Federal Trade Commission (FTC) Compliance for Social Media Endorsements

Do you work with brands to recommend or endorse products on social media? 

If so, you need to be familiar with Federal Trade Commission (FTC) regulations governing paid endorsements, affiliate links, and other sponsored messages shared on social media. The FTC enforces regulations to ensure transparency and prevent deception in advertising and influencer marketing. 

Under Section 5 of the Federal Trade Commission Act:

• Advertising must be truthful and non-deceptive;
• Advertisers must have evidence to back up their claims; and
• Advertisements cannot be unfair.

The FTC Act and Social Media

To clarify and give insight into how the FTC enforces Section 5 of the FTC Act in an evolving digital advertising world, the FTC published its Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides or Guides). These Guides, most recently revised in June 2023, are not law, but rather reflect the FTC’s interpretation as to how Section 5 of the FTC Act applies in particular situations.

As an influencer, it’s your responsibility to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads.

Our social media law team has served as counsel to a number of online influencers, brand ambassadors, and professional associations seeking guidance on adequate and compliant disclosures. Contact us today at (713) 909-7323 to discuss FTC compliance for your online business. 

What Is An Endorsement According to the FTC? 

Per the FTC, “an ‘endorsement’ means any advertising, marketing, or promotional message for a product that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”

In the most recent iteration of its Endorsement Guides, the FTC clarified that tags and certain other types of communications “can be” endorsements (although not always). 

It also provides guidance on who is an endorser, adding virtual influencers, brands, fake reviewers, and “what appears to be” an individual, group, or institution to its definition. 

Endorsements can be made through a number of formats, including “verbal statements, tags in social media posts, demonstrations, depictions of the name, signature, likeness or other identifying personal characteristics of an individual, and the name or seal of an organization.”

If you endorse a product through social media, your endorsement message should clearly disclose that you have a relationship or “material connection” with the brand.

When to Disclose:

According to the FTC, “when there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.”

You should disclose your partnership or collaboration with a brand or business if you are (or have):

• Paid to promote a product or nutrition message in social media – from blogs or podcasts to TikTok videos or Instagram posts;
• Paid to include a brand or ingredient in a recipe or meal plan;
• Received free product samples;
• Participated in a sponsored event or tour;
• Provided with compensation via contests or affiliate links; 
• A Family relationship; or 
• Any financial relationship to a company, including investments.

The overarching principle is that if social media users would evaluate your review or endorsement differently knowing that it was motivated in part by a gift or incentive from the brand or advertiser, there should be a disclosure.

Here are more tips for making compliant endorsements: 

• You can’t talk about your experience with a product you haven’t tried.
• If you’re paid to talk about a product or receive free samples in exchange for a review, your review must be honest. Per the FTC, “if you thought it was terrible, you can’t say it’s terrific.”
• You can’t make up deceptive claims about a product or service or claims that can’t be substantiated by the advertiser. In other words, don’t claim a health benefit unless there is scientific proof to back it up. 

FTC Compliance For Expert Endorsements

Subject matter experts, such as licensed health and mental health professionals, dietitians, engineers, attorneys, etc., have an additional responsibility to only endorse products or services within their expertise. 

The Guides provide that “[w]henever an advertisement represents, directly or by implication, that the endorser is an expert with respect to the endorsement message, then the endorser’s qualifications must in fact give the endorser the expertise that he or she is represented as possessing with respect to the endorsement.”

FTC emphasized this obligation in a November 2023 blog post: “Consumers are likely to give greater weight to the opinions of health professionals, which compounds the potential for injury when material connections aren’t properly disclosed.”

When creating content, an expert must exercise their expertise in evaluating product features or characteristics only within that expert’s area of expertise and which is relevant to an ordinary consumer’s use or experience with that product. For example, if a piece of content is created by “Dr. Smith” and endorses a new prescription drug, Dr. Smith must be a medical doctor practicing that particular area of medicine (i.e. Dr. Smith cannot be a PhD, as the implication is that he is a medical doctor).

How to Disclose:

Make sure your visitors and followers will see and understand the disclosure. The consumer should not have to search for a disclosure or wonder what it means. 

The disclosure should be placed where it is hard to miss and within the endorsement message itself. For example:

• If a claim is made in video format, the required disclosure must be present on the video itself, and if the content is audio, there must be an audio disclosure.
• If the post contains both an audio and video element, the disclosure must be made both audibly and on the video itself.
• A written disclosure should stand out from any accompanying text or other visual elements so that it is easily noticed, read, and understood. For example, superimpose “#ad” or “Sponsored by [BRAND]” over photos or videos in a high-contrast font that stands out against the background.
• If an endorsement is included in a live stream, the disclosure should be repeated periodically – verbally and visually – so viewers who may join late will also get the disclosure.

More tips for compliant disclosures:

• Don’t use vague or confusing terms like “sp”, “spon”, or “collab”, and avoid stand-alone terms like “thanks” or “ambassador”.
• Always include the name of brand or company who is the sponsor of the post; tagging a brand alone is not sufficient.
• You can use a built-in disclosure tool, but do not rely on it as the only form of disclosure.
• Do not mix your disclosure into a group of hashtags or links; add the disclosure at the beginning of a post or caption.
• A single disclosure in your bio, profile, or home page that products are provided free or that you have a partnership is not enough.

It’s important to note that there is no bright-line rule or answer for what meets FTC’s definition of a “clear and conspicuous” disclosure. Digest the FTC Endorsement Guides and other FTC resources and make the assessment in light of the format and platform of your paid endorsement. Your goal should be to make the disclosure difficult to miss and easily understandable by ordinary consumers.

Both Advertisers And Influencers Have An Obligation To Disclose Material Connections

Companies, brands, and industry associations also bear responsibility for partnerships with influencers who are not disclosing their relationships.

Advertisers should make a reasonable effort to instruct social media partners on clearly and conspicuously disclosing material connections, especially if deceptive practices could cause consumers harm. Advertisers also have a responsibility to monitor their influencer partners for compliance. 

What Are The FTC Penalties for Inadequate Disclosures?

According to their FAQs, “if concerns about possible violations of the FTC Act come to our attention, we evaluate them case by case. If law enforcement becomes necessary, our focus usually will be on advertisers or their ad agencies and public relations firms. However, action against an individual endorser might be appropriate in certain circumstances – for example, if the endorser hasn’t made required disclosures despite warnings.”

Violations of the FTC Act can result in federal injunctions and civil penalties of up to $50,120 per violation. 

Are You In Receipt Of An FTC Warning Letter?

If a violation of the FTC Act does come to the attention of the FTC, the agency will most often send a warning letter. The purpose is to warn influencers or advertisers that their conduct may be unlawful and to immediately correct problematic advertising or marketing language, or face serious legal consequences. 

If you receive such a letter, contact the social media law team at Hendershot Cowart P.C. We can help you address the problematic endorsements and help you prepare your response to the FTC. Most often, if the alleged violation is addressed within the time allowed, the FTC will not take formal enforcement action.

FTC Defense and Compliance Attorneys For Social Media Influencers

Don’t let FTC enforcement actions discourage you from exploring paid sponsorship and endorsement opportunities. Instead, enter into these relationships with confidence with the counsel of an experienced social media lawyer. 

Our law firm was among the first to recognize the legitimate legal risks and regulatory concerns of today's influencers, and we routinely counsel clients on FTC and FDA compliance, intellectual property protection, business formation, and influencer and content licensing agreements. We can review your campaigns for compliance and counsel you on other legal matters to protect your brand, online income, social media accounts, and other digital assets.

Call (713) 909-7323 today or contact us online to get started.