Blogging and Your Business

At first glance, these new guides make sense, as any consumer who reads a comment about a product should know whether the manufacturer is paying the “commenter.” This was the intent of the guides: namely to protect consumers from what appear to be “neutral” bloggers who sample products and recommend them. What was happening more frequently in recent years, however, was that these bloggers were not neutral at all. They were either paid directly by the producer to sample and comment on its products, or received free products. Either way, their objectivity could certainly be subject to challenge.

Given a second glance, however, the guides went a bit too far, as they now provide that anyone who receives a salary must disclose that fact, as a “material connection” to the advertiser. So, in effect, the FTC has told employers that they need to be responsible for any “posts” or “comments” their employees make on the Internet about their products, in the same way they are responsible for the content of paid advertising. This is not as dire as it may sound, but it does require all employers to update their Internet policies and to make employees aware of certain types of behavior they should avoid when they are out “twittering,” “tweeting,” “chatting” and “blogging.”

The FTC Guides

The focus of the guides (which are not laws or regulations) are “endorsements” ' a term that is defined as “any advertising message ' that consumers are likely to believe reflects the opinions, beliefs, findings or experiences of a party other that the sponsoring advertiser.” The guides state that an endorsement “must reflect the honest opinions, findings, beliefs, or experiences of the endorser.” They go on to state that both advertisers and endorsers “may be subject to liability for false and unsubstantiated statements made through endorsements,” or for “failing to disclose material connections between themselves and the endorsers.”

This means that if there is a relationship between the speaker who presents the message and the advertiser, it must be disclosed. Thus, any blogger who “receives cash or in-kind payment to review a product“ is considered an “endorsement.” Also, bloggers who make an endorsement “must disclose the material connections they share with the seller of the product or service.”

'Material Connection'

What is a “material connection?” The guides define the term as any “payment” by the maker or advertiser to the bloggers, whether the payment was specifically in exchange for creating or posting the blog or not. Thus, if someone is on the payroll, or on the payroll of an ad agency or marketing firm, and they are blogging or making comments about your product, that blog or comment could be considered a “sponsored” endorsement. Most importantly, the guides specifically state that companies are subject to liability for false or unsubstantiated statements made through “sponsored endorsements,” or for failing to disclose “material connections” between themselves and their endorsers. To quote the guides:

Any paid endorsement must not include any representation that would be deceptive if made directly by the sponsoring advertiser.

Therefore, an employee who uses electronic media, including e-mail, blogs or social networking sites, to make comments about a product made by his or her employer, and who fails to disclose his or her relationship with that manufacturer, may create legal liability under the FTC guides. Further, should a consumer rely on a particular comment in that posting to his or her detriment, any ensuing damage could be attributed to the manufacturer/company.

Again, the aim of the guides is that a consumer or reader of a blog be informed and know whether the person making comments is employed by the company.

What Is the Likelihood of Enforcement and What Are the Penalties?

It's important to understand that these guides are not FTC rules or regulations. They are just guides. So there is no express fine for violating the guides.

While the FTC's own comments to the guides include a statement that the Commission would be “unlikely” to take action against a company for the conduct of a single “rogue” employee who violates a company's social media policy via an illegal endorsement, that comment remains to be tested.

Certainly, the comment underscores the need for a good policy. So, should your company fail to create a social media policy and publicize it to employees, the FTC may not have much patience. On the other hand, if your company has the policy, publicizes it, trains people and still has one bad actor go “off the reservation,” on a first offense or considering that this rule is still in its infancy, a cease-and-desist letter is likely the worst that could be expected.

What if a Consumer Makes a Complaint?

Should a noncompliant endorsement create broad consumer injury or damage, the endorser's employer may find that it cannot escape associated liability under the new guides. While guides themselves do not have the same force that a statute does, courts view them as an indication of how a law should be interpreted, and often act consistently with them. From the FTC's perspective, however, it would probably first issue a warning letter.

What Does This Mean for Employers?

The intent of the guides, the FTC has made clear, is not to entrap average companies or employees, who happen to make positive comments about their companies' products. Nor is it likely that the FTC expects companies to be able to oversee all the postings and Internet chatter of employees. That said, however, these guides have been out since October 2009, so it is fair to assume the FTC will expect that companies will take reasonable steps to educate their employees and to comply with them.

There are two essential measures every company should consider in an effort to comply with the FTC guides. First, every company should have an Internet use policy. That policy should include some references to social networking and regulation of employee conduct on social networking sites. Second, employees need to be educated to ensure that they understand the policy as implemented. The education the company provides should subject to a specific protocol and acknowledged in writing by each employee.

What Can Employers Regulate?

An employer has the right to monitor. The need for concern, however, is when the employer takes action based on an employee's activity because an employer cannot always discipline an employee for what they do on these sites. In this regard, there are two different types of conduct to consider: on-duty and off-duty conduct.

On-Duty Conduct: An employer certainly can and should regulate what employees do on work time and on company computers. This your property. These are your systems, and the courts ' within bounds of reason ' have been clear that employers can regulate the use of their own systems. You can also regulate how employees behave when they are on duty.

Off-Duty Conduct: Things get a bit murkier once employees are off premises or duty. If an employer issues an employee a “company laptop” or allows an employee to have electronic access to the company's network from home, there is a recognition that the company can regulate the employee's use of that equipment and system. Once again, even if the employee is not on “work time,” that individual is using your system and must do so responsibly and in compliance with your rules and standards. Other basic rules should be followed at all times:

• Employees should never be able to “electronically” abuse or harass each other, on or off duty.
• You can also remind employees to be professional and appropriate, when they tweet or blog about the company or its products.
• Remind employees that what they tweet or blog can be seen by all ' and there can be disciplinary consequences for inappropriate comments.

Comments About Products

Given the new FTC guides, your company should also take steps to regulate what employees do ' as it relates to the brand and your products, even when they are both off duty and are not using your system. Here, the ability to control the behavior is obviously limited, but companies should at least put a policy in place that sets some boundaries:

• Employees should be told they can never disclose confidential information, trade secrets, and other business information that should not be in the public domain.

• Employees should be told that they cannot speak “for” the company. If there is some public issue going on and they are asked for comment, they should refer comment back to the company. You should designate a company spokesperson for this business.
• Employees, in light of the FTC rule and even before this rule, should be told not to use company logos or the company brand on their own blogs or Web sites. It should be clear that whatever page or posting the employee is making is theirs, and is not endorsed by the company. (Necessary because an employer cannot possibly control the quality and content of what employees are saying about you and your products.)
• If an employee posts a comment, company policy should state that an individual must disclose that the company employs him/her.

Conclusion

Most commentators agree that the intent of the FTC guides was good, in that the agency was trying to protect consumers from being duped into believing that the “neutral blogger,” who just “happened” to talk about the great new face cream she just tried, but was being paid to try the cream, or paid to post on the blog. However, all do not agree upon the breadth and scope of the guides, and how they apply to large employers.

Barbara E. Hoey is a partner in Kelley Drye & Warren LLP's New York office and co-chair of the labor and employment practice group. She represents employers in all areas of labor and employment law, with a concentration in employment litigation.

Social networking, blogging, and the use of sites like Facebook and Twitter to communicate are exploding. As a marketer, know that if your employees post a blog comment, or an entry on Facebook or Twitter about your company or its products, a number of questions are raised. What if the comment is wrong or exaggerated? What if your employee makes a claim about the product that is untrue? Is the company responsible?

The FTC Has an Interest

The FTC has taken an increased interest in the use of social media sites for product advertising. On Dec. 1, 2009, new FTC “guides,” published at 16 C.F.R. ' 255, went into effect, requiring that any person who goes onto a blog, Web site or a “social network” site and posts a comment about a product must disclose whether that person is receiving “anything of value” from the maker/producer of that product. Many commentators have focused on how these guides will affect advertisers, marketing companies, and professional bloggers. What many employers fail to realize is that the guides may also apply to companies and employees who are not professional advertisers.

At first glance, these new guides make sense, as any consumer who reads a comment about a product should know whether the manufacturer is paying the “commenter.” This was the intent of the guides: namely to protect consumers from what appear to be “neutral” bloggers who sample products and recommend them. What was happening more frequently in recent years, however, was that these bloggers were not neutral at all. They were either paid directly by the producer to sample and comment on its products, or received free products. Either way, their objectivity could certainly be subject to challenge.

Given a second glance, however, the guides went a bit too far, as they now provide that anyone who receives a salary must disclose that fact, as a “material connection” to the advertiser. So, in effect, the FTC has told employers that they need to be responsible for any “posts” or “comments” their employees make on the Internet about their products, in the same way they are responsible for the content of paid advertising. This is not as dire as it may sound, but it does require all employers to update their Internet policies and to make employees aware of certain types of behavior they should avoid when they are out “twittering,” “tweeting,” “chatting” and “blogging.”

The FTC Guides

The focus of the guides (which are not laws or regulations) are “endorsements” ' a term that is defined as “any advertising message ' that consumers are likely to believe reflects the opinions, beliefs, findings or experiences of a party other that the sponsoring advertiser.” The guides state that an endorsement “must reflect the honest opinions, findings, beliefs, or experiences of the endorser.” They go on to state that both advertisers and endorsers “may be subject to liability for false and unsubstantiated statements made through endorsements,” or for “failing to disclose material connections between themselves and the endorsers.”

This means that if there is a relationship between the speaker who presents the message and the advertiser, it must be disclosed. Thus, any blogger who “receives cash or in-kind payment to review a product“ is considered an “endorsement.” Also, bloggers who make an endorsement “must disclose the material connections they share with the seller of the product or service.”

'Material Connection'

What is a “material connection?” The guides define the term as any “payment” by the maker or advertiser to the bloggers, whether the payment was specifically in exchange for creating or posting the blog or not. Thus, if someone is on the payroll, or on the payroll of an ad agency or marketing firm, and they are blogging or making comments about your product, that blog or comment could be considered a “sponsored” endorsement. Most importantly, the guides specifically state that companies are subject to liability for false or unsubstantiated statements made through “sponsored endorsements,” or for failing to disclose “material connections” between themselves and their endorsers. To quote the guides:

Any paid endorsement must not include any representation that would be deceptive if made directly by the sponsoring advertiser.

Therefore, an employee who uses electronic media, including e-mail, blogs or social networking sites, to make comments about a product made by his or her employer, and who fails to disclose his or her relationship with that manufacturer, may create legal liability under the FTC guides. Further, should a consumer rely on a particular comment in that posting to his or her detriment, any ensuing damage could be attributed to the manufacturer/company.

Again, the aim of the guides is that a consumer or reader of a blog be informed and know whether the person making comments is employed by the company.

What Is the Likelihood of Enforcement and What Are the Penalties?

It's important to understand that these guides are not FTC rules or regulations. They are just guides. So there is no express fine for violating the guides.

While the FTC's own comments to the guides include a statement that the Commission would be “unlikely” to take action against a company for the conduct of a single “rogue” employee who violates a company's social media policy via an illegal endorsement, that comment remains to be tested.

Certainly, the comment underscores the need for a good policy. So, should your company fail to create a social media policy and publicize it to employees, the FTC may not have much patience. On the other hand, if your company has the policy, publicizes it, trains people and still has one bad actor go “off the reservation,” on a first offense or considering that this rule is still in its infancy, a cease-and-desist letter is likely the worst that could be expected.

What if a Consumer Makes a Complaint?

Should a noncompliant endorsement create broad consumer injury or damage, the endorser's employer may find that it cannot escape associated liability under the new guides. While guides themselves do not have the same force that a statute does, courts view them as an indication of how a law should be interpreted, and often act consistently with them. From the FTC's perspective, however, it would probably first issue a warning letter.

What Does This Mean for Employers?

The intent of the guides, the FTC has made clear, is not to entrap average companies or employees, who happen to make positive comments about their companies' products. Nor is it likely that the FTC expects companies to be able to oversee all the postings and Internet chatter of employees. That said, however, these guides have been out since October 2009, so it is fair to assume the FTC will expect that companies will take reasonable steps to educate their employees and to comply with them.

There are two essential measures every company should consider in an effort to comply with the FTC guides. First, every company should have an Internet use policy. That policy should include some references to social networking and regulation of employee conduct on social networking sites. Second, employees need to be educated to ensure that they understand the policy as implemented. The education the company provides should subject to a specific protocol and acknowledged in writing by each employee.

What Can Employers Regulate?

An employer has the right to monitor. The need for concern, however, is when the employer takes action based on an employee's activity because an employer cannot always discipline an employee for what they do on these sites. In this regard, there are two different types of conduct to consider: on-duty and off-duty conduct.

On-Duty Conduct: An employer certainly can and should regulate what employees do on work time and on company computers. This your property. These are your systems, and the courts ' within bounds of reason ' have been clear that employers can regulate the use of their own systems. You can also regulate how employees behave when they are on duty.

Off-Duty Conduct: Things get a bit murkier once employees are off premises or duty. If an employer issues an employee a “company laptop” or allows an employee to have electronic access to the company's network from home, there is a recognition that the company can regulate the employee's use of that equipment and system. Once again, even if the employee is not on “work time,” that individual is using your system and must do so responsibly and in compliance with your rules and standards. Other basic rules should be followed at all times:

• Employees should never be able to “electronically” abuse or harass each other, on or off duty.
• You can also remind employees to be professional and appropriate, when they tweet or blog about the company or its products.
• Remind employees that what they tweet or blog can be seen by all ' and there can be disciplinary consequences for inappropriate comments.

Comments About Products

Given the new FTC guides, your company should also take steps to regulate what employees do ' as it relates to the brand and your products, even when they are both off duty and are not using your system. Here, the ability to control the behavior is obviously limited, but companies should at least put a policy in place that sets some boundaries:

• Employees should be told they can never disclose confidential information, trade secrets, and other business information that should not be in the public domain.

• Employees should be told that they cannot speak “for” the company. If there is some public issue going on and they are asked for comment, they should refer comment back to the company. You should designate a company spokesperson for this business.
• Employees, in light of the FTC rule and even before this rule, should be told not to use company logos or the company brand on their own blogs or Web sites. It should be clear that whatever page or posting the employee is making is theirs, and is not endorsed by the company. (Necessary because an employer cannot possibly control the quality and content of what employees are saying about you and your products.)
• If an employee posts a comment, company policy should state that an individual must disclose that the company employs him/her.

Conclusion

Most commentators agree that the intent of the FTC guides was good, in that the agency was trying to protect consumers from being duped into believing that the “neutral blogger,” who just “happened” to talk about the great new face cream she just tried, but was being paid to try the cream, or paid to post on the blog. However, all do not agree upon the breadth and scope of the guides, and how they apply to large employers.

Barbara E. Hoey is a partner in Kelley Drye & Warren LLP's New York office and co-chair of the labor and employment practice group. She represents employers in all areas of labor and employment law, with a concentration in employment litigation.