MARCH 2016 ;e Costco Connection 17
FROM WAIST CINCHERS to cosmetic procedures, teeth whiteners to tummy teas, endorsements
on social media by influencers drive sales. An endorser’s relationship to a product or service is not
always clear. Hidden placements are common for
influencers who get paid to discreetly place product
or service pitches in their social media streams. So
how can you tell the truth in social media advertising? It can be tricky.
Enter the Federal Trade Commission (FTC),
our nation’s consumer protection agency. The FTC
conducts investigations and brings cases involving
endorsements under Section 5 of the FTC Act,
which generally prohibits deceptive advertising for
commercial speech. Last year, the FTC updated its
Endorsement Guides FAQs to specifically address
social media. The guides are in place to assure that
endorsements online are not misleading to consumers. The guides for social media are not different
from those for conventional media. However, the
updates address scenarios specific to the current
social media landscape.
The guides pertain to advertisers, content creators and social media account holders who are
rewarded or compensated by a sponsoring advertiser only. It is important for any businesses or individuals using social media to advertise to be in the
know about FTC regulations.
In brief, here are the main points of the guides.
When in doubt, disclose
If you mention a product or service online, a
consumer must understand your relationship to it.
If knowing about the relationship affects the weight
or credibility someone may give to your recommendation, then a disclosure is necessary. Disclosures
are also necessary for contests and sweepstakes
The FTC is not mandating specific wording of
disclosures. However, disclosures should be clear
and prominent, and should be easily seen, noticed
For example, on Twitter, starting a tweet with
#Ad or #PaidAd is likely effective in some circumstances. Posting a photo or video is subject to the
same disclosure rules as words. Disclosure is not an
issue if you paid for a product or service yourself or
if it was received for free due to a store giving away
free samples to its customers.
What is considered misleading?
If material compensation is not disclosed to an
audience, it may be considered misleading. Forms of
material compensation can include (but are not lim-
ited to) free products or services, discounts or gifts.
So, it could be misleading if:
; You are a makeup artist and you tout a cosmetic product without revealing that the cosmetic
company gives you free products in exchange for
; You are a travel expert who calls a resort the
“best place to stay” and you do not reveal that the
resort is paying you.
; You are a food reviewer who gets free meals
at reviewed restaurants and does not disclose it.
There are 35 examples involving different social
media scenarios on the FTC website that you may
ftc.gov (enter “Endorsement Guides” into
the search box).
It is not clear to the FTC yet how much the
number of Facebook likes on a post affect a consumer’s desire to buy a product or service. So the
failure to disclose incentives being given in exchange
for likes might or might not be an issue.
That being said, the FTC does not encourage
advertisers to use platforms such as Facebook “like”
buttons that do not allow for a disclosure to be
made. Offering incentives for likes is different from
buying fake likes, which is clearly deceptive. The
purchaser and seller of fake likes could presumably
face enforcement action.
What is enforcement action?
The guides are intended to give insight into
what the FTC thinks about marketing activities
involving endorsements and how Section 5 of the
FTC Act may apply to those activities. Practices
inconsistent with the guides may result in law
enforcement actions for violations of the FTC Act.
Cases may be settled with a letter of understanding between the FTC and the advertiser in
question wherein the party agrees to make proper
disclosures moving forward. Or law enforcement
actions can result in defendants being required to
give up money they received from violations.
The FTC is not generally monitoring bloggers
or influencers, however, if possible violations are
brought to the FTC’s attention, they will be evaluated on a case-by-case basis.
For more detailed information and a list of
FAQs, you may visit
ftc.gov and search: “Endorsement
Guides.” Questions may be sent to endorsements@
ftc.gov. If you think an influencer or advertiser is
violating the guides, you may file a complaint on the
FTC website. C
Finding truth in social
David Horowitz is a leading
consumer advocate. David’s
daughter Amanda Horowitz
is the CEO of Fight Back! and
Questions and answers of the
greatest interest to Costco
members will be used in this
column (with the permission
of the contributor) and will be
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