Social media personalities who have tweeted, grammed, Vine’d and snapped their way to stardom have no doubt caught the attention of businesses large and small. Much like how professional athletes and other celebrities are paid to endorse products, businesses and retailers have increasingly turned to recognized social media personalities (often called “influencers”) to recommend their products. Although social media influencers can get paid significant sums of money for product placement and rave reviews, sometimes the relationship with the company is not readily apparent to the public. Where the endorsement is not based on genuine user experience, this can have a misleading and negative impact on consumers.
Disclosing the connection is important to the truth about the advertisement or endorsement. The basic premise behind the truth-in-advertising principle is that all advertising, including endorsements, whether direct or indirect, be honest and not mislead the public.
There are some influencers who may post about a certain product and simply review and recommend the product with no connection to the marketers of those products. However, influencers who are compensated, or receive the product or other benefits from the marketer for the sole purpose of providing a recommendation may be deceiving their audience where the connection is not disclosed. Transparency and disclosure of the connection are needed to help the audience properly evaluate whether they can give adequate credence to the influencer’s claims.
United States – Federal Trade Commission Endorsement Guides
The US Federal Trade Commission (FTC) published “The FTC’s Endorsement Guides – What People Are Asking” in May 2015 to provide guidance on how to disclose connections between brands and their endorsers to consumers and provides over 35 examples of various endorsement scenarios. We have previously written about the FTC Endorsement Guides here.
Canada – Advertising Standards Canada Code
More recently, Advertising Standards Canada (ASC), the national advertising self-regulatory body, has amended the Canadian Code of Advertising Standards (Code) to require online influencers in Canada to fully disclose paid endorsements. Clause 7 of the ASC Code requires that “testimonials, endorsements or other representations of opinion or preference must reflect the genuine, reasonably current opinion of the individual(s), group or organization making such representations, must be based upon adequate information about or experience with the identified product or service and must not otherwise be deceptive.” The ASC published an Interpretation Guideline for testimonials, endorsement and reviews, which states:
- A testimonial, endorsement, review or other representation must disclose any “material connection” between the endorser, reviewer, influencer or person making the representation and the “entity” (as defined in the Code) that makes the product or service available to the endorser, reviewer, influencer or person making the representation, except when that material connection is one that consumers would reasonably expect to exist, such as when a celebrity publicly endorses a product or service.
- If such a material connection exists, that fact and the nature of the material connection must be clearly and prominently disclosed in close proximity to the representation about the product or service. [emphasis added]
International – ICPEN Guidelines
In addition, the International Consumer Protection and Enforcement Network (ICPEN), an organization comprised of consumer protection agencies from over sixty countries (including the US FTC, UK Competition and Markets Authority and Canadian Competition Bureau), published three guidelines for online reviews and endorsements for review administrators, traders and marketers, and digital influencers. The guidelines were developed by ICPEN members to help parties comply with the truth-in-advertising principle for endorsements.
According to the ICPEN Guide, traders and marketers should be guided by the following key principles:
- Do not prevent consumers from seeing the whole picture of genuine, relevant and lawful reviews;
- Do not write, commission or publish fake reviews;
- Disclose paid-for content clearly and prominently; and
- Disclose other commercial relationships where they may be relevant to the content.
Similarly, the ICPEN Guide states that influencers should be guided by the following principles:
- Disclose, clearly and prominently, whether the content has been paid for;
- Be open about other commercial relationships that might be relevant to the content; and
- Give genuine views on markets, businesses, goods or services.
Legal reviewers of advertising and promotional materials should be aware of a company’s use of influencers and ensure proper disclosures are used. While there is no special wording or legalese required for the disclosure, an effective statement should be clear and should give the audience the essential information and the nature of the relationship. For example, if the influencer received the product for free, the disclosure could simply read, “Company X sent me this product to try…” If the influencer was paid for the endorsement, say so. If the endorsement is a video post, ensure the disclosure is clear and prominent in the video itself, and not merely in the text of the description.
The ICPEN Guides provide general guidelines for appropriate actions for review administrator, traders and marketers and digital influencers, but do not provide shelter from liability in ICPEN member countries. National laws respecting competition, advertising and transparency must be complied with and legal requirements of the jurisdiction in which a company operates must still be assessed.