Ask The ExpertThe Amoskeag Business Incubator and New Hampshire Union Leader's on-line “Ask-the-Expert” series is an interactive, web-based environment where questions may be asked and answered on various business topics that change each month as new experts are introduced. New experts will be featured periodically, who will post a short article on a specific business topic. Readers will then be able to ask questions of the featured expert. Answers will be posted to selected questions and the information will be available to on the website for future reference. September 01, 2010
Ask The Expert![]() Maria Recalde, EsquireAttorney, Sheehan, Phinney, Bass + Green
FTC's Revised Endorsement Guides: Blogger's Material Connections Must Be Disclosed By Maria Recalde, Esq. Sheehan, Phinney, Bass + Green
The Federal Trade Commission (FTC)'s revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (the "Guides") address endorsements by consumers, experts, organizations and celebrities, as well as the disclosure of important connections between advertisers and endorsers. The Guides represent nonbinding administrative interpretations (advisory in nature) of laws enforced by the FTC for the guidance of the public in conducting its affairs in conformity with legal requirements that prohibit false, unfair or deceptive advertising. The revised Guides became effective on December 1, 2009. Practices inconsistent with the Guides may result in enforcement action by the FTC under Section 5 of the FTC Act if, after investigation, the FTC has reason to believe that the practices fall within the scope of conduct declared unlawful by the statute. The Guides set forth the general principles that the FTC will use in evaluating endorsements and testimonials, together with examples illustrating the application of those principles. Whether a particular endorsement or testimonial is deceptive will depend on the specific factual circumstances of the advertisement at issue. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product or service will be considered an endorsement subject to the prohibitions of Section 5 of the Act regarding unfair and deceptive practices. Bloggers who make an endorsement must disclose the "material connections" they share with the seller of the product or service they review. Specifically, when there exists a connection between the endorser and the seller of the product or service at issue that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed (e.g., payments, gifts, commissions on sales, employment relationships, etc.). In this regard, by way of example, bloggers that receive free products from a company with the understanding that they will promote the products in their blogs as well as bloggers who are part of network marketing programs where they sign up to receive free product samples in exchange for writing about them are required to disclose these connections. The Guides provide additional practical examples illustrating circumstances under which bloggers are required to make disclosures regarding "material connections". The following examples are representative of such circumstances, though not exhaustive:
Although, as noted above, the Guides are administrative interpretations of the law intended to help advertisers comply with the FTC Act and not binding law themselves, it is clear that the FTC intends to investigate and pursue allegedly deceptive use of testimonials or endorsements taking into account compliance with the Guides. Indeed, in April 2010, the FTC made public its first investigation involving a company's compliance with its updated Guides in connection with the posting of content by bloggers who had attended a certain event and failed to disclose that they had received gifts for posting blog content about that event. A copy of the FTC's closing letter may be found at http://www.ftc.gov/os/closings/100420anntaylorclosingletter.pdf. It is worth reading as it sheds some light on how the FTC expects companies to comply with the Guides. Additional information on the revised Guides and the FTC's answers to the most frequently asked questions submitted by advertisers and bloggers, among others, since the FTC issued the revised Guides may be found at http://www.ftc.gov/bcp/edu/pubs/business/adv/bus71.shtm. I look forward to answering your questions on this interesting topic.
This article is intended to serve as a summary of the issues outlined herein for informational purposes only. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. About Maria Recalde, EsquireMaria E. Recalde is a shareholder at Sheehan Phinney Bass + Green, P.A, admitted to practice in Massachusetts and resident in the firm's Boston office. She chairs the firm's Corporate Department and is a member of the firm's Intellectual Property and Technology Practice Group. Her practice concentrates on the rapidly changing areas of technology and intellectual property transactions, litigation and counseling. A significant portion of Maria's practice involves advising clients on matters involving intellectual property protection, licensing and transferring, electronic contracting, privacy and data security regulation and compliance, electronic communications and social media use in the workplace, consumer privacy, Internet marketing, online contests and sweepstakes, domain names, and web site development, hosting and maintenance. Maria also counsels clients in prevention techniques for avoiding litigation and other risk exposures in these areas. Maria is a graduate of Boston College Law School and Wellesley College. She is a native of Managua, Nicaragua, and is fluent in Spanish.
Ask The Expert A Question
Use the above link. Questions are emailed to the Expert, who may answer you privately, and/or post a response here. Ask The Expert Series
Disclaimer The "Ask-the-Expert" series is provided by the Amoskeag Business Incubator and its experts for general informational and educational purposes only and is offered with the express understanding that neither the Amoskeag Business Incubator nor the experts is engaged in the rendering of any legal, accounting or other professional advice or services. Users of this series should not rely on this information without first seeking specific guidance from a qualified professional. Individuals seeking legal advice should contact legal counsel. THE INFORMATION AND RESPONSES PROVIDED THROUGH THIS SERIES ARE PROVIDED ON AN "AS IS" AND "AS AVAILABLE" BASIS AND THE AMOSKEAG BUSINESS INCUBATOR AND ITS EXPERTS EXPRESSLY DISCLAIM ALL WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED. Without limiting the generality of the foregoing, neither the Amoskeag Business Incubator nor its experts make any representations regarding the accuracy, adequacy, reliability, suitability, completeness or current nature of any information provided. Any use of the information contained on or provided through this series is at your sole risk. No information provided to or by the Amoskeag Business Incubator or its experts is privileged, private or confidential and participation in this series, whether through electronic mail or other interaction in any form, shall not create a privileged relationship or other professional or client relationship of any kind. |