Understanding the FTC's Updated Endorsement Guidelines for Social Media and Online Advertising
The Federal Trade Commission (FTC) has recently made significant changes to its Endorsement Guides, which provide guidance on fair and honest practices in advertising. The updates primarily focus on the use of social media, online advertising, and artificial intelligence. In this blog post, we'll break down the key changes and what they mean for advertisers, brand ambassadors, and endorsers.
Genuine Reviews and Incentivized Reviews: The FTC emphasizes that advertisers should not manipulate consumer reviews by engaging in activities like promoting or suppressing reviews. They also address issues related to incentivized reviews, reviews by employees, and fake negative reviews from competitors.
Clear and Conspicuous Disclosures: The updated guidelines stress the importance of disclosing any material connection between the endorser and the product or brand being promoted. The disclosure should be "difficult to miss" and easily understandable to ordinary consumers. Visual, written, or audio disclosures should be noticeable, readable, and comprehensible.
Expanded Definition of Endorsements: The definition of endorsements has been expanded to include virtual influencers, fake reviews, tags, and "likes" on social media. This change acknowledges the evolving landscape of technology and marketing, including the use of artificial intelligence.
Liability for Deceptive Advertising: The FTC clarifies that not only advertisers but also endorsers, influencers, brand ambassadors, and intermediaries can be held liable for deceptive endorsements. Recent warning letters to social media influencers have highlighted the FTC's stance on deceptive endorsements and inadequate disclosures.
Guidelines for Online Consumer Reviews: The updated guidelines introduce a new principle against distorting consumer opinions by manipulating reviews. Businesses must ensure that reviews are honest, not incentivized, and not selectively displayed. They should also avoid fake negative reviews or using positive reviews from unrelated products.
Endorsements Directed at Children: The FTC acknowledges that advertising directed at children requires special attention due to the unique characteristics of the audience. While specific disclosure guidance for children's advertising is not provided, the FTC states that disclosures may not effectively work for younger children. Further research is needed to develop more specific guidelines in this area.
Conclusion: The FTC's updated Endorsement Guides address the changing landscape of social media, online advertising, and AI-driven marketing. Advertisers, endorsers, and intermediaries must ensure they comply with the guidelines to maintain transparency and avoid deceptive practices. By understanding the new principles and requirements, businesses can navigate the evolving world of endorsements while building trust with consumers.