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Social Media: A Haven for Orchestrated Testimonials and Endorsements or Genuine Opinion?

27 Feb, 2011 By: Jeffrey Richter, Arthur Yoon


From Facebook to Twitter to Yelp, social media has become an integral part of many people’s daily lives and relationships. Its popularity has changed the way people communicate and, as a consequence, the way direct marketers advertise. In order to engage and foster relationships with social media participants, many advertisers are designing word-of-mouth marketing programs that include the orchestrated posting of favorable product reviews by bloggers (i.e., an endorser) on various social media platforms.

The Federal Trade Commission (FTC) has established guidelines on endorsements and testimonials posted on social media platforms. Under the FTC “Guides Concerning the Use of Endorsements and Testimonials in Advertising” (the FTC Guides), bloggers are required to disclose any material connection they might have to a seller about whose products they are writing. (A copy of the FTC Guides can be downloaded at www.ftc.gov/os/2009/10/091005revisedendorsementguides.pdf.) When there exists a connection between the blogger and the advertiser of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed. Advertisers are subject to liability for failing to disclose material connections between themselves and their bloggers.

In response to the FTC Guides, the Word of Mouth Marketing Association (WOMMA) released its “Social Media Marketing Disclosure Guide” (WOMMA Guide) in an effort to assist word-of-mouth marketers in understanding the requirement to disclose material connections between themselves and their endorsers. (A copy of the WOMMA Guide can be downloaded at www.womma.org/ethics/disclosure/.) Key social media platforms covered in the WOMMA Guide include personal and editorial blogs, product review blogs, online comments, microblogs, status updates on social networks, video and photo sharing websites, and podcasts.

As recognized in the WOMMA Guide, consumers have a right to know the sponsor behind advertising messages that could influence their purchasing decisions. The FTC requires the disclosure of all “material connections” between advertisers and bloggers for testimonials and endorsements delivered to consumers through social media. Important examples of “material connections” provided in the WOMMA Guide include (a) consideration (benefits or incentives such as monetary compensation, loaner products, free services, in-kind gifts, special access privileges) provided by an advertiser to a blogger, or (b) a relationship between an advertiser and a blogger (such as an employment relationship).

The WOMMA Guide emphasizes the need for clear and prominent disclosures on all forms of social media. Disclosure language should be easily understood and unambiguous, while the placement of disclosures should not be hidden deep in text or on the page. In addition, all disclosures should appear in a reasonable font size and color that is both readable and noticeable to consumers.

The WOMMA Guide includes sample disclosures for the most popular social media websites. For example, if a blogger posts a product review as a status update on Facebook, WOMMA proposes that the blogger write, “I received (product or sample) from (company name) to review” or “I was paid by (company name) to review.” WOMMA also strongly recommends that bloggers provide a link directing people to a full “Disclosure and Relationships Statement” that fully discloses how the blogger works with a company, and listing any conflicts of interest that may affect the credibility of the review.

The FTC’s disclosure requirements must be followed for those advertisers using word-of-mouth marketing on social media platforms. The model disclosures provided in the WOMMA Guide should not be construed to replace your legal counsel’s advice, but rather to enhance it. As social media platforms are continuously changing, such model disclosures will continue to be refined to reflect evolving industry best practices.

Jeffrey Richter is a partner and Arthur Yoon is an associate at Los Angeles-based Finestone & Richter. They can be reached at (310) 575-0800, or via E-mail at jrichter@frlawcorp.com and ayoon@frlawcorp.com. The foregoing article is not intended as legal advice, which can only be rendered in connection with specific facts.


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