Innovation@work: Understanding the Legal Do’s and Don’ts of Social Media Advertising (Part 1)

By: Kristin Mendoza

If your first question after reading the title of this article is “There are laws that govern social media advertising?”, please keep reading.

The primary law that governs advertising on social media has been on the books since 1914 and is called the Federal Trade Commission Act. The act, signed into law by President Woodrow Wilson, outlaws unfair acts and practices that affect commerce and created the Federal Trade Commission (FTC), a federal agency that enforces the act. Since its passage, the FTC has used its broad mandate to investigate and prosecute violators who engage in deceptive advertising practices across every communication medium including television, print, radio and social media.

As more and more businesses advertise on social media, it’s important to understand some of the legal guidelines for promoting your product and/or services.

Do’s and Don’ts for Customer and Third-Party Endorsements

We all enjoy when someone says something wonderful about our products or services on social media. In addition to that, customer endorsements can be a powerful tool for attracting would-be customers who are looking beyond the “sales pitch” of a traditional business advertisement when making a purchasing decision. Many online platforms, such as LinkedIn and Thumbtack, even encourage you to obtain customer endorsements or reviews as part of your business’s online profile.

However, simply sharing the wonderful things that people say about you or your business, especially if you have asked for an endorsement, requires some responsibility on your part. If you are going to re-tweet or otherwise share those remarks on your social media pages to promote your business, you should only do so if you believe that the tweet or blog post fairly represents your product or service.

Here’s why:

A social media post that you share or sponsor that consists of an endorsement by a customer or third-party on a key attribute of your product or service can be interpreted by the FTC as an advertisement; one promoting that the endorser’s experience is representative of what other consumers will generally achieve with the product or service in actual use.

Because the endorsement sets the expectations that a new customer will have the same type of experience with your company as the endorser, the FTC has regulations about use of endorsements to prevent giving false or deceptive impressions to the public. Therefore, you want to make sure that your use of customer and third-party endorsements abides by the following guidelines:

• When the message represents that the endorser uses the endorsed product, the endorser must have been a bona fide user of it at the time the endorsement was given
• Your business, as the promoter or advertiser, may continue to run or promote the endorsement only so long as you have good reason to believe that the endorser remains a bona fide user of the product. If the endorsement relates to a prior version of your product or service, you should inquire with the endorser whether his or her statements remain accurate in light of their use of the newer product. If they are no longer a customer, the endorsement should be removed or archived
• If you pay a blogger to promote your product or service on their blog, it is your responsibility to make sure that the blogger discloses that they are being paid for promoting services and that log posts about your product or service do not contain deceptive statements or unsubstantiated claims

For example, if a customer providing an endorsement has achieved an uncommonly good result after using your product or service, then as the promoter or advertiser, you are responsible for notifying potential customers in a clear and conspicuous way that the results achieved by the endorser may not be typical. Likewise, if a blogger is making exaggerated representations about your product or services, you should take steps to have the blog post revised and should not continue to promote the post until revised.

Companies that use endorsements to promote their business are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. If you have any questions or concerns about whether third-party endorsements could be viewed as deceptive, speak with an attorney.

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