Broadcasters and advertisers should take note of the more than 90 warning letters that the FTC sent out this week as a reminder of the need to disclose material sponsorship connections in social media promotions and endorsements. The FTC has since 2009 announced a policy that any online content for which anything of value has been received must disclose that consideration – even social media posts (see our article here about that policy). This is in the nature of the FCC’s sponsorship identification rules for broadcast content. That same policy statement addressed the need for those making personal endorsements to make these sponsorship disclosures. The recent warning letters are notable not only for their sheer number, but also because the warning letters were addressed to marketers and social media “influencers” – the individuals whose social media followings make their endorsements valuable. To date, the FTC has only named marketers (Warner Brothers Home Entertainment and Lord & Taylor) in its social media endorsement cases. Although the FTC did not say who received warning letters, its press release noted that the letters were “informed by petitions filed by Public Citizen and affiliated organizations” in September 2016.
By directing warning letters to marketers and influencers, the FTC is sending a firm reminder that both sides of a sponsorship arrangement need to disclose their connection, “unless the connection is already clear from the context of the communication containing the endorsement.” Specifically, the FTC advises influencers that they must “clearly and conspicuously” disclose any material connection with a marketer; and marketers, in turn, should ensure that the influencers they sponsor disclose their material connections.
In addition to emphasizing that disclosure is a shared responsibility, the warning letters reiterate that the FTC will scrutinize the language and placement of sponsorship disclosures. The FTC not only calls for “unambiguous language” to identify a material connection but also a making the disclosure “stand out.” The FTC has not defined what counts as standing out, but the letters point out a couple of practices that are likely to fall short of the FTC’s standards. Specifically, the FTC warns against (1) making consumers scroll down a screen or click “more” to reach a disclosure and (2) burying a disclosure with multiple hash tags.
Broadcasters and other media companies, as they expand their sales and marketing efforts online, need to consider these FTC policies. Violations of FTC policies can lead to enforcement actions imposing orders with strict conduct and reporting requirements, monetary relief, and civil penalties. Avoid these issues, pay attention to the FTC requirements.