The US Government Cracking Down on Social Media Advertising. Are You at Risk?
FTC’s Announcement to Crack Down
In October 2021, the US Federal Trade Commission (the “FTC”) issued a press release stating that it would be cracking down on deceptive online marketing practices on social media platforms, including online reviews of products and services. The FTC advised that that it would be “blanketing industry” with Notices of Penalty Offenses (“Notice”) and confirmed that the list of recipients would include manufacturers, advertising agencies and retailers in almost every industry. For a full list of the recipients in October 2021, click here.
Interestingly, (and perhaps disturbingly) the FTC advised that an issuance of a Notice to a particular company does not necessarily indicate a violation of the law but essentially creates a placeholder for the FTC to seek civil penalties should that recipient violate the Notice in the future.
The Director of the FTC clearly set out their objective and motivation:
“Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses. Advertisers will pay a price if they engage in these deceptive practices.”
What Is the FTC?
The FTC is the US government agency that is charged with “protecting consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity.”
What Could Be a Violation?
According to the FTC, offside actionable conduct could include:
Falsely claiming an endorsement by a third party;
Misrepresenting that an endorser is an actual user, a current user, or a recent user;
Continuing to use an endorsement without good reason to believe that the endorser continues to subscribe to the views presented;
Misrepresenting that an endorsement represents the experience, views, or opinions of users or purported users;
Using an endorsement to make deceptive performance claims;
Failing to disclose an unexpected material connection with an endorser; and
Misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.
How Does this Apply to You?
If social media marketing is part of your business model, you could be at risk. If you are targeting the US market, you could be at risk. If you are using US talent, influencers and celebrities as endorsers, you could be at risk. If you manage a marketing and influencer agency, you could be at risk. If you are a influencer or celebrity that endorses US products or services, you could be at risk.
When launching your social media marketing campaign, it’s imperative that your marketing campaigns and 3rd party relationships are properly managed so that you are compliant with marketing laws. We can help you with this. We can structure your social media policies, verify your advertising campaigns to ensure that they are compliant and negotiate your contracts with 3rd parties to ensure that issues of liability, risk and compliance are addressed.
If you would like to book a phone call to discuss this matter further, feel free to schedule a call using this link.