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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

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In 2009,&nbsp;the Federal Trade Commission put the social media world on edge when it released updated <a href="http://www.ecfr.gov/cgi-bin/text-idx?SID=de10601c673ac6ac7500291dbfecca38&amp;mc=true&amp;node=pt16.1.255&amp;rgn=div5" target="_blank" rel="noreferrer noopener">Endorsement Guidelines</a>&nbsp;that made it clear that they were watching social media for deceptive and misleading endorsements. Companies doing social media marketing set about experimenting (some successfully, some not) with various ways to convey the required disclosures in as few words and in as inconspicuous a manner as possible, and bloggers were spooked by the fact that they could face liability juts for reviewing a free sample.

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Now the FTC has come out with another round of guidance on the topic. In an FAQ page called "<a href="https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking" target="_blank" rel="noreferrer noopener">What People Are Asking</a>," the FTC answers several common questions about social media endorsement guidelines. Cut and pasted below are some of what I find to be the more pertinent portions:

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Generally not, but if concerns about possible violations of the FTC Act come to our attention, we’ll evaluate them case by case. If law enforcement becomes necessary, our focus usually will be on advertisers or their ad agencies and public relations firms. Action against an individual endorser, however, might be appropriate in certain circumstances.

What if all I get from a company is a $1-off coupon, an entry in a sweepstakes or a contest, or a product that is only worth a few dollars? Does that still have to be disclosed?

The question you need to ask is whether knowing about that gift or incentive would affect the weight or credibility your readers give to your recommendation. If it could, then it should be disclosed. For example, being entered into a sweepstakes or a contest for a chance to win a thousand dollars in exchange for an endorsement could very well affect how people view that endorsement. Determining whether a small gift would affect the weight or credibility of an endorsement could be difficult. It’s always safer to disclose that information.

Also, even if getting one free item that’s not very valuable doesn’t affect your credibility, continually getting free stuff from an advertiser or multiple advertisers could suggest you expect future benefits from positive reviews. If a blogger or other endorser has a relationship with a marketer or a network that sends freebies in the hope of positive reviews, it’s best to let readers know about the free stuff.

Even an incentive with no financial value might affect the credibility of an endorsement and would need to be disclosed. The Guides give the example of a restaurant patron being offered the opportunity to appear in television advertising before giving his opinion about a product. Because the chance to appear in a TV ad could sway what someone says, that incentive should be disclosed.

Would a single disclosure on my home page that “many of the products I discuss on this site are provided to me free by their manufacturers” be enough?

A single disclosure on your home page doesn’t really do it because people visiting your site might read individual reviews or watch individual videos without seeing the disclosure on your home page.

If I upload a video to YouTube and that video requires a disclosure, can I just put the disclosure in the description that I upload together with the video?

No, because it’s easy for consumers to miss disclosures in the video description. Many people might watch the video without even seeing the description page, and those who do might not read the disclosure. The disclosure has the most chance of being effective if it is made clearly and prominently in the video itself. That’s not to say that you couldn’t have disclosures in both the video and the description.

Would a button that says DISCLOSURE, LEGAL, or something like that which links to a full disclosure be sufficient?

No. A hyperlink like that isn’t likely to be sufficient. It does not convey the importance, nature, and relevance of the information to which it leads and it is likely that many consumers will not click on it and therefore miss necessary disclosures. The disclosures we are talking about are brief and there is no reason to hide them behind a hyperlink.

What about a platform like Twitter? How can I make a disclosure when my message is limited to 140 characters?

The FTC isn’t mandating the specific wording of disclosures. However, the same general principle – that people get the information they need to evaluate sponsored statements – applies across the board, regardless of the advertising medium. The words “Sponsored” and “Promotion” use only 9 characters. “Paid ad” only uses 7 characters. Starting a tweet with “Ad:” or “#ad” – which takes only 3 characters – would likely be effective.

My company runs contests and sweepstakes in social media. To enter, participants have to send a Tweet or make a pin with the hashtag, #XYZ_Rocks. (“XYZ” is the name of my product.) Isn’t that enough to notify readers that the posts were incentivized?

No. It’s likely that many readers would not understand such a hashtag to mean that those posts were made as part of a contest or that the people doing the posting had received something of value (in this case, a chance to win the contest prize). Making the word “contest” or “sweepstakes” part of the hashtag should be enough. However, the word “sweeps” probably isn’t, because it is likely that many people would not understand what that means.

I’m starting a new Internet business. I don't have any money for advertising, so I need publicity. Can I tell people that if they say good things about my business in online reviews, I’ll give them a discount on items they buy through my website?

It’s not a good idea. Endorsements must reflect the honest opinions or experiences of the endorser, and your plan could cause people to make up positive reviews even if they’ve never done business with you. However, it’s okay to invite people to post reviews of your business after they’ve actually used your products or services. If you’re offering them something of value in return for these reviews, tell them in advance that they should disclose what they received from you. You should also inform potential reviewers that the discount will be conditioned upon their making the disclosure. That way, other consumers can decide how much stock to put in those reviews.

My company recruits “influencers” for marketers who want them to endorse their products. We pay and direct the influencers. What are our responsibilities?

Because of your role in recruiting and directing the influencers, your company is responsible for any failures by the influencers you pay to adequately disclose that they received payments for their endorsements. Teach your influencers to adequately disclose their compensation for endorsements and take reasonable steps to monitor their compliance with that obligation.

Augmented Legality

Emerging Media and Technologies

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Brian D. Wassom

Information Technology Transactions

FTC Responds to Questions on Social Media Endorsements

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FTC Responds to Questions on Social Media Endorsements

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