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The Internet enables businesses to reach a wide range of
consumers. Beyond the confines of their own websites, businesses
are using social media and seeking recognition from popular
bloggers to tout their products and services.
The informality of the Internet and the low barrier to entry,
however, often lead businesses to forget the legal restrictions
applicable to certain commercial speech. In recent years, the
Federal Trade Commission (FTC) has made it clear that laws and
regulations relating to deceptive advertising and endorsements are
applicable to the online environment.
The FTC issued formal guidelines, available on its website
(www.ftc.gov), concerning the use of endorsements and testimonials
in advertising, including online endorsements. Businesses that do
not comply with these guidelines may be subject to liability and
enforcement action by the FTC for false and deceptive advertising.
Key points include:
An endorser's statements must reflect their honest
opinions, findings, beliefs or experience.
For example, an endorser may not claim to use a product the
endorser does not actually use.
If there is a "material connection" between the
endorser and the advertiser (the endorser is an employee or
relative of the advertiser), then you must disclose this
relationship.
If, for example, an employee of a record label writes a positive
review of an album released by that label in iTunes, then the
review must disclose the employment relationship.
If the endorser has received something of value (a free
product, a commission, or a gift) in exchange for an endorsement,
then you must disclose this fact. For example, if a blogger is
given free products in exchange for promoting a clothing line, then
the blogger must disclose the compensation.
Disclosures should be included even on platforms such as
Twitter that limit message length. The FTC recommends using a
hashtag such as #paidad, #paid or #ad.
All disclosures must be clear and conspicuous. It is generally
not sufficient to include a disclosure in an obscure location.
As both advertisers and endorsers may be held liable for failure
to comply with the FTC guidelines, advertisers must educate
endorsers regarding their obligations. Prudent advertisers will
establish an official policy for dealing with bloggers and other
online endorsers to help ensure FTC compliance.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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