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