What’s Enough Under The FTC Endorsement Guidelines?

It’s the hot new game show that’s sweeping the conference I attended last week!

In my last post I wrote about what I did as co-chair of the ACI Social Media, Sweepstakes, and Promotions conference last week.  But in addition to being co-chair I was also on a panel during the second day.  Our panel had the provocative title “You Better Disclose That: Ensuring that Your Company is Closely Adhering to the FTC’s Endorsement and Testimonial Guidelines.”  I know, great title, right?  Anything that has “Closely Adhering” is a winner in my book.

I have one rule for conference presentations: they cannot be boring.  So I always look for some way to structure the talk or panel to be more than just a bunch of talking heads who take turns at the microphone.  Last year at the conference I turned my panel into a game show called “Are You Smarter Than A Social Media Lawyer?” where three other lawyers were asked questions by me (I didn’t tell them the questions in advance because I’m mean like that) and then they had 30 seconds to answer.  If the audience wanted more they could yell out “More!”.  It was a blast.  First, because limiting attorneys to 30 seconds of talking is funny (we’re horrible at that).  Second, because it was awesome to hear the audience yelling out “More!” when they really wanted to here more.  We covered a lot of ground.

But we couldn’t do that again, so my co-panelists Jim Dudukovich from Coke and Paul Garrity from Sheppard Mullin Richter & Hampton agreed to go along with another game show idea I had.  This one was called #enuf or #notenuf.  We handed out double sided cards to everyone in the audience; one side read #enuf and the other read #notenuf.  Then Paul, as our game announcer, read a hypothetical scenario and asked the audience if the company/person/whatever had done enough under the FTC Endorsement Guidelines.  After the audience voted, then Jim and I voted and discussed the answers.

I think the format worked and we had some great discussions.  While I won’t give away the answers here unless people are really interested, it was apparent that there isn’t a clear consensus on many issues.  Some items were easy to decide (hypothetical 2 is based on the case that defined astroturfing, after all).  But others are in the gray area and you needed more information.  This area of law is still evolving quickly so it will also be interesting to see if our answers change over time.

For those of you still interested, here are the 20 hypotheticals that we discussed.  What do you think on these?  Was it #enuf or #notenuf?  If you’re curious, comment away and I’m happy to discuss.  Maybe we can even get Jim to pitch in.

Scenario #1: Lofty Bloggers

•A fashion store holds a preview even for bloggers only.  After bloggers attend they are encouraged to write about the event and fashions.  If they send a link to their blog post back to the store they will be entered to win a gift card that could be worth $10 to $500.  There is no requirement for the bloggers to mention the special event or the gift card drawing in their blog post.

•Did the fashion store do enough to follow the Guidelines?

Scenario #2: iReview Games
•A marketing company is hired by a video game developer to help increase sales of its awesome iPhone game, Poke The Lawyer.  The marketing company has several dozen paid interns create new accounts on iTunes for the sole purpose of posting a five-star review of Poke The Lawyer.  (“Realistic poking action!” “Caveat this!” “I poked him in tenths of an hour increments, is that wrong?”)  None of the reviews disclose that they are reviewing a client’s application.
•Did the marketing company do enough to follow the Guidelines?
Scenario #3: Affiliate Dis-Chord
•A mail order company sells DVDs (remember those?) that teach you how to play guitar.  Customers can also become affiliates where they post links to purchase the DVDs after posting a review about their experiences.  (“Simple directions!” “This DVD was so easy I can play every Whitesnake song after one week!” “I’m now the lead guitar player for Journey!”)  None of the reviews disclose that the affiliate makes money off of subsequent purchases, nor does mail order company require the affiliates to disclose that arrangement.
•Did the affiliates do enough to follow the Guidelines?
Scenario #4: I Like Free Stuff And I Cannot Lie
•A mail order glasses company creates an offer on its Facebook page that is only visible to its fans, so it requires Liking the page.  The offer is marketed as Free Glasses For Fans, but only after Liking the page would customers discover that there are limited options for those free glasses.  Most customers who clicked Like as a result of this ad order and receive their free glasses.
•Did the glasses company do enough to follow the Guidelines?
Scenario #5: You Other Glasses Sites Can’t Deny
•Follow up to the previous scenario, the mail order glasses company takes advantage of all the new customers it has acquired on its Facebook page.  Before the Free Glasses campaign the page had 80,000 Likes but now it has 260,000.  The company then proudly announce it has over 250,000 fans.  This becomes a second marketing campaign
•Did the glasses company do enough to follow the Guidelines?
Scenario #6: Lose The Weight By Cutting Testimonials!
•A weight loss company starts a Pinterest board with photographs of customers and descriptions that tell how much weight that customer lost.  Neither the board description nor the photo captions contains the usual disclaimer about these weight loss results not being typical or that actual results could vary.
•Did the weight loss company do enough to follow the Guidelines?
Scenario #7: Drive For Results
•A car company hires an ad agency to help spark social media content surrounding its Super Bowl commercials.  Unbeknownst to the car company, the agency provided gift certificates to popular bloggers in return for writing favorable blog posts about the commercials.  The agency did not require or even ask the bloggers to disclose the gift certificates.
•Did the car company do enough to follow the Guidelines?
Scenario #8: Disclosures Really Satisfy You
•A candy company hires several celebrities to send a series of tweets.  The first few tweets have the celebrity talking about something completely out of character.  An athlete talks about his passion for knitting.  A model dives into macro-economic policies.  After a few tweets the celebrity tweets out a photo of them eating the candy and suggesting that when they’re hungry they just aren’t themselves.  Only this final tweet discloses that the series was a paid advertising campaign.
•Did the candy company do enough to follow the Guidelines?
Scenario #9: #Obvious
•An athlete sends out tweets paid for by a sneaker company.  The tweets do not disclose that they were paid for, but they do include URLs to the sneaker’s most recent campaign and the #hashtag that accompanies that campaign.  The particular athlete is well known for being sponsored by that particular sneaker company.
•Did the athlete do enough to follow the Guidelines?
Scenario #10: Hypothetical Katie, pt. 1
•A paint company gives Katie, an avid blogger on home repair projects, two gallons of their paint.  In the middle of a blog post about her latest painting project, Katie writes “PaintWorld sent me two gallons to try out, and this paint is amazing.”
•Did Katie do enough to follow the Guidelines?
Scenario #11: Hypothetical Katie, pt. 2
•A paint company gives Katie, an avid blogger on home repair projects, two gallons of their paint.  In the middle of a blog post about her latest painting project, Katie includes a link to “PaintWorld’s Just One Coat paint.”  At the end of the blog post, Katie writes “By the way, PaintWorld gave me the paint just to try it out, but this paint is so terrific, I’ll buy it myself next time.”
•Did Katie do enough to follow the Guidelines?
Scenario #12: Hypothetical Katie, pt. 3
•A paint company gives Katie, an avid blogger on home repair projects, two gallons of their paint.  Katie does not mention that PaintWorld gave her the paint anywhere in the blog post.  In the sidebar of the blog there is a link to “Disclosures & Disclaimers.” Clicking that link goes to a page that mentions how PaintWorld gave her the paint.
•Did Katie do enough to follow the Guidelines?
Scenario #13: Live Or Die-t By The Guidelines, pt. 1
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #14: Live Or Die-t By The Guidelines, pt. 2
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #15: Live Or Die-t By The Guidelines, pt. 3
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #16: Live Or Die-t By The Guidelines, pt. 4
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #17: Live Or Die-t By The Guidelines, pt. 5
•Did @JuliStarz do enough to follow the Guidelines?
Scenario #18: That’s Nina My Business
•A well known fashion editor and reality TV competition judge signs a deal to consult with a major department store chain.  The chain is known for mainstream fashions but would like to be a bit more cutting edge and is testing new store designs and inventory.  The editor visits one of these test designs then tweets “Thanks for the walkthrough of the prototype.  Get ready to shop!  It’s going to be a game changer!”  The department store’s stock immediately jumped 5%.
•Did the fashion editor do enough to follow the Guidelines?
Scenario #19: Pin It, Pin It Good
•A well known shopping website encourages customers to create a Pinterest board and Pin items from the site they would like to win, up to $1,000.  The only requirement is to browse the website and click the Pin button above the items they want—no need to apply a #hashtag or description to the item.
•Did the website do enough to follow the Guidelines?
Scenario #20: The Pin Is Mightier Than The Referral Fee
•A well known shopping website encourages customers to create a Pinterest board and Pin items from the site.  If another Pinterest user clicks on the Pin and purchases the item, the Pinterest board owner will receive $15.  There is no requirement to have any description or disclosure on the pinned item.
•Did the website do enough to follow the Guidelines?
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Filed under Affiliates, Celebrities, Commercial Activity, Consumer Protection, FTC Endorsement Guidelines, Social Content, Social Marketing, Social Media Risks

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