United States: FTC Enforcement Action Confirms That Ad Disclosure Obligations Extend To Endorsements Made In Social Media

The Federal Trade Commission ("FTC") has once again made good on its promise to enforce against deceptive advertising under Section 5 of the FTC Act, regardless of the media in which the advertising appears: its recently announced proposed complaint and draft settlement with the advertising firm Deutsch LA, Inc. involves endorsements posted by social media users. The action unmistakably signals to companies that advertise through social media—especially by leveraging user-generated content—that they need to comply with Section 5's disclosure requirements.

As discussed below, not only is it deceptive to post bogus endorsements, but a clear and conspicuous disclosure of any material connection between an endorser and the advertising company is necessary in order to avoid a charge of deception.


Section 5 of the FTC Act bars "unfair or deceptive acts or practices." This prohibition extends to advertising, marketing and other promotional activities, including the use of endorsements. The FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising ("Endorsement Guides")1 represent the FTC's interpretation of the application of Section 5 to the use of endorsements and testimonials in advertising. In other words, they explain how an advertiser using endorsements can avoid engaging in deceptive practices.

The FTC defines an "endorsement" as an advertising message that "consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser."2 According to the Endorsement Guides, a customer endorsement must be from an actual, bona fide user of the endorsed product or service. In addition, if there is any material connection between the endorser and the advertiser that consumers would not reasonably expect—such as payment or other exchange of consideration, or an employment relationship—then that connection must be clearly and conspicuously disclosed. Because such information is likely to affect the weight or credibility that consumers will give to an endorsement, a failure to clearly and conspicuously disclose it is deceptive.

The FTC staff has provided guidance on how to effectively make clear and conspicuous disclosures in online advertising. When the staff initially released its Dot Com Disclosures guidance in 2000, it affirmed that Section 5 applies to online advertising, just as it applies in the brick-and-mortar world. In 2013, the FTC staff released updated Dot Com Disclosures, specifically addressing how to make appropriately clear and conspicuous disclosures online, including on mobile devices. The guidance reaffirmed that disclosures that are required to avoid deception or to otherwise comply with the law must be presented in a clear and conspicuous manner—no matter the media in which they appear—and asserted that, if an advertiser cannot make a required disclosure effectively in a particular medium, then it should not run the ad in that medium.


The proposed settlement with Deutsch LA arose out of the advertising firm's alleged activities relating to the promotion, on behalf of its client Sony, of the PlayStation Vita handheld gaming console.3 The gravamen of the FTC's complaint related to allegedly deceptive advertising claims about the console's technological capabilities. The FTC also, however, included a count relating to the advertising firm's use of Twitter to promote its client's console. Specifically, the complaint alleged that Deutsch LA employees responded to a request from an assistant account executive to use their personal Twitter accounts to post positive comments about the Sony console, using the same "#gamechanger" hashtag. The complaint includes examples of the employees' tweets, such as "One thing can be said about PlayStation Vita...it's a #gamechanger."

The FTC alleged that the employees' tweets were deceptive because they falsely purported to be endorsements from actual users of the Sony gaming console. Moreover, the fact that the tweets were written by employees of Sony's ad agency would have been material to consumers in making decisions about whether to purchase the console. For this reason, the tweeters' failure to disclose their connection to Deutsch LA (and, in turn, to Sony) was allegedly deceptive.

In light of both the Endorsement Guides and the revised Dot Com Disclosures guidance, this FTC enforcement action is not surprising. The Endorsement Guides establish that the failure to disclose a material connection is deceptive, and Dot Com Disclosures affirm that the FTC's rules on necessary disclosures apply to any message, whatever the medium, and expressly including even "space constrained ads," such as tweets.


The Deutsch LA proposed consent order bars the company from representing that an endorser of a product is an independent user or ordinary consumer of the product, if that is not the case, and it requires the ad agency to make clear and prominent disclosures of any material connections between an endorser and Deutsch LA and/or entities on whose behalf it promotes a product or service. The action thus reaffirms that individual endorsements that appear in social media must clearly and conspicuously disclose any material connection between the endorser and the advertiser of the endorsed product or service.

Although the FTC has brought cases based on deceptive endorsements before,4 Deutsch LA appears to be the first time that it has brought an enforcement action against endorsements made on social media. Now that the FTC has followed through on its Dot Com Disclosures guidance that tweeted ads are just like any other advertisements—and thus require the same clear and conspicuous disclosures as in any other media—the obvious question is, what's next? Now that social media is multimedia (see, for example, Instagram and Pinterest, which let users post photos and videos), brands are likely to leverage users to incorporate promotions into their personal feeds. For instance, if a brand discovers that a popular Instagram user takes compelling pictures that meld with the brand's image, the brand might engage that user to produce content on behalf of the brand and to use a hashtag or some other means to promote the brand organically in the user's feed. If the brand does not require the user to disclose—clearly and conspicuously and in each picture, tweet or other post—that he or she has a material connection to the company, then both the company and the user run the risk of being subject to a charge of deception.


1 See 16 CFR § 255.

2 See id. at § 255.0(b).

3 The FTC also reached a proposed settlement with Sony.

4 For instance, in 2010, In re Reverb Communications (also an advertising agency), the FTC alleged that Reverb's employees posted reviews in iTunes about the agency's clients' gaming applications, without disclosing their relationship to the agency or its clients.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.