Today, the Federal Trade Commission announced that it is seeking public comment on whether to make changes to the FTC's "Guides Concerning the Use of Endorsements and Testimonials in Advertising."
The Endorsement Guides provide detailed guidance to businesses and others about how to market using endorsers and influencers without violating the FTC Act's prohibition on unfair or deceptive acts or practices. It's not surprising that the FTC is taking a fresh look at the Endorsement Guides now. Not only have influencers, consumer reviews, and other types of endorsements consistently been one of the FTC's top priorities for many years, the Endorsement Guides haven't been revised since 2009 -- which is a year before the launch of Instagram, one of the most popular platforms for influencers.
In the proposed Federal Register notice seeking public comment on the Endorsement Guides, the FTC makes it clear that this isn't going to be a routine review. The FTC is asking some tough questions about what marketers and influencers are doing now and what they're doing well (and what they're not doing well). Based on what the FTC learns, marketers should expect to see substantial updates to Endorsement Guides.
Here are some of the key questions that the FTC is asking:
- Have consumer perceptions regarding endorsements changed since the Endorsement Guides were last revised?
- Should the FTC include its FAQs in the Endorsement Guides?
- Are marketers and influencers doing a good job disclosing material connections on social media platforms, and what types of disclosures work better than others?
- Do young children understand disclosures of material connection?
- When marketers give free or discounted products to consumers in exchange for posting reviews, without requiring the reviews to be favorable, is a disclosure of material connection necessary?
- Are composite ratings (e.g., "five stars") misleading when they are based on some incentivized reviews and, if so, could a disclosure help?
- Do consumers who use social media understand that influencers who promote products are generally paid to do so?
- Should the Endorsement Guides be revised to address the use of affiliate links in product reviews and other online content?
- What disclosures, if any, should advertisers or operators of review websites make about the reviews they publish in order to prevent them from being deceptive or unfair?
In another signal that this is going to be an interesting review process, Commissioner Rohit Chopra issued a statement calling on the FTC to be tougher on marketers and influencers that violate the law. He said that the FTC needs to "seek tougher remedies for companies that are illegally astroturfing or disguising their advertising as an authentic endorsement or review." As part of the review process, Commissioner Chopra said that the FTC should consider developing specific rules for social media platforms that profit from influencer marketing, issuing formal rules on endorsements so that violators would be liable for civil penalties, and specifying what companies must include in their contracts with influencers.
If you're interested in submitting comments to the FTC, the agency will be accepting public comments for 60 days from the date that the Federal Register notice is published, which should happen soon.
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