Social media has grown from a simple place to connect friends and family to a major platform for marketing for businesses of all sizes. Partnerships between businesses and social media influencers have grown dramatically in the past few years and this growth has attracted the attention of the Federal Trade Commission (FTC). Therefore, it is crucial for brands and influencers to follow the FTC rules to avoid legal or financial penalties.
FTC rules for truth-in-advertising standards about endorsements and disclosures apply to posts on social media platforms as well as other forms of advertisements. The FTC disclosure requirements aim to help consumers differentiate between paid advertisements and organic posts. The influencers are required to disclose any “material connections” that they have with the brand they are endorsing. A connection is deemed “material” when the relationship between the influencer and brand may materially affect the weight or credibility of the endorsement from the influencer.
Here are some tips to help you comply with FTC’s disclosure requirements:
- Disclose any financial or family relationship between the influencer and the brand. Do not assume the audience knows about such relationships.
- The Disclosure must be unambiguous. When disclosing a material connection, use language that’s clear and unmistakable. It’s unlikely that abbreviations, shorthand, #inStringofHashtags, or arcane lingo will communicate the disclosure effectively to consumers.
- Placement of disclosure matters. The FTC does not dictate where you have to place the “#ad.” What the FTC will look at is whether it is easily noticed and understood. Don’t rely on a disclosure placed after a CLICK MORE link or in another easy-to-miss location.
- Don’t assume that using a platform’s disclosure tool is sufficient. Some social media platforms have disclosure tools, but that’s no guarantee they’re an effective way for an influencer to disclose a material connection to a brand.
- The endorsement must be truthful. An endorsement has to represent the accurate experience and opinion of the endorser. You can’t make claims about a product that would require proof the advertiser doesn’t have.
If you find all of this confusion, please do not hesitate to reach out to someone to discuss the nuances of complying with FTC rules. You can reach us at [email protected]
Written by Judy Yen, Associate (Bar Pending).
Judy Yen is an associate in Carbon Law Group’s Los Angeles office. She joined our firm in 2019 and her practice focuses on representing emerging companies in intellectual property and business transactional matters.
Born and raised in Taiwan, Judy is a native speaker of Mandarin Chinese. She has used her international legal experience, language, and bicultural skills to represent businesses and investors from the Greater China region in cross-border business expansion plans and execution in investing in the United States. Prior to joining Carbon Law Group, Judy worked for Paul Hastings LLP in their Shanghai office, where she gained valuable experience in international corporate law, including working on two IPO projects.
Judy is admitted to practice law in California. She graduated from Loyola Law School, Los Angeles in May 2019. In law school, Judy was a member of the Fashion Law Clinic, Transactional Negotiation Team and Entertainment Moot Court. She received her bachelor’s degree in Political Science and Accounting from the University of California, Los Angeles.
Judy grew up in a family of artists and entrepreneurs who had fostered her passion for art and business. She is an avid foodie who loves to both explore cool restaurants and try new recipes at home. She also likes oil painting, swimming, and hiking.