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TMT Perspectives Insight & Commentary on Business, Legal and Policy Developments Affecting the Telecom, Media, and Technology Sectors

Celebrities Rule—But the FTC Has Endorsement Rules

Posted in FTC, Legal Developments
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Perhaps because it is pervasive, there is a growing presumption that social media communications are unregulated. That is not accurate where endorsements are concerned.

So before you blog or tweet about a product under circumstances in which you are getting compensated, it is worth figuring out whether your communication complies with the Federal Trade Commission’s Endorsement Rules.

The rules say that if you are recommending or promoting a product, and if you are compensated, that compensation has to be clear to the reader. If not, you may have violated federal law against deceptive speech.

The concern about deceptive speech in the social media context is particularly high where the recommendation is from a “true celebrity”—a famous actor or business person. But the rules also apply to non-celebrity notables, such as bloggers, vloggers, and other twitterati.

To understand the rules, you only need to think about deception. The rules are intended to prevent deceptive recommendations. Largely, this requires what lawyers call a “totality of the circumstances” analysis. Under all of the circumstances, would the consumer understand that the recommender is being compensated? If not, then you may have a problem.

The good news is that the cure is pretty simple: clarity about the nature of your relationship with the product.

Sometimes though, understanding what constitutes an “endorsement” can be tricky. What about the simple posting of a picture of a product? Or a picture of you at an airline’s counter? FTC staff say those may well be endorsements (although the analysis is tricky, given that the FTC does not have product placement rules).

Happily the FTC has put together a pretty sensible and readable “Guides” on its Endorsement Rules.

Keep handy, you celebrities.