Traps for the Unwary
Today’s small to medium sized businesses are outsourcing social media marketing more and more in an effort to save time and money while ensuring maximum advertising impact. Whether you do your own social media marketing, or outsource it to a third party, there are key issues that you must be aware of to avoid potential legal liability.
Federal laws require that every advertisement, whether it appears on your website, social media page, on television, radio, or in print, be truthful and not misleading. The Federal Trade Commission (“FTC”) enforces these truth-in-advertising laws, known as the FTC Act. The FTC Act prohibits “unfair or deceptive acts or practices” in advertising claims, marketing and promotional activities, and sales practices, whether you are a small business or a large corporation.
A component of nearly any strategy for marketing on social media is endorsements — people recommending, or vouching for the quality or value of, your products or services. The FTC has created guidelines for the use of endorsements in advertising generally, and more recently has updated these guidelines to address the use of endorsements in online marketing. This guidance reinforces the fact that the rules concerning unfair or deceptive advertising apply equally to online activities (e.g., Twitter, Instagram, Facebook, Pinterest). The guidelines do not, themselves, have the force of law. However, they are intended to provide insight into how the FTC will enforce the laws in this new and evolving marketing landscape.
What does this mean for your company if you outsource your social media marketing?
The FTC makes it clear that a company is ultimately responsible for what others do on its behalf. Accordingly, your company needs to take precautions to mitigate the risk of running afoul of FTC rules. Whether your company uses a network of bloggers and other social media influencers, or the company’s entire social media program is run by an outside entity, the FTC recommends having an appropriate program in place to train and monitor social media content providers with respect to the following:
- Guidelines for what accurate and truthful statements can be made about your products or services – and what cannot be claimed;
- Clear instructions regarding the provider’s responsibility to disclose their connection to your company;
- Periodic searches for what service providers or members of the social media network are saying about your company’s products or services; and
- A follow-up procedure if questionable practices are found.
The most common mistake that companies make in this space is failure to disclose the relationship between the blogger or social media consultant and the company. If it is not abundantly clear to readers that the person posting about your company’s products or services in a blog or on social media is being paid or otherwise incentivized to make such posts, that connection needs to be disclosed. These incentives can include being paid to post about the company’s products or services, receiving free products or services, or receiving other perks with the expectation that the person will promote or discuss the company’s offerings on social media. (For more information about whether the FTC Act applies to particular types of endorsement, click here.)
Disclosing these relationships is required no matter what advertising medium is being used. The FTC has specifically stated that if your advertising message and disclosure cannot both be made in the limited number of characters allotted (e.g., on Twitter), then that medium may not be appropriate for a product endorsement. This illustrates the importance the FTC places on disclosures in preventing unfair and deceptive advertising. (For specific ideas on how to make effective disclosures on various social media platforms, click here.)
Whether your company handles its social media marketing in-house, or outsources this effort to a third party, your company is ultimately responsible for its compliance with advertising laws and regulations. When hiring third parties to promote your business in blogs or on social media, the best protection is to have an agreement with each vendor that addresses the FTC guidance and provides remedies in the event these steps are not followed.