Social media platforms are a popular way for companies to advertise their products and services, and engaging endorsers, namely celebrities, to boost this type of advertising is a popular practice. However, the Federal Trade Commission (FTC) is concerned that these endorsements may be misleading if consumers aren’t given all information necessary to make informed buying decisions. For example, consumers may believe a celebrity’s praise of a product implies they are endorsing it because they think it is great, when in fact, they were paid to give their endorsement. As a result, the FTC established guidelines and recently has increased efforts to enforce consumer protection laws and regulations for social media.
Companies and endorsers are required to clearly disclose a material connection between the two parties so reasonable consumers can have all information before making buying decisions. The FTC expects the disclosure to be clear and readily available to consumers, not buried in a link or otherwise less obvious. They also want companies to train and monitor endorsers so they are fully aware of what can and cannot be said about a product or service. Failure to comply with these guidelines can result in charges of deceptive practices that may be penalized at both the federal and state levels. Before engaging an endorser, companies should also consider adding a breach-of-contract provision to agreements that allows them to terminate the agreement if guidelines aren’t adhered to.
A paid endorsement on social media may be a great way for you to increase sales for your company, but make sure you know and follow the FTC guidelines so you can avoid any legal issues.