FTC Endorsement Guidelines: Social Media Dos and Don’ts

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If you are a business owner, you certainly want consumers to trust your brand, like your brand, and, ultimately, purchase from your brand. Taking into account the fact that 88% of consumers trust online reviews as much as personal recommendations, you would certainly strive to have as much positive feedback about you floating around the Internet as possible.

Let’s say you decide to take a simple path and make your life a bit easier. You launch a well-thought-out marketing campaign offering people your products/services for free and just ask them to write good reviews in return. As a nice bonus, you may as well be giving them money for that. Sounds like a winning scheme? Well… You’re about to commit a crime! The Federal Trade Commission (FTC) has recently been scrutinizing marketing campaigns for evidence of deceptive practices. The charges of fraud, misrepresentation of facts, unfair business practices, etc. will come at you with guns blazing. And these are the allegations to not be taken lightly.

You think this has nothing to do with you, perhaps? Well, you have been misled. Based on real-life business cases, we at PissedConsumer.com have collected some mishaps below.

The FTC accused Lord & Taylor of deceptive advertising

In its complaint, the FTC alleged that as part of the Design Lab roll-out the national retailer paid 50 online fashion “influencers” to post Instagram photos of themselves wearing a dress from that collection. Another one of the FTC’s allegations was that Lord & Taylor did not disclose that each of the posts had been pre-approved by them and that each poster was given a dress AND an additional monetary reward in exchange for the endorsement.

The social media campaign was launched in March 2015 and essentially focused on one article of clothing – the Design Lab Paisley Asymmetrical Dress. The chosen fashion “influencers” were paid the sums ranging from $1,000 to $4,000. Hereby, it is worth noting that according to their contracts with Lord & Taylor they were obligated to use “@lordandtaylor” Instagram user designations and “#DesignLab” campaign hashtag in their posts.

The item in question quickly sold out. All the parties involved lived happily for the whole year until in 2016 the FTC decided to investigate the campaign and brought their charges against the company. In an attempt to defend themselves, Lord & Taylor stated that the influencers themselves should be held responsible for disclosing the fact the company paid them to promote the dress. The FTC, however, took a different route establishing that Lord & Taylor as an advertiser was supposed to ensure compliance and should not have delegated their responsibility to promoters, publishers, or any other third parties.

Lord & Taylor did settle the charges with the FTC in 2016. However, in doing so, “…Lord & Taylor is prohibited from misrepresenting that paid ads are from an independent source, and is required to ensure that its influencers clearly disclose when they have been compensated in exchange for their endorsements…”.

FTC Endorsement Guidelines: Social Media Dos and Don’ts

Warner Bros. got punished by the FTC for a misleading marketing campaign

According to the FTC’s allegations, Warner Bros. failed to properly disclose the fact that paid online “influencers” from tens of hundreds of thousands of dollars to promote their video game Middle Earth: Shadow of Mordor on YouTube and in social media.

As opposed to the above-mentioned Lord & Taylor case, Warner Bros.’s failure was not intentional. Moreover, the videos in question did include the disclosures. The problem stated by FTC was that those disclosures were not visible enough. Warner Bros. put the disclosures in the description box appearing below the video. Due to the fact that there was other information to be put in that box, the disclosure became visible only when the consumer clicked on the “Show More” button in the description box. Besides that, when “influencers” posted those videos on social media websites, such as Facebook or Twitter, the posts did not include any “Show More” button. Thus, it was even less likely that consumers would see the sponsorship disclosures.

As a result of the FTC’s charges, Warner Bros. is barred from engaging in such deceptive marketing practices in the future. Otherwise, the company will risk civil penalties or even a contempt charge in federal court.

To avoid the above-mentioned disasters, it is best to follow the FTC social media guidelines. According to these guidelines, sponsored posts in social media must:

  1. Communicate sponsorship in clear, unambiguous language, and appear at the beginning of posts (or “above the fold”) if possible.
  2. Be easy to read and in a shade that stands out from the background.
  3. Remain on the screen for long enough to be noticed and read, if sponsored content is a video.
  4. Be included even if the influencer is negatively reviewing a product or service.
  5. Be visible on all devices.

Examples of do’s and don’ts for sponsored posts in social networks

If you would like to find out more information about the FTC Endorsement Guidelines, we at Pissed Consumer suggest checking out FTC’s answers to the most frequently asked questions about the guidelines.

5 Tips for Proper Sponsored Posts

To help you comply with the above requirements and ensure safe promotion, you are advised to follow five simple tips:

  1. Sponsorship disclosures should be placed close to the content they are related to.

  2. Disclosures should be easy to read.

  3. Disclosure should stand out against the body of the post.

  4. For sponsored videos, disclosures should stay on the screen long enough to be noticed, read, and well understood. It is best to ensure that the sponsorship message is displayed closer to the beginning of the video. To be on a safe side, you may also want to include the word “sponsored” or similar wording in the title of the video.

  5. Audio disclosure should be clear, precise, and easy to understand.

Another technique that should be avoided in marketing is fake reviews. Suffice it to say that we at PissedConsumer.com as well as other well-known review platforms and online businesses such as, for example, TripAdvisor, Yelp, and Amazon, have undertaken various measures to prevent fake online reviews, either negative or positive.

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