The FTC’s Endorsement Guides, Part 1: Do You Know What You Need to Disclose?
If you use endorsements in your marketing, do they meet the standards of the FTC Act and the FTC’s Guides Concerning Use of Endorsements and Testimonials in Advertising? And what about social media influencers? If your business works with influencers or if you’re an influencer yourself, are you both taking necessary steps to clearly disclose material connections? You should know.
Disclosure sits at the heart of the Federal Trade Commission’s (FTC) Endorsement Guides. At their core, the guides reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading. If there’s a connection between an endorser and the marketer that consumers would not expect (such as family or payment or exchange of services) and it would affect how consumers evaluate the endorsement, that connection should be disclosed. For example, if an ad features an endorser who’s a relative or employee of the marketer, the ad is misleading unless the connection is made clear. The same is usually true if the endorser has been paid or given something of value to tout the product. This applies to product reviews if the individual is either contracted to perform the review either for payment or in product exchange of value. This does not apply, however, when a product is loaned to a reviewer, reporter, or writer at an affirmed media outlet for a product review (whether long- or short-term); however, you can cover yourself in an agreement by stating the length of the testing period, requiring return of the product, and having the reviewer note the product was provided for the review.
Q: A company wants me to attend the launch of its new product. They will fly me to the launch and put me up in a hotel for a couple of nights. They aren’t paying me or giving me anything else. If I write about the product, should I disclose anything?
Yes. Knowing that you received free travel and accommodations could affect how much weight your readers give to your thoughts about the product, so you should disclose that you have a financial relationship with the company.
Q: I heard that every time I mention a product on my blog, I have to say whether I got it for free or paid for it myself. Is that true?
No. If you mention a product you paid for yourself, there isn’t an issue.
The FTC is only concerned about endorsements that are made on behalf of a sponsoring advertiser. For example, an endorsement would be covered by the FTC Act if an advertiser – or someone working for an advertiser – pays you or gives you something of value to mention a product. If you receive free products or other perks with the expectation that you’ll promote or discuss the advertiser’s products in your blog, you’re covered. Bloggers who are part of network marketing programs, where they sign up to receive free product samples in exchange for writing about them, also are covered.
After talking to a number of media outlets and getting clarification from various sides in order to help translate this, if the company (or their PR rep) has negotiated a positive story or product placement and you (the reviewer, blogger, influencer, etc.) are getting the product for free, then this is an exchange of services for goods, and it is an endorsement. However, if your PR agency, such as Caster, has pitched an editorial person for an unsolicited product review and has to provide the product on loan to conduct said product review and the results of the review are not guaranteed and, in fact, could go sideways, then this is considered an independent and unbiased review. This is the long-standing and traditional process of product review and testing from experts and a key component in consumer PR.
More backup: The Pew Research Center found that 82% of American adults say they sometimes or always read online reviews for new purchases. And more than two-thirds of regular review readers believe that they’re “generally accurate.”
Q: Does the FTC hold bloggers to a higher standard than reviewers for traditional media outlets?
No. The FTC Act applies across the board. The issue is – and always has been – whether the audience understands the reviewer’s relationship to the company whose products are being recommended. If the audience understands the relationship, a disclosure isn’t needed.
If the writer or reviewer is employed by a known media outlet – whether that is a magazine or newspaper or TV station to give reviews online or offline, then the audience understands that it is their job is to provide opinions on products. In that situation, the FTC says “it’s clear that you did not buy the product yourself” – whether it’s a book or a car or a movie ticket or a TV. On a personal blog, a social networking page, or in similar media, the reader might not realize that the reviewer has a relationship with the company whose products are being recommended. Disclosure of that relationship helps readers decide how much weight to give the review.
The FTC is getting more aggressive in pursuing actions to actively enforce its influencer guidelines. Each fine comes with monetary penalties to the influencer, but the damage will likely come in harm to their reputation. Part 2 of this blog will dive into Disclosures 101, including the giant surprise that, as a PR agency, we should be using #Client whenever we as individuals post about their products or services to disclose our relationship. More next week.
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