Lawyer Gives Insight on FTC Revisions to Endorsement Guides
eM+C recently caught up with Thomas Cohn, an attorney in the New York office of Venable, a Washington, D.C.-based law firm. Cohn, a former Federal Trade Commission (FTC) regional director who advises clients on the legal and practical aspects of compliance with FTC regulations and industry self-regulation programs, discussed ways marketers can avoid enforcement action by the FTC when it implements revisions to its endorsement guides. Among other things, the proposed revisions require businesses that employ new online or viral marketing techniques to disclose any material connections they have to sponsoring companies.
Without giving legal advice or opinion that he'd only provide when related to specific fact situations, Cohn offered the following insights:
eM+C: Can you offer more detail about the FTC's proposed revisions to its endorsement guides?
Thomas Cohn: The FTC always required endorsements to disclose any material connections between endorsers and advertisers. In its proposed revisions, the FTC has added three new examples to illustrate the application of this principle to new media situations such as bloggers, online discussion boards and street teams. While we don't know whether the FTC will adopt these revisions as proposed, modify them, or pull them for additional study and comment, we expect the FTC to issue its revisions sometime later this year.
eM+C: Do you think this is a good idea or even needed?
TC: The FTC appears to be treating online conduct differently than its offline counterpart. The FTC should not address the issue of the proper way to regulate word-of-mouth marketing and endorsements in new media contexts without giving the implications of such regulation full consideration, particularly where industry has already acted successfully to self-regulate through organizations such as the Word of Mouth Marketing Association and the Blog Council.
The new examples also raise issues regarding the reasonableness of requiring marketers to prevent any party with whom they have a connection from making statements promoting the marketers’ products without disclosing the connections.
It would also be impracticable for marketers to ensure that “material” connection disclosures accompany endorsements made through online discussion boards, “street teams” or similar channels, as required under the FTC's new examples. Marketers can’t control what employees say on discussion boards or what street team members say to their friends. It’s also unclear what steps marketers would be required to take to prevent persons with a material connection to them from making positive statements about their products without disclosing the connections.
eM+C: Are there any best practices online marketers should follow in an effort to stave off enforcement?
TC: To help steer clear of enforcement, the best practice is for endorsements to reflect the honest opinions, findings, beliefs or experience of the endorser, and to not contain any representations that would be deceptive or could not be substantiated if made directly by the advertiser. Endorsers should also clearly and conspicuously disclose all connections between them and advertisers — such as paid compensation or freebies — that may materially affect the weight or credibility that consumers attach to the endorsement.