United States: FTC proposes updates to social media

In brief

The use of endorsements and reviews in advertising continues to be an area of active Federal Trade Commission (FTC) enforcement. The FTC has proposed updates to its Endorsement Guides to strengthen advertising guides related to endorsements and reviews.

As we have previously reported, the FTC has been very active in enforcing its endorsement and testimonial guides and procuring significant penalties. Any company posting reviews or working with influencers will want to consider the proposed updates to the FTC Endorsement Guides. These updates are not necessarily new but rather clarifications and further examples of existing principles. Given that FTC penalties can be high, and a single marketing promotion may give rise to many individually actionable offenses, whether or not the proposed guides are ultimately adopted as written, we can expect that the underlying principles will remain the same.

In the proposed revisions to the guides, the FTC has:

  • Added a new section of the guides regarding consumer reviews and clarified that fake reviews can subject advertisers to liability as both deceptive endorsements and false advertising;
  • Stated that computer-generated fictional characters may be “endorsers” under the guides and that social media posts and tags can be endorsements;
  • Explained that advertising agencies, public relations firms and other intermediaries may be liable for their roles in publishing deceptive endorsements;
  • Changed definition of “clear and conspicuous” to “a disclosure that is difficult to miss and easily understood by ordinary people” and added explanations regarding what this may mean to a particular group, for example, older consumers;
  • Clarified that reliance on social media platform’s disclosure tools may not be enough and that representations made both visually and by ear must include disclosures by both means; and
  • Required disclosures of “material connection” includes disclosure of non-monetary benefits, for example, sweepstakes entry or media appearances.

In addition, the FTC also has proposed adding a new section about advertising to children and the recognition that children may react differently than adults to endorsements.

These proposed guides, invitations for comments and recent enforcement activities illustrate that this remains a focus of the FTC.