FTC Advertising Guidance + Disclaimer placement legal guidance
Who needs to comply?
If you advertise or endorse products on the internet then you need to comply with the FTC Act for deceptive advertising and the FTC’s Endorsement Guides.
What is considered endorsement of a product?
Tags, social media likes on posts or videos, pins, and similar ways of showing you like a brand or product can be endorsements. If you simply are just telling people about a product you purchased, you don’t need to declare that you don’t have a brand relationship.
What are examples of bad endorsements?
Some of the following are examples of illegal endorsements:
- Misrepresent an endorser as an actual user, a current user, or a recent user of a product or service.
- Continue to advertise an endorsement unless the advertiser has good reason to believe that the endorser continues to agree to the views presented in the endorsement.
- Use testimonials to make unsubstantiated or otherwise deceptive performance claims even if such testimonials are genuine.
How to comply?
The FTC has laid out guidelines and a publication on how influencers should comply when advertising or endorsing products on their platforms. In sum, influencers need to disclose to the public when they have a relationship with a brand. The relationship could be either financial, personal, employment, or family. This includes even free products or perks.
How to disclose and where?
The FTC has listed some of the following ways of how and where to disclose your brand relationship:
- The disclosure should be placed with the endorsement message itself.
- If your endorsement is in a picture, superimpose the disclosure over the picture and make sure viewers have enough time to notice and read it.
- Use simple and clear language.
Penalties for Endorsements
The FTC could give civil penalties up to $43,792 per violation.
Consumer Review Fairness Act
The Consumer Review Fairness Act is important for businesses because the law allows people to share their honest opinions about products or services, including social media. In addition, it also protects a consumer’s opinion about a company in general. As a business you are not allowed to have a contract that prohibits honest reviews, or threatens legal action over them.
What type of opinions or reviews are allowed?
- Online reviews
- Social media posts
- Uploaded photos
- Consumer evaluations of a company’s customer service
What type of contract or terminology is prohibited?
- Prohibiting a party to that contract to review a company’s products, services, or conduct;
- Imposing a penalty or fee against someone who gives a review; or
- Requiring people to give up their intellectual property rights in the content of their reviews.
It is important to know that this law does not apply to employment contracts or agreements with independent contractors.
When is it okay to remove or prohibit a review?
- It contains confidential or private information
- It is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or on the basis of race, gender, sexuality, ethnicity, or other intrinsic characteristic;
- It is unrelated to the company’s products or services; or
- It is clearly false or misleading.
Penalties for violation of the CRFA
The penalties could be subject to financial penalties, as well as a federal court order.