FTC Launches New Era of Online Advertising Scrutiny, Updates Advertising Guides

posted on 7.31.2023

To say the Federal Trade Commission’s advertising guidelines needed an update is a bit of an understatement.

The FTC’s endorsement guidelines, for example, were last updated a decade and a half ago.

Since then, the world of online and social media advertising has exploded.

Broadcasters’ efforts to monetize their online and social media assets have been part of that explosion, and so has the rise of social media “influencers.”

In late June, the commission released updated rules to clarify federal regulations on product endorsements in its ongoing effort to combat deceptive advertising.

The revised rules are matched with new FTC endorsement guidelines and answers to FAQs for inquisitive advertising outlets such as Radio and TV stations, as well as potential advertisers.

Among the topics tackled in the FTC’s materials are:

• What constitutes an endorsement?
• Product placement
• Endorsements made by “ordinary consumers”
• Disclosures needed when given a product for endorsement
• Social media contests
• Affiliate and network marketing
• Employee endorsements

Seth Williams and Jackie Fisher, attorneys at TAB Associate member law firm Fletcher Heald Hildreth, said the “the scope and reach of the rules has greatly expanded,” but sponsored content still requires disclosure under the FTC’s revisions. 

“Where there is a material relationship between an advertiser and an endorser, that relationship must be disclosed,” said Williams and Fisher. 

“The disclosure should be clear and conspicuous.”

The consequences for advertisers who fail to make such disclosures are FTC investigation and fines.

The new rules provide further guidance regarding the disclosure of material relationships between sponsors and social media influencers, said Williams and Fisher.

The two wrote about the FTC’s revisions in a recent CommLawBlog post, the Fletcher Heald Hildreth law firm’s online home of news and analysis by attorneys in its communications law practice.

Williams and Fisher discussed the FTC’s inclusion of “brand” in the definition of “product” as well as how advertisers may be held liable for false statements made by their endorsers.

Other concerns also are addressed.

“It’s a good time to review your company’s social media policy and contact your communications attorney for any help in complying with the FTC’s updated rules,” said Williams and Fisher. 

Questions? Contact TAB’s Michael Schneider or call (512) 322-9944.
 

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