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Online advertising and word-of-mouth endorsements are typically the cheapest and most accessible forms of advertisements for businesses to get noticed, grow, and spread their brands. In fact, it is common practice for companies to provide products, services, or discounts to individuals (especially those with wide reach on social media) to endorse or promote their products, services, or brand. For example, some bloggers have Instagram accounts with thousands of followers, and are often compensated in one way or another for posting pictures of products or themselves using a particular product on their accounts.

There are, however, legal implications with respect to some endorsements. While social media has its own methods of operation, the Federal Trade Commission (FTC) rules must be taken into account when handling these promotions.

WHAT YOUR BUSINESS NEEDS TO KNOW ABOUT SOCIAL MEDIA ENDORSEMENTS

The FTC is the government agency that directs individuals and companies from using unfair methods of competition and unfair or deceptive acts or practices, including advertising and social media. The agency is critically focused on ensuring consumers are not mislead into believing an endorsement is an honest opinion when, in reality, there is a relationship (e.g., employment or a financial exchange) between the endorser and the company. When a relationship exists, or if there is an agreement between the company and the endorser that money or other benefits will be exchanged for favorable opinions of products or services, the FTC requires the endorser to disclose this information.

Recently, the FTC issued an update to its regulations governing online advertising, and it is important to be aware of these updates if you are using social media to advertise or promote your business.

The scope of the FTC’s guidance covers any form of paid advertisements, which includes the type of endorsements employees can make about their employer’s brand, services, products, etc. What this means for businesses is that, when using social media or any other platform for advertisement, they must ensure that any paid promotion contains the proper disclosures. It also means that before an employee or someone else with a relationship to the company makes an endorsement that others could rely on to choose that particular company for a good or service, they should be informed that they too must make proper disclosures in the advertisement or endorsement disclosing the relationship.

Thus, if an employee or someone who is being compensated in any form, including service or product discounts, writes a review or, in any way, endorses a product or brand, the endorser must disclose whether the product was provided to them by a certain manufacturer or to at least disclose their relationship (i.e. if they are sponsored or employed by the endorsed).

In some forms of social media such as Twitter, Pinterest, and Instagram, there is a limited amount of space to post, which makes it difficult to make the required disclosures. Not to mention, the FTC has not mandated the specific wording of disclosures. However, the FTC does advise that inserting short statements such as “#sponsored”, “#promotion”, “paid ad” or even “ad,” may be sufficient to disclose a connection between the endorser and company.

While there is no way to fully control what is being done or said about a company or individual’s brand or service, to the extent a business knows an endorsement is occurring or is paying for it in some way, be mindful of the FTC’s guidelines to prevent an enforcement action by the agency.

Compliance with the FTC’s guidance is not difficult, but it will take active involvement. Here are five easy steps to take now to avoid an FTC enforcement action later.

REMEMBER THE GOLDEN RULE
Put simply, if money is changing hands, an obvious disclosure must be made in the ad.

TRAIN AND COMMUNICATE
Train and communicate to your employees and partners when disclosures are needed and what type of disclosures work (e.g., #sponsored”, “#promotion”, “paid ad”, “ad” or “ProvidedToMeBy[insertcompanyname]forfree”).

MONITOR
Monitor your brand, endorsers, and employees. It is important for every business or brand to know what is being said and by whom. This includes retweets, re-pins, re-grams, and shares of endorsed posts.

CULTIVATE
Cultivate an environment for unpaid brand ambassadors who are fans of the brand or services and are not afraid to share it. Not only are these fans free, but they are exempt from the FTC’s enforcement arm.

ASK
No one asks a lawyer to dance or choreograph, so no one expects you to know every regulation and government red tape. If you have any questions, ask an attorney to help you – leave the regulation to them and (most) attorneys will leave the dancing to you!

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