FTC Rules: Easy to Follow, Easy to Forget

Happy Lawyers Unpacking our Barbri Books

I have the pleasure of speaking at Content Marketing World next month, in part, about the FTC rules that apply to advertising.

Disclose, Disclose, Disclose
The key to complying with the FTC rules for native advertising it to always disclose when you have a relationship with a company. That includes when you get a product for free, when you have a personal relationship with an officer of the company, and when you use affiliate links. In all of these situations, regardless of the platform, you have disclose when you are compensated for sharing an opinion or have a reason to be biased.

These rules even apply on social media platforms, including Instagram and Twitter. Usually using the hashtag “#ad” is sufficient to comply with the rules. The purpose of the rule is to let the reader know about your potential bias before they form an opinion about the product or your review.

The fine for violating these rules are harsh – up to $16,000 per violation under the current rules.

See you in Cleveland!
I have a goal of finding a way to climb this thing.

So Easy to Forget
These rules are simple to follow, and it’s also super easy to forget to remember to include the proper notice in a post. I had first-hand experience with this over the last few weeks.

My colleague and I teamed up with Barbri to study for the California Bar Exam. They gave me my study course for free (I split the cost of my colleague’s course with him) in exchange for writing a weekly post about what it’s like to study for a bar exam while practicing law. We did 11 weekly posts, and I’ll write one more when we get our results this fall.

Early in each post, I repeated verbiage that disclosed our relationship with Barbri – that was easy enough. Where I had trouble was remembering to include “#ad” on every social media post. It’s easy to forget to remember to include those three characters. There were many mornings where I had to edit my posts or delete and re-do tweets to add in “#ad.”

I recently learned I’m not alone. According to research, 37% of publishers do not adhere to the FTC rules for labeling the material as sponsored. I’m curious to see if the FTC is investigating or fining content creators who don’t follow the disclosure rules.

I’m super excited to talk about the FTC rules and how to write effective contracts for content creators at Content Marketing World. It’s one of my favorite events on online advertising. I’m just as ecstatic about speaking as I am about learning from my fellow presenters.

I’m constantly doing work related to internet law, so if you want to keep up with what I’m doing or if you need help, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn.  You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

FTC Compliance Friendly Reminders

Praise by bark from Flickr (Creative Commons License)

Praise by bark from Flickr (Creative Commons License)

Bloggers, vloggers, and other social influencers frequently asked me about the rules regarding disclosure when partnering with companies and using affiliate links. With holidays (and therefore holiday gift guides) on the horizon, it seemed apropos to share some helpful reminder for how to comply with the FTC’s disclosure rules when you get free product or are compensated for providing a review.

It’s All About Transparency
The purpose of the FTC’s disclosure rules is transparency. When people consume content, they have a right to know whether the creator has a relationship with the company or product or whether it is 100% their independent opinion. Knowing that a person has a relationship with a company, which may or may not include financial compensation, will impact whether a person reads or view a post and how much weight or credibility to give it.

To comply with the transparency requirements of Federal law, social influencers must clearly and prominently label the content they were compensated to make as advertising to avoid misleading consumers.

Disclosure First
Many influencers put their notice that they were compensated for doing a post or that a post has affiliate links at the end of the content. This is likely insufficient to comply with the rules because consumers need to be informed before they form an opinion about a product that they’re reading a sponsored post or an ad.

In general, you should make a disclosure in the post itself and shortly before the reader receives the advertising message. The FTC recommends putting it in front of or above the ad’s headline. Additionally, the notice need to be clear and unambiguous language. To determine whether your disclosure complies with the FTC, consider your notice from the perspective of the reasonable consumer who’s seeing your content for the first time. Will he/she notice the disclosure statement and understand that they’re reading or seeing an ad?

The FTC says terms like “ad,” “advertisement,” or “sponsored advertising content” are likely to be understood but terms like “promoted,” or “sponsored by [XYZ]” don’t comply with the disclosure requirement because they could be interpreted as merely underwriting the content without influencing the statements made in it.

So what does this mean? If you write a review of a product that you got for free or got paid for writing the post about it, you have to disclose at the top of the post that you have a relationship with the company. If you use affiliate links, you have to clearly disclose those relationships as well, prior to posting the link. (In some circumstances, using the term “affiliate link” may be insufficient if the average consumer doesn’t know the difference between links and affiliate links. Yes, this happens – I recently attend a blogging conference where an attendee assumed that the terms “link” and “affiliate link” were interchangeable.)

Every Post, Every Platform
When you have a relationship with a company or are compensated for writing about a product, you have to disclose it to your audience every time you write about it – regardless of the platform it’s on or what device people use to access it. Every single time. (Yes, I know this is annoying, but it’s what the FTC requires.)

Disclosure is Everyone’s Responsibility
Everyone who is involved in the creation or distribution of native advertising should review the content to ensure that the required disclosure is present and that the material does not mislead the audience about the product or the relationship between the writer and the company. This includes middle men like ad agencies. If anyone is found to be in violation of the FTC rules about native advertising, they could be fined by the FTC – the company that created the product or service, the writer, and anyone in between who was involved – up to $16,000. That’s a stiff penalty for forgetting or refusing to disclose a relationship.

If you want to learn more about this topic, I recommend the FTC’s article, Native Advertising: A Guide for Businesses. If you want to chat with me about these issues, like how to incorporate these requirements into website terms of service or contracts with third party content creators, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

Checklist for Social Media Influencers

Selfie Stick by R4vi from Flickr (Creative Commons License)

Selfie Stick by R4vi from Flickr (Creative Commons License)

Some people, including a lot of average joes, have such a strong social media following that brands want to send them free products to review or to partner with them for a native advertising campaign. If you are lucky enough to get such an offer, you need to understand the rules and read the fine print closely to make sure you’re not setting yourself up to be accused of an FTC violation. Don’t count on the other side to educate you. As we saw in the Lord &Taylor situation, companies who seek to partner with social media influencers don’t always know and follow the rules themselves.

If I were presented with an offer to do a product review or be part of a native advertising campaign, these are some of the questions I would ask in regards to the offer.

Influencer-Company Relationship
What is the company asking me to do?
What is the company giving me in return?
Is there fair give-and-take between both sides? (If not, it’s not a valid contract.)
Are expectations and deadlines clear?
Who is my point person at the company if I have any questions?

FTC Compliance
Does the offer require that my review be truthful?
Does the offer require me to give an accurate review of the product? (Bonus points for companies that require reviewers to write what they like and dislike about the product.)
Does the offer require that me to disclose my relationship with the company – both in my review itself and also any promotions I do about the content on social media (i.e., use #ad or #sponsored)? (The FTC requires this so if the company doesn’t want you to do this, turn and run. They don’t know the basic rules about native advertising.)

Intellectual Property
Does the offer clearly state who owns the copyright in what I create under the agreement?
By accepting the offer, do I grant the company certain rights to use my work?

General Legal Provisions
Is there a written contract? (It’s avoids confusion when all the provisions are in a single document and has  provision that states, all the terms of this agreement are in this contract.)
Is there a severability clause so if one provision is illegal, the rest of the contract remains in place?
What are the rules for modifying the agreement?
Which state law governs the agreement?
If there’s a problem between the company and me, how will we resolve it?
Under what circumstances will the agreement be terminated?

Final Words of Wisdom
Contracts are relationship-management documents, ideally written to protect both sides. If a company offers me a contract with provisions I dislike, I request changes. (I’m the queen of changing liability waivers.)

And if there’s a word or provision you don’t apprehend, ask! Don’t sign a contract that you don’t understand, because as long as it’s legal, you’re stuck with it.

If you are a serious influencer and get offers to do product reviews or participate in campaigns, treat your social media activities like a business. Consider hiring a lawyer to create a contract template for these situations when the other side doesn’t have a written contract. At the least, use this checklist to do a preliminary review of the offers you receive.

If you want more information about the legal rules regarding your blog and social media, please check out The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. If you want to chat with me about social media law, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that’s shared only with my mailing list, by subscribing to the firm’s newsletter.

FTC & Promotions – Always Disclose Relationships

My box of Mental Mojo - love this stuff! (Thanks to the owners for sending me free product!)

My box of Mental Mojo – love this stuff! (Thanks to the owners for sending me free product!)

My friends own a company called Mental Mojo – it’s a powder that contains caffeine and cognitive enhancers that you mix in water. I drink it when I’m tired – it helps me get my work done without making me jittery. (I love that it turns my water super nerd green, which reminds me of this infamous exchange between Data and Scotty on Star Trek: The Next Generation.)

Because I talk about it so much online, I usually get my Mental Mojo for free (and they’ve invited me to the taste test for the new flavors). I’m not a paid spokesperson for this company, but I do get benefits from promoting the product. As such, every time I talk about drinking free product, I need to disclose my relationship with this company – not just because it shows transparency, but because the federal law requires it.

FTC Rules about Promotions
The Federal Trade Commission has strict rules about making “clear and conspicuous” disclosures when a person has a relationship with a company. These rules apply to spokespeople, online contest participants, product reviewers, and companies that use affiliate links on your site. When you are compensated for giving an opinion, you have to disclose your relationship.

If you fail to disclose a relationship with a company, the FTC can fine you up to $11,000. And they can go after you or the company.

Even in 140 Characters
And don’t think for a second that tweets or other micro-form social media sites are exempt from this rule. At the very least, you have to include “#ad” on your post. It’s not enough to include a link to a site that includes the disclosure of your relationship.

Truthfulness and Transparency
Whenever you write a product review, whether it’s on a review site like Yelp, a product review blog post, or providing a quote for their website or LinkedIn profile, you must provide a truthful and accurate review of the product or service. Posting fake or embellished reviews (positive or negative) violates the FTC rules.

I’ve written product reviews and I appreciate that my editors respect the FTC rules by asking us to describe the benefits and drawbacks of each product we try.

Video Disclosures
If you do reviews in video form – including unboxing videos – you need to disclose when you get free product and provide honest reviews. The FTC says it’s not enough to have the disclosure in the video notes. You have to say it or post verbiage to that effect at the beginning of your video and possibly repeat this information throughout the video depending on its length.

This disclosure doesn’t have to be complex. It can be something like, “The guys at Mental Mojo sent me this free box of their product. Let’s try it out.” (If you are trying Mental Mojo for the first time, the flavor may be a bit strong. Until you get used to the taste, you may want to mix it with club soda instead of plain water. The carbonation helps take the edge off.)

Final Thoughts
Disclose disclose disclose. If you get a benefit from talking about a product or company online, disclose it. Whether it’s your employer, a client, or a company that sends you stuff for free – it should be crystal clear to anyone who sees your posts that you have a relationship with the company.

If you work with spokespersons or campaign partners, make sure part of your relationship includes an educational component about their obligation to disclose your affiliation whenever they talk about you on any platform.

I spoke about this topic earlier this year at Content Marketing World. Be sure to check out the follow-up article about this panel by Northeast Ohio Media Group.

If you want more information about this topic, please check out 6 Things to Know About FTC Disclosures When Working with Influencers or my book The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. If you want to chat with me about a specific question related to the FTC rules and promotions, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn.