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Interpreting FTC's New Endorsement Guidelines
[Editor's Note: Many celebrities serve as product endorsers in advertisements. But outside these traditional endorsement settings, some celebrities tout goods during press interviews without disclosing that the product companies are compensating the celebrities for the accolades. In part to address this concern, for the first time since the 1980s the Federal Trade Commission (FTC) recently overhauled its guidelines and liability parameters for product endorsements and testimonials. The new guidelines also address the promotion of products through Internet, social networking and other new media. These updated guidelines, which took effect Dec. 1, also cover the use of consumer endorsements and reviews. Entertainment companies that promote products ' and celebrities who blog and tweet ' through new media should consider how these guidelines may affect their marketing practices.]
Increasingly, marketing is occurring virally, particularly via the Internet, mobile and other evolving media, through word-of-mouth (WOM), including by means of the use of product sampling and consumer reviews, comments and recommendations. Product sampling involves distributing products to influential new-media users/authors in the hope that they will positively discuss the product with their followers and friends. Such so-called “recommendation marketing,” which may or may not encompass product sampling, is well suited for consumer-driven social media and can take many forms ' ranging from paying or encouraging an influencer to write a blog or post or tweet about a brand.
Recommendation marketing also includes: motivating consumers to initiate e-mails that send product listings or other information to friends via “send-to-a-friend” e-mail tools made available to consumers by online merchants or marketers (notwithstanding the FTC recent guidance on send-to-a-friend campaigns, see, FTC CAN SPAM FIND Rule, 16 CFR Part 316, Federal Register, Vol. 73, No. 99, pp 29654-29680 (May 21, 2008), this technique has spawned several recent lawsuits, one of which is being defended by the author and his firm); displaying a user's name and/or picture in connection with an ad that is directed to the user's friends on a social networking site (this practice is among the types of social media advertising that formed the basis of a lawsuit filed against Facebook in California in August 2009. Melkonian v. Facebook Inc., CA Superior Court, Orange County, 30-2009-00293755); and eliciting product reviews on retail Web sites.
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