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The FTC Turns its Eye to Social Media: New Rules Effective Dec. 1, 2009

12.08.2009

A new sheriff has come to the Wild West of social media. The Federal Trade Commission (FTC) has issued new rules on social media content, effective on December 1, 2009. The FTC is trying to protect consumers from misleading product endorsements that may appear as editorial reviews, blogs, Twitter or Facebook pages. If the author or blogger is paid to review and promote a product online, or received the product from a manufacturer for free, the author must now disclose this information online – and the manufacturer must monitor that the rules are being followed.

Through endorsements and reviews, online marketing is commonplace in the social media world. But the messaging can be confusing for potential consumers. A quick Twitter search brought up tweets such as "Check out some sweet Nike gear for your next workout" with a link to Nike's website. Another blogger tweeted "Consider the Snuggie plush for Christmas, but read this first…" with a link to her blog where she reviews the Snuggie. This blogger followed the new law by disclosing that she received no compensation or products for the review.

Online marketers, bloggers or authors of social media content should be familiar with the new FTC rules, paying close attention to:

  • Disclosures – If a manufacturer pays you to review their product online, you must disclose it that you have been compensated. You must also disclose if you were sent the product for free.
  • Monitoring – Companies that provide the products (paid or not) are now responsible for monitoring the endorsements or comments made about their products to make sure that these disclosures are being made, and that they are truthful. Failing to abide by this rule can result in charges of unfair or deceptive advertising. This liability also applies to individual bloggers, so online marketers or manufacturers should communicate this new rule to bloggers before arranging any endorsement deals.

The FTC's goal is to treat social media outlets the same way it treats traditional advertising. Fines of up to $11,000 per violation are possible under the new rules.

Next Steps

  • For a definition of what the FTC considers an "endorsement" and for hypothetical examples of when online marketing will be subject to the new rules, read the complete FTC ruling available on the FTC's website.
  • Businesses and employers who engage in any form of online marketing or social media activity should develop a social media marketing policy that complies with the FTC ruling. Contact attorney Fred Frawley with any questions on social media policies, or other intellectual property and advertising law issues. Fred may be reached at afrawley@preti.com.