As we previously reported, the Federal Trade Commission (FTC) recently released proposed updates to its Endorsement Guides. If implemented, the proposed updates will impact everyone involved in the dissemination and monetization of sponsored content (e.g., social media influencers, brands, social media platforms, ad agencies, public relation firms). This blog post summarizes some of the key proposed updates relevant to influencers.
What are the Endorsement Guides
By way of background, the Endorsement Guides were first enacted in 1980 and are intended to help ensure that endorsements (think sponsored content) and testimonial advertising (think customer reviews) conform with Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in or affecting commerce. The Endorsement Guides do not carry the force of law, and are thus advisory in nature, but they set the tone for FTC interpretations and potential enforcement actions.
The newly proposed updates aim to modernize the Endorsement Guides (which have not been updated since 2009) to reflect brands’ growing reliance on social media to market products. The FTC is soliciting public comments on its proposed updates through September 26, 2022 (see here for instructions on how to submit a comment).
The proposed updates would clarify that an influencer may be liable for statements in a post that he/she knows, or should know, are deceptive. The level of due diligence required by the influencer will depend on the influencer’s level of expertise and knowledge, among other factors. An influencer may also be liable if he/she makes misleading or unsupported statements about performance or effectiveness that are inconsistent with the influencer’s personal experience or that were not made or approved by the brand and go beyond the scope of the influencer’s personal experience. Furthermore, under the proposed updates, influencers who rely on insufficient built-in platform disclosures could be liable for any shortcomings in such disclosures.
Disclosure of Material Connections
Where there is a connection between an influencer and a brand that might materially affect the weight or credibility of the influencer’s endorsement, the Endorsement Guides currently require influencers to fully disclose that connection. The proposed updates would clarify that such disclosure must be “clear and conspicuous” (see definition immediately below) and would add an exception to this requirement where the connection is “understood or expected by all but an insignificant portion of the audience.” A material connection in this context includes a business, family or personal relationship, monetary payment, free or discounted products or services or early access to a product.
Under the proposed updates, this disclosure must clearly communicate the nature of the connection sufficiently for consumers to evaluate its significance, but does not need to include the complete details of the connection. The FTC has not prescribed magic language for purposes of this material connection disclosure as part of its proposed updates.
Clear and Conspicuous
In the proposed updates, “clear and conspicuous” would be defined as a disclosure that “is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers.” The proposed updates would include specific guidance with respect to visual and audible disclosures, stress the importance of “unavoidability” and say that the disclosure should not be contradicted or mitigated by, or inconsistent with, anything in the post.
The Endorsement Guides currently define an “endorsement” as any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings or experience of a party other than the sponsoring advertiser (again, think sponsored content). The proposed updates would expand the scope of this definition to include merely tagging a brand in a post. As a practical matter, this means that an influencer’s post could fall under the purview of these rules if he/she tagged a brand without otherwise explicitly mentioning the brand.
Influencer’s Current Opinion of a Product
While an influencer cannot endorse products they no longer use, the proposed updates would clarify that the FTC does not require influencers to modify or delete prior posts, so long as those posts are clearly dated and not reposted.
Endorsements Directed to Children
As part of the proposed updates, the FTC is contemplating adding a new section to the Endorsement Guides dedicated to endorsements directed to children. The FTC plans to hold a public event this Fall to gather more information on this issue. More to come.
Influencers (and brands that utilize influencers) should review the proposed updates against their own policies and practices to ensure they align. If you have any questions, or need assistance updating your policies and practices, please reach out to Lauren Carey.