After the Federal Trade Commission (FTC) announced in June a finalized new version of its Endorsement Guides, brands, influencers and those working on their behalf poured over the updates for key counseling and practice compliance tips for working with endorsers.
It was immediately obvious that the updated Guides focused on consumer reviews, monitoring obligations, and the unavoidability of disclosures made in a digital environment.
Since the release of the Guides, however, it has become clear that regulators and self-regulators (like the National Advertising Division (NAD)) are taking another important position: that use of tags like "ad" or "sponsored," once considered the standard in digital material connection disclosures, may no longer work in all contexts when standing alone.
Here are three recent examples to note:
1. NAD's Decision in Cariuma
Today, NAD announced that, through its routine monitoring program, it had inquired about three social media posts featuring Cariuma sneakers that appeared on the Instagram and Facebook accounts of Travel + Leisure, US Weekly, and The Quality Edit and were labeled "Sponsored" below the name of the publisher. The posts included images of Cariuma sneakers and invited consumers to "shop here" or "learn more" about the sneakers. NAD concluded that even though the posts were labeled "Sponsored," it was not clear whether the posts were sponsored by the publishers or by Cariuma. As a result, NAD recommended that the posts clearly and conspicuously disclose material connection to the endorser and publisher of the posts.
2. FTC's Endorsement FAQs
The Commission's easily digestible set of FAQs on the endorsements, FTC's Endorsement Guides: What People Are Asking, also suggest that endorsements should clearly identify their sponsor when their identity would be material. For example, the FTC states:
- "Simply tagging a post...as an #ad might be fine, but it could be confusing in some circumstances. When the sponsor's identity is unclear but would matter to consumers, the sponsor should probably be identified."
- "The FTC doesn't mandate the specific wording of disclosures. Regardless of the advertising medium or platform, the same general principle applies: people should get the information they need to evaluate sponsored statements. Starting a post with "Ad:" or "Paid ad" or "#ad" or "Advertising:" or "Advertisement" would likely be effective. The words "Sponsored" and "Promotion" at the beginning of a post might also be effective, but "Sponsored by XYZ" or "Promotion by XYZ" would be clearer (where "XYZ" is a brand name).
3. The FTC's Recent Warnings
As Jeff Greenbaum recently noted in his post, "FTC's New Warning Letters About Influencer Disclosures Include Important Guidance for Marketers," the FTC just sent warning letters emphasizing the need to clearly identify the sponsor of posts, and clarifying that identifying a sponsor with an abbreviation or a reference to a generic website or a hashtag would not be sufficient.
What's the takeaway here?
When it's unclear but material to consumers, the sponsor of an endorsement should be identified in each applicable post. A conspicuous hashtag like #Sponsored_by_[name of sponsor] works well.
Think that the sponsor is clear from the context of the post? Remember to assess from the perspective of a consumer acting reasonably under the circumstances. And remember the FTC's longstanding position: "When it's not obvious what consumers understand, we recommend erring on the side of disclosure."
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