In depth

The FTC Endorsement Guides explain that the identity of a speaker and its relationship to the company or organization on whose behalf they are posting is material to consumers. An adequate disclosure should be clear and conspicuous, by which the FTC means that the disclosure should be difficult to miss and should be easily understood.  Here, dieticians, engaged as social media influencers, failed to adequately disclose that they were hired to promote the safety of artificial sweeteners in their social media posts.

The FTC sent letters to the association that hired the dieticians and to the dieticians themselves and included a Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct Around Endorsements and Testimonials to put them all on notice that future violations can subject them to civil penalties of up to USD 50,120 per violation.  It is also worth noting that a single advertising campaign can result in numerous violations such that the total penalties can be very high.

Similarly, the FTC sent a warning letter to another association regarding the inadequacy of disclosures made by dieticians hired by that association to promote messaging about the safety of consuming sugar.  The FTC also sent warning letters to the dieticians and influencers and again, included a Notice of Penalty.

These letters, and the publicity around them, provide an opportunity for companies to review their use of social media influencers for compliance with the FTC Endorsement Guides and the Business Guidance in What People Are Asking | Federal Trade Commission.

The FTC's summary regarding these actions include the following:

• Both advertisers and influencers have an obligation to disclose material connections. Advertisers need to remind their influencers of the need to make clear and conspicuous disclosures.
• Consumers should be able to notice the disclosure easily, and not have to look for it. Disclosures buried in long hashtags, disclosures that require clicking, displayed in poorly contrasting type or that Instagram truncates are insufficiently conspicuous.
• Disclosures in videos may need to be audible, visual, or both.
• Don't rely solely on platforms’ disclosure tools. That doesn’t mean influencers cannot use those tools, but the disclosures are more likely to be more effective when used in conjunction with other, clearer forms of disclosure.
• Influencers should clearly identify the sponsor of their posts. Without knowing who the sponsor of the post is, viewers might not be able to adequately evaluate the weight and credibility to give an endorsement.  In some instances, the abbreviations and hashtags might not be understandable to consumers.

Key takeaways 

Companies will want to review their social media programs and be comfortable that they are instructing their influencers regarding clear and conspicuous disclosures regarding their relationship to the company.  Further, companies will want to make clear the sorts of objective claims about their products that can be substantiated.  Where health claims and the use of experts such as dieticians are involved, consumers may be paying particular attention and the FTC is also certainly doing so.

If you have any questions about the FTC Guides, Business Guidance or what may constitute a reasonable social media monitoring program, please contact your Baker McKenzie attorney or the authors below.