Social media is a fast-growing marketing tool for companies of all sizes. It is not without legal concerns and risks, however. In October 2009 the Federal Trade Commission, which enforces laws related to advertising in all types of media, broadened its Guides Concerning the Use of Endorsements and Testimonials in Advertising to include social media.
The Endorsement Guides requires any person who publishes internet content, including blogs, to disclose “material connections they share with the seller of the product or service” when endorsing a company, the company’s goods or services, or defending the company online. Failure to comply can carry a fine of $11,000 for each disclosure violation.
The FTC has concluded its first blog disclosure investigation against Ann Taylor, Inc., a women’s clothing retailer. In February 2010 Ann Taylor Loft offered gift cards to bloggers who attended a preview of its summer 2010 collection. When some bloggers failed to disclose that they had received gift cards for posting content about the preview, the FTC instituted an investigation against Ann Taylor. The FTC concluded that even though some of the bloggers failed to disclose the material connection between them and Ann Taylor, the retailer would not be fined. One of the mitigating factors was that Ann Taylor had adopted a written policy stating that the company would not issue a gift to any blogger without first instructing him or her to disclose the gift in the blog.
What should your company do in light of this FTC investigation?
- Implement written policies regarding social networking and disclosure; and
- Alert employees, independent contractors, and all other persons with material connections to your company, goods, or services of the FTC's disclosure requirement.
By Crystal N. Riggins
cnr@hogefenton.com | 408.947.2434 direct
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For additional information or answers to specific questions regarding your business, please contact:
Jeanine D. DeBacker - Chair, Employment Law Group
jdd@hogefenton.com | 408.947.2419 direct
Stephanie O. Sparks - Chair, Intellectual Property Group
sos@hogefenton.com | 408.947.2431 direct