On Notice With Updated Disclosure Guidelines
The U.S. agency updates its FAQ page for endorsement requirements for the first time since 2010. The new guidance could precede a crackdown.
If you hire celebrities or influencers to talk up your brand or if you hold contests with promotional tie-ins to social media, it might be time for a proper-disclosure check up.
That’s because the Federal Trade Commission, the agency that enforces U.S. truth-in-advertising laws, appears to be sending get-tougher signals.
Late last month, the FTC updated the “What People Are Asking” page for its Endorsement Guides for the first time since 2010. The FTC’s basic message — that material relationships between brand and endorser on social media must be “clearly and conspicuously” disclosed — hasn’t changed. But FTC is now getting more specific with detailed guidance about social media issues that weren’t on the agency’s radar five years ago.
That specificity makes it likely that the FTC will crack down in the coming months, says Allison Fitzpatrick, an attorney in the advertising, marketing and promotions practice group at Manhattan-based law firm Davis & Gilbert.
Fitzpatrick says she has been telling clients for more than a year that the FTC is starting to pay more attention to social media marketing activity.
The agency fired its first social warning shot in March 2014, sending a letter to Cole Haan warning that a contest it sponsored on Pinterest was potentially deceptive. At issue, the requirement for users to pin photos from the footwear and accessory brand’s website for a chance to win a $1,000 shopping spree. Because those Pinterest posts were incentivized, the FTC said, they needed to include a disclosure. The FTC didn’t take enforcement action at the time partly because it hadn’t yet publicly offered guidance about that particular scenario.
With the new FAQs, that’s no longer the case.
“Now they are saying, ‘We have given guidance. You are all on notice,’” Fitzpatrick told Marketing Land. “So you are not going to get a warning letter. You are going to get an action.”
FTC actions targeting social media misuse have been very rare. Besides the Cole Haan letter, the only other official move was a settlement in December over an allegedly deceptive Twitter campaign by ad agency Deutsch LA.
That case was relatively simple. The FTC said Deutsch employees tweeted about the launch of a gaming device for then-client Sony without disclosing their connection.
The new FAQs address some of the grayer areas.
Contests & Sweepstakes Rules Need Disclosure
As the Cole Haan instance showed, when a contest entry is accompanied by an endorsement on social media, a disclosure is required. And the responsibility falls on the contest sponsor to make sure people entering the contest make the disclosure; using a hashtag like “contest” or “sweepstakes” should be sufficient but using something like “#BrandXYZ_Rocks” or merely “#sweeps” is not because neither is obvious enough. Fitzpatrick said brands could be exposed to FTC scrutiny if contest rules don’t require disclosure.
What if a business is offering a $1 coupon or a product only worth a few dollars in exchange for a tweet? Would that be enough to trigger the need for disclosure? Perhaps not, according to the FTC. The key is whether the gift would affect the “weight or credibility” of an endorsement, but determining where to set the bar is difficult, so “it’s always safer to disclose.”
Guidance For Influencers: When In Doubt, Disclose
Does an athlete well-known as a spokesperson for a product need to disclose that he’s being paid every time he tweets about the product? That depends on whether his followers know about his relationship with the brand. So Michael Jordan and Nike back in the day? You’re probably in the clear. Short of that, the FTC seems to be saying, err on the side of caution: “Determining whether followers are aware of a relationship could be tricky in many cases, so we recommend disclosure.”
Fake Facebook Likes Might Be In FTC Crosshairs
The FTC doesn’t quite know what to make of Facebook likes. It recognizes that there is no way to disclose when a like has been given and also isn’t sure how much stock social network users put into likes when deciding whether to patronize a business. Still the agency recommends against incentivizing likes, which is now possible a moot point since Facebook officially ended that practice on Facebook Pages when it shut down “like gates” last November.
As for fake likes, FTC is not at all conflicted. Both buyers and sellers of likes from non-existent or people with no experience with a business’ product or service could face enforcement.
“I wouldn’t be surprised if one of the next FTC actions is against fake likes,” Fitzpatrick said. “It’s just so disingenuous what they do. It’s so fraudulent and it really undermines the value of Facebook and the like button.”
On Twitter, Limited Space Is No Excuse
The FTC also reiterated its guidance about Twitter, first signaled in its 2013 .Com Disclosures PDF, that the abbreviated 140-character space doesn’t change the need for disclosure. From the FAQ: “The words ‘Sponsored’ and ‘Promotion’ use only 9 characters. ‘Paid ad’ only uses 7 characters. Starting a tweet with ‘Ad:’ or ‘#ad’ – which takes only 3 characters – would likely be effective.”
Video Disclosures Must Take It From The Top
For YouTube video, it’s not enough to have a disclaimer on the details page; the disclosure must be made at the beginning of the video and preferably repeated multiple times for longer-form pieces. Similarly streaming video — often used by video game reviewers sponsored by gaming companies — needs disclosure throughout.
Many Marketers Still Haven’t Gotten The Message
All in all, the FTC has put together a clear and nuanced roadmap to help marketers stay out of the regulator’s crosshairs. But the message might not be hitting its target. Fitzpatrick says the FTC could do more to publicize the guidelines, which were published without much fanfare on the last Friday in May and haven’t received much media attention.
“I still don’t think I’ve seen any press releases about it,” she said. “It’s interesting because people like myself, some of our clients, a lot of industry members have been waiting for this guidance for five years and to announce it on a Friday afternoon in the summer is not enough.”
Ted Murphy, founder and CEO of IZEA, a company that acts as middleman between brands and social media influencers, says the marketing industry needs to do a better job of self-regulation.
Many marketers don’t know the basic rules. Murphy said a 2014 survey sponsored by his company showed that 29% of marketers were completely unaware of the disclosure rules and that only 10% were aware of and understand the FTC guidelines.
“I think the real issue is the lack of awareness and education among the marketing community,” Murphy said. “We must continue to educate the community, and marketers must take responsibility to know, at the very least, that the disclosure question is one they should be asking.”
If that question is asked more often perhaps the message will reach influential people like Kobe Bryant, who just last week had a text book exchange with a journalist after tweeting about an energy drink.
— Kobe Bryant (@kobebryant) June 4, 2015
@kobebryant is this an advertisement?
— samir mezrahi (@samir) June 4, 2015
— Kobe Bryant (@kobebryant) June 4, 2015
So would the original tweet be considered a violation? Yes, says Fitzpatrick: “He should have disclosed his relationship with the brand.”