by: Sophia Allen with contributions by Jamie Rubin, Ben Stein and Sara Chubb

Just a few weeks ago, the FTC released its updated Guides Concerning the Use of Endorsements and Testimonials in Advertising (aka: the FTC Endorsement Guides). We’ve finished digesting the updates. Alongside the revised Guides, the FTC also released an updated set of Endorsement Guides FAQs and a proposed rule that would ban fake reviews and testimonials. We trust that everyone will read the updated Guides and resources from top to bottom. Until then, we’ve pulled out 10 key takeaways for endorsers, influencers, and brands:

1. New Key Terms and Expanded Existing Terms. The terms, “Endorsement” (see 255.0(b)) and “Material Connection” (see 255.5(a)) have been built out to incorporate current examples. For example, under the Guides, just tagging a brand or showing “apparent enjoyment” in a video may constitute an endorsement – triggering compliance requirements. The Guides also now confirm that “material connections” warranting disclosure can arise from many connections, including the nature of a relationship, free or discounted products (even where those products are unrelated to the endorsed product), or more unassuming benefits to the endorser, such as the mere possibility of payment. Additionally, the Guides present “Clear and Conspicuous” as a new, defined term (see 255.0(f)) and require that disclosures mirror the endorsement’s communication mechanism. In other words, if the endorsement is made visually, the disclosure must also at least be made visually. If the endorsement is presented through audio, then the disclosure must also be audible. And if the endorsement is made “through both visual and audible means, the disclosure should be made in the communication’s visual and audible portions.”

2. Which Disclosures Work? While the revised FAQs emphasize that there is no specific wording required for disclosures, they also call out a few disclosures that FTC considers insufficient. For example, the FAQs state that a disclosure of only the hashtag, “#endorsement,” is not clear enough on its own. Similarly, the hashtags “#ambassador” and #partner” alone are too ambiguous and confusing. Instead, according to the FTC, endorsers should include the name of the brand partner in the hashtag to make this disclosure more clear. The same goes for the ubiquitous #sweepstakes: the FAQs state that this disclosure is not enough alone because it may not be clear to viewers of the #sweepstakes post that the post was incentivized by a sweepstakes. Here again, the FAQs state it is clearer to also include the brand name in the hashtag.

3. Context is Key. Many of the Guides’ new examples emphasize that there is no one-size-fits-all approach in the endorsement and disclosure arena. The Guides repeatedly coach marketers and influencers to carefully consider the holistic experience of their target consumers and adapt disclosures based on that multi-faceted experience. Context rules all! For example, endorsers should consider:

• Differences in media, such as podcast vs. social media post vs. television. While we may be more accustomed to considering the broader medium, the new guidance suggests a more granular approach. Brands and endorsers should also adjust disclosure procedures based on the specific type of social media post. According to the revised FAQs, when it comes to monitoring short-lived endorsements (think Instagram Stories or Snapchat), brands should require that paid posts aren’t made without advanced approval because it is likely impractical to monitor “ephemeral” posts in real time. Additionally, the FAQs instruct that different social media platforms may require different disclosure mechanisms. For example, the FAQs explain that for an endorsement via Instagram post, even a disclosure in the caption or description box may be inadequate if the post itself “conveys an endorsement without the viewer having to read the accompanying description and a significant minority of viewers don’t read the description.”

• Viewing devices, such as whether a consumer will view a disclosure on a computer browser vs. a smartphone. See 255.0(g)(11)(ii). If disclosures are not examined in the responsive web design process, a disclosure that is clear and conspicuous on one device may be easily missed on another.

• Language, including ensuring that for every language in which an endorsement is presented, a disclosure is also made in that language. Where an advertisement has been published in a particular language, the Guides state, “[t]he adequacy of the disclosure will be evaluated from the perspective of the [targeted] individuals [who speak that particular language], and the disclosure must be in the same language as the ad.” See 255.0(g)(11)(i).

4. Old Advertising Law Principles Seep into Endorsement Guides and Examples. In addition to the contextual considerations above, the Guides now incorporate old ad law principles, including analyzing endorsements through a geographic lens, creating accessible content, and adjusting disclosures based on the target user’s age.

5. Consumer Reviews Will Be… Reviewed. We have seen multiple cases brought by the FTC that focus on consumer reviews. Remember Fashion Nova’s $4.2 Million settlement related to allegations that it suppressed negative reviews? Or the FTC’s case against Roomster alleging that it posted fake reviews? The heart of these cases lives on in the FTC’s proposed rule which would ban fake reviews and testimonials (see 16 CFR Part 465) and in the Guides’ new subsection that specifically prohibits deceptive practices related to reviews. See 255.2(d). The Guides and FAQs are also filled with fresh, new examples related to reposting, boosting, editing, procuring, and filtering consumer reviews (and much, much more).

• That Includes Star Ratings. Star ratings are not immune. For example, the new Guides provide that where a brand’s incentivized reviews also include star ratings, if those incentivized reviews are sufficiently numerous to materially increase the overall star rating of a product or service, that outcome itself is deceptive without a clear and conspicuous disclosure tethered to the average star rating. This applies even if each individual review clearly and conspicuously discloses the material connection of the reviewer.

6. A New “Significant Minority of the Audience” Standard. Under the new Guides, a material connection must be disclosed when a “significant minority of the audience” for an endorsement does not understand or expect the connection. See 255.5(a). The Guides further distinguish between unexpected and expected connections. See new addition in 255.1(d).

7. Influencer Liability. The Guides suggest that an influencer would be liable for false statements if they knew or should have known that their representation was inaccurate. See 255.1(e) and the corresponding example in 255.1(h)(4). If a celebrity knows that their statement is untrue, they are subject to liability. The advertiser is also liable for misrepresentations made through the endorsement. For a real-life set of facts, recall the FTC’s case against Google LLC and iHeart Media, Inc.

8. Don’t Misrepresent a “Material Attribute” of the Endorser. While “material attribute” is not defined in the new Guides, examples are likely instructive. For example, it is deceptive to pair a consumer testimonial about an acne product’s efficacy with a stock photo of a model with near-perfect skin. See 255.1(g) and 255.1(g)(6)(i). Influencers and brands alike should also be wary of how AI tools, like social media filters, could misrepresent material attributes.

9. Affiliate Links Must Be Disclosed. A new example indicates that affiliate links are a material connection that require clear and conspicuous disclosure. See 255.5(b)(11). In the example, the Guides explain that a consumer’s knowledge of the compensation an otherwise independent reviewer could receive through an affiliate link “could affect the weight or credibility” given to that reviewer. And note! The FAQ’s state that the term “commissionable link” is probably not clear enough while the disclosure “paid link” would likely be sufficient if it is placed right next to the affiliate link.

10. Brands: Train and Monitor Your Endorsers and Influencers (and Employees!). The Guides include a new subsection that specifically instructs brands to provide guidance to endorsers, monitor endorser compliance with the Guides, and quickly remedy any non-compliance. See 255.1(d)(1)-(3). This even includes all those endorsers and influencers who only received free gifts! For example, the FAQs state that even where the only connection is a “free unsolicited product and nothing else,” brands should monitor resulting posts and:

• Ask the endorser to clearly and conspicuously disclose the gift in any resulting social media posts or other endorsements;

• Tell the endorser how the gift should be disclosed;

• Ask the endorser to tag the brand; and

• Describe what the endorser can and can’t say about your products (watch out for deceptive claims).

Employees need training in this realm, too. For example, when endorsing a company product in an online forum or review section, employees should clearly and conspicuously disclose their material connection to the brand. And, if any endorsements are made at the brand’s instruction (or the brand has reason to know about them), it should monitor for compliance. See 255.5(b)(8).

Navigating what works and what doesn’t when it comes to endorsements is tricky. We’re here to help!

Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE.