August 4, 2020

Volume X, Number 217

August 03, 2020

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FTC Seeks Comments on Revamping its Endorsement Guides

At a time when influencers are making a living – and sometimes millions of dollars – for promoting everything from eye shadow to the latest smartphone, the Federal Trade Commission (FTC) is reassessing its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Guides). The Guides provide direction to businesses that use influencers and endorsers on when and how to make disclosures concerning a “material connection” or commercial relationship between the advertiser and influencer.

The Guides were enacted in 1980. The FTC amended the Guides in 2009 to include new requirements for influencers to disclose material connections – whether in the form of cash, free products, or other consideration – with companies whose products or services they recommend. But in 2009, the FTC could not predict the massive growth of global platforms such as YouTube and Instagram where some influencers have millions of followers. The FTC is now seeking public comments on a range of issues including:

  • whether the practices addressed by the Guides are prevalent in the marketplace and whether the Guides are effective at addressing those practices;

  • whether consumers have benefitted from the Guides and what impact, if any, the Guides have had on the flow of truthful information to consumers;

  • whether the FTC’s guidance document, The FTC’s Enforcement Guides: What People Are Asking, should be incorporated into the Guides;

  • how well advertisers and endorsers are disclosing unexpected material connections in social media;

  • whether children are capable of understanding disclosures of material connections and how those disclosures might affect children;

  • whether incentives like free or discounted products bias consumer reviews, even when a favorable review is not required to receive the incentive, and whether or how such incentives should be disclosed;

  • whether composite ratings that include reviews based on incentives are misleading, even when reviewers disclose incentives in the underlying reviews;

  • whether the Guides should address the use of affiliate links by endorsers; and

  • what, if any, disclosures should advertisers or operators of review sites make about the collection and publication of reviews to prevent them from being deceptive or unfair.

FTC Commissioner Rohit Chopra issued a separate statement in which he called for the FTC to perform a “self-critical analysis of the agency’s enforcement approach” and to focus on advertisers, not small influencers. He expressed a hope that after reviewing the comments, the Commission would consider going beyond the Guides by: (1) adopting requirements for technology platforms that facilitate and either directly or indirectly profit from influencer marketing; (2) codifying elements of the existing Guides into formal rules to allow for imposition of civil penalties; and (3) specifying the requirements that companies must adhere to in their contractual arrangements with influencers.

Interested parties should submit comments within 60 days of publication of the Request for Comments in the Federal Register, which is expected soon.

© 2020 Keller and Heckman LLPNational Law Review, Volume X, Number 44

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About this Author

Sheila Millar, Keller Heckman, advertising lawyer, privacy attorney
Partner

Sheila A. Millar counsels corporate and association clients on advertising, privacy, product safety, and other public policy and regulatory compliance issues.

Ms. Millar advises clients on an array of advertising and marketing issues.  She represents clients in legislative, rulemaking and self-regulatory actions, advises on claims, and assists in developing and evaluating substantiation for claims. She also has extensive experience in privacy, data security and cybersecurity matters.  She helps clients develop website and app privacy policies,...

202-434-4646
Tracy Marshall, Keller Heckman, regulatory attorney, for-profit company lawyer
Partner

Tracy Marshall assists clients with a range of business and regulatory matters.

In the business and transactional area, Ms. Marshall advises for-profit and non-profit clients on corporate organization, operations, and governance matters, and assists clients with structuring and negotiating a variety of transactions, including purchase and sale, marketing, outsourcing, and e-commerce agreements.

In the privacy, data security, and advertising areas, she helps clients comply with privacy, data security, and consumer protection laws, including laws governing telemarketing and commercial e-mail messages, contests and sweepstakes, endorsements and testimonials, marketing to children, and data breach notification. Ms. Marshall also helps clients establish best practices for collecting, storing, sharing, and disposing of data, and manage outsourcing arrangements and transborder data flows. In addition, she assists with drafting and implementing internal privacy, data security, and breach notification policies, as well as public privacy policies and website terms and conditions.

As to intellectual property matters, Ms. Marshall helps clients protect their copyrights and trademarks through registration, enforcement actions, and licensing agreements.

She also represents clients in proceedings before the Federal Communications Commission and Federal Trade Commission.

Ms. Marshall is a Certified Information Privacy Professional (CIPP/US) through the International Association of Privacy Professionals (IAPP) and a contributing author of Beyond Telecom Law Blog and Consumer Protection Connection.

Education: Washington and Lee University (B.A., 1997); American University, Washington College of Law (J.D., 2002).

Admissions: District of Columbia; Maryland

Memberships: American Bar Association

202-434-4234