The Federal Trade Commission (FTC) recently announced that it has entered  into a consent order with a public relations agency whose employees posted  positive reviews about the firm’s clients’ products within iTunes.  This is  the first enforcement action involving the FTC’s endorsement guidelines, which  were recently updated to apply to social media, and makes it clear that  employers can be held responsible for encouraging their employees’ online  conduct.

The FTC endorsement guidelines require that bloggers discussing  or reviewing products or services disclose any a connection between the endorser  and the marketer of the product that would affect how people evaluate the  posting.

This means that if a person is an employee of the  marketer of the product, receives compensation (which could be free product) for  reviewing or making a statement about the product, or is a client of the  marketer of the product, that relationship should be disclosed.    While extensive disclosures may be difficult on Facebook, Twitter or in other  social media, disclosures can be as simple as “Company X gave me this product to  try . . ..” on a blog or “#sponsored,”“#paid” or “#ad” on Twitter.

The  FTC alleged that the public relations firm engaged in deceptive advertising by  having employees pose as ordinary consumers posting game reviews at the online  iTunes store, when the employees did not disclose that the reviews came from  paid employees working on behalf of the game developers.  While in this  case employees of an agency were involved, the same principles would appear to  apply to employees who blog about their employer’s products. In fact, the New  York Attorney General took action against a cosmetic surgery company who had its  employees place false postings about the company’s services.

The FTC action makes it even clearer that employers cannot encourage or  condone false or deceptive blog postings about their company’s (or their  customers’) products.   Employers should have written policies in  place which (if the policy allows employers to blog about the employer’s  products or services) require employees to disclose their connection to the  employer when discussing the employer’s products.

Source: Setyfarth Shaw LLP