Endorsements

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The National Advertising Division (NAD) recently issued a series of decisions addressing influencer and third-party marketing. The NAD is a self-regulatory body that assesses the truth and accuracy of claims made in national advertising and refers matters to the Federal Trade Commission (FTC) if an advertiser refuses to comply with its decisions.

Influencer’s Lash Claims

NAD reviewed videos posted on social media featuring a teen influencer self-described as a brand ambassador for the cosmetic company NuOrganic. The influencer made express and implied claims about NuOrganic’s eyelash serum, including “naturally grown long lashes” and “safe for young eyes.” NuOrganic argued that it could not control statements made by the influencer, but that it does monitor posts for content that may violate its guidelines. However, NAD investigated and identified certain Instagram posts where NuOrganic and the influencer had tagged each other about the same product, making substantially similar claims. NAD concluded these posts lacked the disclosures needed to inform viewers about the material connection between the influencer and NuOrganic. NAD recommended that the company take immediate steps to discontinue the videos containing the unsupported claims.Continue Reading National Advertising Division Targets Celebrity, Influencer, and Third-Party Marketing in Recent Decisions

The Federal Trade Commission (FTC) isn’t the only regulator in town when it comes to endorsements and testimonials. The Securities and Exchange Commission (SEC) regulates investment adviser marketing under its “Marketing Rule.” The rule states that an “advertisement may not include any testimonial or endorsement, and an adviser may not provide compensation, directly or indirectly, for a testimonial or endorsement” unless accompanied by clear and prominent disclosures.

According to an SEC cease-and-desist order, Wahed Invest LLC ran afoul of the Marketing Rule when it disseminated advertisements on its public website, social media, and emails containing endorsements from several professional athletes without the required disclosures. In one instance, a soccer player was paid in stock in Wahed’s parent company, worth about $500,000, and MMA athletes were paid around $30,000 monthly for appearing in the advertisements. The endorsements included statements such as:Continue Reading Foul! SEC Faults Investment Adviser for Inadequate Disclosures on Professional Athlete Endorsements

On August 14, the Federal Trade Commission (FTC) announced a final rule aimed at protecting American consumers against fake reviews and testimonials. The rule, approved through a 5-0 vote, comes after nearly two years of rulemaking proceedings on the topic. The FTC has said customer reviews play an important role in consumer decision making, and the rule follows in the steps of related cases and notices of penalty offenses brought and issued by the FTC against the use of fake reviews, as well as guidance the FTC has published on the use of endorsements and testimonials. This final rule now provides the FTC with a potentially powerful tool to punish businesses that knowingly violate it, and to seek consumer redress for violations of the rule.

The rule, which is set to be effective 60 days after its publication in the Federal Register, addresses the following practices:  Continue Reading Façade, Fraud: FTC Final Rule Banning Fake Reviews

Join us as we spotlight select chapters of Venable’s popular Advertising Law Tool Kit, which helps marketing teams navigate their organization’s legal risk. Click here to download the entire Tool Kit, and tune in to the Ad Law Tool Kit Show podcast, to hear the author of this chapter dive deeper into the issue of social media, influencers, and endorsements in this week’s episode.

Advertisers increasingly view social media as an opportunity to have influencers speak positively about their products and services. The Federal Trade Commission (FTC) has made it clear, however, that the rules regarding disclosure of material connections also apply in the social media context. Indeed, the FTC recently updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising to clarify them and address questions triggered by new technologies (such as computer-generated influencers) and platforms. Over the years, the Commission has pursued numerous cases against influencers, agencies, and the companies that hire them.Continue Reading Social Media, Influencers, and Endorsements: An Excerpt from the Advertising Law Tool Kit

Episode 8 of the Ad Law Tool Kit Show, “Social Media, Influencers, and Endorsements,” is now available. Listen here, or search for it in your favorite podcast player.

Advertisers increasingly view social media as an opportunity to have influencers speak positively about their products and services. But the Federal Trade Commission (FTC) has made it clear that rules regarding disclosure of material connections also apply in the social media context.

In this episode, Venable partner Melissa Steinman and I go over guidelines that include straightforward declarations like “X Company gave me a free product” or hashtags like #ad, emphasizing upfront, noticeable disclosures. Specific rules apply for different content formats, urging companies to monitor and educate employees and third-party implementers to prevent regulatory issues.Continue Reading Listen to Episode 8 of Venable’s Ad Law Tool Kit Show—”Social Media, Influencers, and Endorsements”

With the holiday shopping season in full swing, companies will soon begin the annual fight for every consumer dollar. But before companies can make the sale, they will face an even more daunting task: grabbing customer attention in the crowded world of online shopping.

As social media companies integrate shopping features into their base platforms, an industry shift often called “social commerce,” influencer marketing becomes an increasingly important method for driving sales.

As innocuous as those 30-second influencer marketing social media clips may seem to be, companies and influencers should be aware that the Federal Trade Commission (FTC) is keeping a watchful eye. This month, the agency issued dozens of warning letters to influencers for the lack of adequate disclosures in their social media posts as required by the recently updated FTC Endorsement Guides.Continue Reading Influencers on Notice: FTC Issues Warning Letters for Inadequate Disclosures

Thirteen months after proposing sweeping changes to its Endorsements and Testimonial Guides (Guides), the Federal Trade Commission (FTC) has finalized its revised guidelines and released an updated set of FAQs to help guide the industry with respect to the proper use of customer reviews, influencer marketing, and traditional endorsements and testimonials. 

The new Guides are over 80 pages. We will dive into specific sections in greater depth in the coming weeks, but here are some highlights:Continue Reading FTC Finalizes Updated Endorsement and Testimonial Guides

This week, a federal court in California issued an 80-page opinion that painstakingly walks through claims made against several celebrities who had promoted the Ethereum Max (EMAX) cryptocurrency, also called tokens.

The lawsuit was filed last year against Kim Kardashian, Floyd Mayweather, and former professional basketball player Paul Pierce, challenging their EMAX endorsements and social media posts. Since then, the plaintiffs have amended the complaint multiple times.

Among other issues it addressed, this week’s court decision provided a helpful reference point showing where a court aligned with and diverged from the Federal Trade Commission’s Endorsement Guides.

First, the court found that the “#AD” disclaimer in the following post made clear that Kardashian was being paid, even though it appeared toward the bottom of the post.Continue Reading Court Provides Guidance on Social Influencer Advertising in Ethereum Max Crypto Lawsuit

It’s here! The 11th edition of Venable’s popular Advertising Law Tool Kit is now available for download. This annual resource compiles a broad spectrum of marketing-related topics, background information, and checklists into an easy-to-access guide, authored by some of the most experienced attorneys in the industry. Download this year’s Tool Kit or bookmark the link…

Customer reviews and ratings are powerful, low-cost marketing tools. Technology now allows marketers to harness this power on a scale that was unimaginable even five years ago. The ability to solicit, capture, and post reviews and ratings is virtually seamless. But it is just as easy to seek shortcuts or abuse the system. In response, the Federal Trade Commission (FTC) has devoted resources to addressing consumer review fraud, including through public education. Early in the year, it issued nonbinding guidance for both marketers and online review platforms, warning against potentially deceptive acts, such as faking, manipulating, or suppressing online reviews, as well as paying for higher rankings from purportedly “independent” consumer ranking websites. Online reviews should reflect customers’ honest opinions. So how does the FTC suggest you get there?Continue Reading A Sign of the Times: Federal Trade Commission Releases Guidance on Consumer Reviews