Today we welcome guest blogger, David M. Adler, Esq., attorney, author, educator, entrepreneur and nationally- recognized speaker in the fields of intellectual property, media & entertainment and technology law. His blogs are available at: indiefilmlaw.wordpress.com and adlerlaw.wordpress.com. Have you or your company had any experiences with compliance? What updates do you know are now in place? Share below.
In October 2009, the FTC updated it’s Guides Concerning the Use of Endorsements and Testimonials in Advertising to address increasing use of endorsements in online marketing. The update is particularly relevant to the explosive growth of social media as a marketing tool.
The updated Guides contain two areas of concern for marketers. First, the Guides removed the safe harbor for advertisements featuring a consumer’s experience with a product or service, the so-called “results not typical” disclosure. Second, the Guides underscored the longstanding principle of disclosing “material connections”.
It is still confusing for advertisers, marketers, bloggers and social media users to know how to comply. The purpose of this article is to provided simple, concrete standards to determine (1) when to make certain disclosures and (2) the type of disclosures required. I have grouped the disclosures into seven categories. The key requirement to keep in mind is the obligation to disclose any relationship that may have influenced you.
1. Personal Opinion
If you write a review or blog post and it contains only your own opinions, you haven’t received any compensation for the review or post, and you otherwise have no material connection to the topic of your post, you have nothing to disclose.
2. Free Sample/Free Gift
If you have been given a free copy, sample, or gift and you write a review or blog post, you must disclose the facts and circumstances of how you received the item or service, even if you have not been paid. You do not violate the rules if you receive payment unrelated your content. This is useful to remember when your content relates to product previews, reviews of samples, services, gifts, books, software, music, movies, etc.
3. Promotional Relationships
If you write a review or blog post and it is based upon an advertising relationship, and you have received compensation (cash, free services, product samples for personal use or a gift) for the review or post, you must disclose (i) the nature of the relationship, (ii) whether you received anything of value, and (iii) information about relationships with advertisers or endorsers that would have a material impact about how a prospective consumer would view the message. This disclosure is useful to keep in mind when your content relates to paid posts, sponsored messages, tweets, fan page postings, etc.
4. Employment Relationships
If you write a review or blog post and your post is based upon an employment relationship, you have a “material business relationship” to disclose, even if you are not being directly compensated for the message. It may even be part of your job description. Again, be mindful of the requirement to disclose any “connections” that may have influenced you, including both direct and indirect relationships.
5. Affiliate Relationships
If you write a review or blog post and your post is based upon an affiliate relationship, e.g., you have included affiliate links on your page, you must disclose the fact that the relationship exists and that you will be paid for referrals from your page.
6. Healthcare Disclosures
If you write a review or blog post and your content is based upon a connection to a pharmaceutical or healthcare product or program, you need to include relevant healthcare-related disclosures or information safety warnings, side effects, or official links with information.
7. Financial Guidelines & Disclosures
If you write a review or blog post and you work for a financial services company, you may be making investor-relations communications and your communications are subject to regulation by the NASD, SEC, FINRA and potentially state and federal regulatory agencies. The FINRA Guidance on Blogs & Social Networking Sites” can be found here. Record Retention: ensure that you can retain records of those communications. Suitability: a particular communication a “recommendation” for purposes of NASD Rule 2310 and is it suitable for potential recipients. Public Appearances: determine whether your post part of an “interactive online forum” and whether supervision is required. Third-Party Posts: If your firm created or “sponsors” and online forum, be aware that, under certain circumstances, a customer’s or other third party’s content on a social media site may become attributable to the firm. Whether third-party content is attributable to a firm depends on whether the firm has (1) involved itself in the preparation of the content or (2) explicitly or implicitly endorsed or approved the content.
Clearly, legal and regulatory compliance for social media remains a minefield. Although this article is intended to give you a working knowledge of the types of risks created by, and disclosures required for, the use of Social Media, it is NOT LEGAL ADVICE. Each situation is unique and you should consult with qualified legal counsel regarding your specific circumstances.