FTC Laws Online Marketers Need to Know by @ThallenEsq

by Thallen Brassel | Featured Contributor

Did you know that the Federal Trade Commission (“FTC”) directly regulates online advertisements, including product endorsements and reviews by bloggers and social media users?  If you are a paid advertiser (such as a blogger), or if your business utilizes these marketing methods, then read on.

Last month, the FTC updated its FAQs that address these laws (specifically Section 5 of the FTC Act). The goal is that all online advertisements follow the basic “truth-in-advertising” principle that the content is honest and not misleading to consumers.  Although the FTC has not been so aggressive about enforcing these rules in the past, the recent updates may indicate the FTC’s effort to continue, and potentially increase, enforcement of these “truth-in-advertising” laws.

The FAQs have tons of information that will be helpful to understand the legal requirements for businesses and endorsers, but here are a few important takeaways:

• Disclosure is required if there is payment in any form. If an endorser is paid to promote a product, then the endorser must make clear on each individual advertisement that he or she has been paid to promote the product. “Payment” also includes receiving free products. On YouTube (and other video platforms), paid promotions must be disclosed in the actual video content – preferably at the beginning of the video. It is no longer enough to simply include it in the accompanying text description. Additionally, companies that use paid endorsements on their marketing materials must also disclose that the endorsers are paid and/or given free products.
• Advertisement via social media posts requires clear and conspicuous hashtags. While there are many variations of appropriate hashtags, the FAQs provide that #ad would likely be effective.  With only three characters, #ad is the shortest example listed, which is especially important for use on platforms such as Twitter where there are character limitations. Other examples cited in the FAQs are: #paidad, #sponsored and #promotion.
• Online contests and sweepstakes require appropriate disclosure. When running a promotion (i.e., contests or sweepstakes) via social media, appropriate disclosures are necessary.  Specifically, if a promotion requires entrants to post to social media, then the official rules should require that an appropriate hashtag is used by the entrant to identify the post as a contest/sweepstakes entry.  Good examples of hashtags include: #contest or #sweepstakes. An example of a bad hashtag is #sweeps because it is likely that many people would not understand what the term means without proper context. The FTC also strongly discourages requiring an entrant to “like” or “follow” a social media page because it does not allow for clear and conspicuous disclosures.

For other tips and posts on life, law and the internet, check out ThallenBrassel.com!

*This post should not be taken as legal advice.  Please seek the advice and/or counsel of your own attorney regarding any matters discussed here.

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Thallen Brassel is an attorney in the Nashville office of Nelson Mullins Riley & Scarborough LLP, where she concentrates her practice in business, tax and technology law.  She is an alumna of Vanderbilt University and Duke University School of Law, and before returning home to Tennessee, she began her legal career at a Wall Street law firm in New York City.

Thallen is also the creator of Life, Law and the Internet, a consumer’s blog that brings awareness to how the law and internet impact our daily lives.  Her current interests include the fast-paced sector of social media, marketing & advertising, and she has experience advising Fortune 500 companies on marketing campaigns, and compliance with federal and state regulations.

Thallen is also a wife and mom, and enjoys volunteering, traveling and chasing around her toddler son! Follow her on Twitter @ThallenEsq.

Thallen Brassel