Here's a quick disclaimer. This is not specific legal advice, this article serves as an educational resource only. You should always speak to an attorney about your specific situation to get the best advice for you. If you're looking for representation you can contact me here.
When you are trying to build a brand, the last thing you want to do is run into legal trouble. Social media and influencer campaigns can be a great way to get your product or service noticed. You might try to make a post go viral by having some sort of contest where people share the content. These methods can be fantastic for the growth of your brand. However, it's important to remember that such action is regulated by the FTC, and you should strive to be in compliance with their rules.
In a nutshell, make a clear, good faith statement regarding any compensation or relationship between a company and an endorsement.
1. When endorsing a product, any relationship with the owner of the product should be disclosed.
A good rule of thumb is that the relationship should be disclosed if the audience's reaction to your endorsement would be affected by the relationship. Being "off the clock" doesn't affect the applicability of the rules, any relationship should be disclosed even if an endorsement is made during off-hours.
2. It doesn't really matter if the relationship has been ongoing for some time and people might generally associate the person with one's brand.
If someone's employer is listed on, for example, their Facebook page, they should still disclose their relationship on each post that's endorsing the employer. If a "significant minority" of the audience doesn't realize that an endorsement is paid, then it is subject to FTC sanctions. Furthermore, one shouldn't assume that the audience is aware of industry practices when determining if the relationship should be explicitly stated.
3. The medium through which the endorsement is delivered does not matter.
Words aren't required to be considered an endorsement, simply posting a picture or video which includes a product can be considered an endorsement (however, FTC staff views TV product placement as outside of the scope of an endorsement).
4. Paid employees or contractors are not the only ones who can get you in trouble for social media endorsements.
When people perform an action to gain entry to a contest, a discount, or some other non-monetary compensation, the FTC will likely still consider it a compensated endorsement subject to sanctions. For example, if one were to hold a contest that requires a Facebook "Like" or "Share," one should include a clear disclosure to avoid FTC sanctions.
5. Language disclosing a relationship between an endorsing entity and the entity receiving the endorsement does not have to be in a specific way.
However, it does has to specify the nature of the relationship in an accurate way: the language should clearly define the nature of the compensation for the audience of the endorsement (e.g. "I was paid to review this product," "I work for this company," "I received this product for free," "I'm entered to win a gift card," etc.). The disclosure should be attached and viewable on any actual media - a link to a disclosure, or a separate material listing disclosures is not enough. The disclosure should be conspicuous and clear (e.g. at intervals throughout a livestream, at the beginning of a video on YouTube, easy to read font at the top of an ad, before a radio pitch is made). Endorsements also can't be lies - no reviewing a product you've never tried, no bold lies (you hated it, but say it's great).
Companies should make reasonable efforts to ensure that the proper disclosures are made when people endorse them: informing endorsers of the requirement to disclose and spot-checking should be enough.
The FTC is free to investigate any organization affecting commerce other than banks. Any investigation which merely looks for an infraction will remain private. If the FTC finds an infraction, they can exercise their judgement in either simply requesting a change in business practices or pursuing legal action.
Alex is a startup-tech nerd trapped in an attorney’s body. One of his favorite hobbies is hearing about other people’s new ideas and watching them succeed. He has a few ideas of his own, and, like many attorneys, enjoys talking about them. If you want to talk about your projects or hear about his attempts to automate the practice of law, reach out through the contact page.