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There’s No Such Thing As a Free Sample

Social media allows users to effortlessly communicate globally with nothing more than a few keystrokes.  Advertisers have harnessed the power of social media bloggers and incorporated it as a key component of their advertising campaigns.  This practice is known as “consumer-to-consumer” marketing or “consumer-generated media” marketing.  While consumer-to-consumer marketing is a prevalent practice, especially in the fashion industry, the use of bloggers to promote fashion products to consumers necessitates compliance issues under the Federal Trade Commission Act.

In recent years, social media has played an ever-increasing role in the advertising strategies of big and small fashion companies.  In particular, companies seek out individuals with a significant social media following to help promote their products and services.  This is especially true where bloggers provide tutorials on fashion cosmetics and beauty products.  Under a consumer-to-consumer model, companies often provide popular bloggers with samples of their fashion products and/or services to feature on their social media accounts, which often sports tens of thousands of followers.

Fashion bloggers have partnered with corporations like J. Crew, Jo Malone and Tiffany & Company and have received gift products with the expectation that these individual bloggers will feature these products on their blogs and/or other social media accounts (e.g. Facebook, Instagram, etc.).  This practice appeals to fashion companies as it enables them to reach a significant body of consumers in a subtle, yet highly suggestive way.  The danger of this practice, however, lies in the potential for liability under the Federal Trade Commission Act based upon consumer deception where transparency is lacking.

At its core, the Federal Trade Commission Act regulates unfair or deceptive acts affecting commerce.  In recent years, the Federal Trade Commission (“FTC”) has revised its guidelines, “Guides Concerning the Use of Endorsements and Testimonials in Advertising”, to address and combat the potential problem of deception in social media advertising with the following key principles for corporations that engage in consumer-to-consumer marketing:  (1) mandate a disclosure policy that is compliant with the law; (2) make sure employees and bloggers know the rules; and (3) monitor what they are doing on your behalf.  Under these guidelines, bloggers that review or feature products and/or services on their blogs and other social media accounts must disclose to their followers any connection they have with the fashion company advertisers or sample providers.  The overall goal of the disclosure requirement, according to Richard Cleland, the assistant director of advertising practices at the FTC, is to foster truth and transparency in social media marketing.  The FTC’s position is that knowledge of a connection between a blogger and a company, even if the connection is as slight as a free sample, impacts how much weight and credibility followers assign to the blogger’s endorsement or review of the product.

Despite the fact that the guidelines have been established for some time and have not been updated since 1980, some fashion bloggers still fail to disclose their relationship with various brands.  The FTC publication “.com Disclosures:  How to Make Effective Disclosures In Digital Advertising” is a helpful tool in ensuring compliance with the disclosure requirements. The FTC historically has not invoked the Federal Trade Commission Act to punish fashion bloggers with monetary fines, however, continuation of a failure to properly disclose might change the FTC’s treatment of this issue.  While each blog differs in its content and how it features products and/or services, all bloggers should disclose any such relationship and companies that engage in consumer-to-consumer marketing should advise their bloggers to disclose the relationship as best practice.

 

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume V, Number 138
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About this Author

Theodore Max, Attorney, Sheppard Mullin, Entertainment, Technology, Advertising
Member

Theodore C. Max is a member of the Entertainment, Technology and Advertising and Intellectual Property Practice Groups in the New York office, where he focuses on counseling clients on intellectual property issues and litigation. He is co-leader of the firm's Fashion and Apparel team. Mr. Max combines his skill and experience as a trial attorney with his knowledge of copyright, trademark and intellectual property law in servicing the firm's diverse clientele.

212.332.3602
Associate

Nicole Bagood is an associate in the Entertainment, Technology, and Advertising Practice Group in the firm's Century City office.

  • J.D., Loyola Law School, 2014

  • B.A., University of California, Davis, 2007

310.228.3719
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