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2015 Lessons Learned, 2016 Practical Tips

Social Media >> Regulators Scrutinize Social Media Campaigns

April 19, 2016

2015 saw greater regulatory scrutiny of social media marketing campaigns. Specifically, the Federal Trade Commission (FTC) advised on social media promotions, online influencers, and online reviews.

In an update to Frequently Asked Questions (FAQs) about its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the FTC Endorsement Guides), the FTC reiterated that entries into a contest in return for an endorsement required a clear and conspicuous disclosure that the post was incentivized. According to the FTC, tweeting or “pinning” a sponsor’s photo as part of a contest likely constituted a material connection that required such a disclosure. Including the word “contest” or “sweepstakes” as a hashtag in a post likely would be sufficient, but the word “sweeps” alone would not be sufficient because people might not understand its meaning.

The FTC further clarified that platform-specific limitations were no excuse for failing to disclose a material connection. Therefore, if posting on Twitter, disclosures should appear in the same 140-character tweet as the endorsement itself and could be made via hashtags such as #sponsored or #paidad. If posting on YouTube, a disclosure should appear in the video itself, preferably at the beginning of the video.

The FTC also provided guidance on employee and influencer endorsements on social media. In March 2015, Deutsch LA settled claims that it misled consumers by urging its employees to promote its client Sony’s PS Vita on Twitter without also instructing them to disclose their connection to the client. Later in the year, the FTC brought an action against Machinima for allegedly failing to disclose that its influencers were being paid to produce and upload endorsements of Xbox One to YouTube. The FTC made clear that companies have a responsibility to properly instruct and monitor employees and influencers hired to promote their products or clients on social media.

Online reviews emerged as a big issue. Amazon charged customers with posting fake reviews on its websites, asserting claims for breach of contract and violations of Washington’s Consumer Protection Act. On the regulatory side, the FTC charged AmeriFreight, an automobile shipment broker, with touting the quality of its online customer reviews while failing to disclose that the reviewers were compensated. As part of its settlement, AmeriFreight agreed to stop misrepresenting that its services were highly rated based on unbiased customer reviews.

Looking Ahead

  • Recent guidance and enforcement likely foreshadow further enforcement by the FTC in the area of social media marketing, particularly with respect to the online activities of promotion entrants, employees, and influencers.
  • Marketers and their agencies should pay special attention to how they conduct campaigns on various social media platforms, and ensure that promotion entrants, spokespeople, bloggers, and influencers make conspicuous disclosures of their material connections regardless of the platform.
  • It is not enough for marketers to tell their bloggers and influencers to make appropriate disclosures; marketers and their agencies need to monitor bloggers and influencers to ensure they are making appropriate disclosures.
  • Online reviews will face greater scrutiny by regulators as well as the review sites themselves, and marketers and their agencies should ensure that their endorsers adequately disclose if any product reviews were in fact incentivized.