The Federal Trade Commission (FTC) has long enforced the principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. For example, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. And a paid endorsement, like any other advertisement, is considered deceptive if it makes false or misleading claims.
A recent example of the FTC’s enforcement of this principal is its charge that the home security company ADT LLC misrepresented that paid endorsements from safety and technology experts were independent reviews (HERE). The FTC’s administrative complaint alleged that ADT paid spokespeople to demonstrate and review the ADT Pulse on NBC’s Today Show, as well as other television and radio news programs and talk shows across the country, and in blogs and other online material. ADT, the FTC alleged, misrepresented that the reviews were independent, and failed to disclose that the experts were being paid by ADT to promote the Pulse system.
Paid endorsements are not new. However, social media-based marketing has made the marketing tactic more easily accessible to business owners. Twitter, blogs, and Facebook are commonly used by businesses to promote product awareness. Launching a baby product? Find a mommy blogger. Launching a new handbag? Find a celebrity to tweet about your product. However, if you provide free product to the blogger or celebrity, make sure that that there is full disclosure regarding the connection with your company and that your endorser does not make false or misleading claims about your product.
Click HERE to view the FTC guidelines regarding endorsements.