Product Reviews – the FTC’s Perspective

BlogPaws 2010April 10, 2010

Mary K. EngleAssociate Director for Advertising Practices

Federal Trade Commission

What Is the FTC?

Nation’s consumer protection agency

Small, independent agency of 1,100 employees -- lawyers and economists

Enforce truth-in-advertising, antitrust laws

FTC Advertising Law 101

Federal Trade Commission Act, Section 5:

Prohibits deceptive commercial practices

Ads must be truthful and substantiated

Ads are deceptive if they are likely to mislead consumers about something important to decision to use/purchaseExpress and implied claims be

misleading

FTC Endorsement Guides

The Guides are interpretations of the law – that is, they explain how the FTC would apply Section 5 of the FTC Act to particular uses of endorsements and testimonials in advertising

They are not rules or regulations

There are no fines associated with them

What Is an Endorsement?

An endorsement is any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a person or organization other than the sponsoring advertiser

Statements are perceived to represent the personal views of the speaker

What the Endorsement Guides Say

Endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser

When an advertiser and an endorser have a relationship that consumers wouldn’t reasonably expect (a “material connection”), the relationship should be disclosedConsumers reasonably may judge what someone

says differently depending on whether speaker is independent from the seller

Consumers wouldn’t normally expect that another consumer has been compensated to talk to them about a product

Principles apply to . . . Viral

Marketing

Stealth Marketing

Blog Advertising

Blogs (and Flogs)

And . . .

Buzz Marketing

Viral Video

And . . .

Social Networking Sites

As well as . . .

Who Is an Endorser?

The FTC is not concerned with independent, unsolicited, unpaid consumer promotions or product reviews

These types of product promotion are not likely to present issues under the FTC Act

But when consumers are endorsing products as part of an advertiser’s social media marketing campaign, then the endorsement may become marketing subject to the FTC Act

Independent Product Review – social networking, personal blog

exampleA cat lover has a blog where she writes

regularly about her cats’ anticsThe blog mentions a new tick medicine she

has tried and how it has kept her cat tick-freeThe blogger updates her social networking

page to say how great it is to finally find tick medicine that worksThe blogger received the medicine for free during a

recent visit to a pet store, as part of a sampling program

The blogger received the medicine for free because she got a coupon in the Sunday newspaper

Because there is no relationship between the cat lover and the tick medicine marketer, she doesn’t need to say she received the medicine for free

Sponsored Product Review – social networking, personal blog

example

A cat lover has a blog where she writes regularly about her cats’ antics

The blog mentions a new tick medicine she has tried and how it has kept her cat tick-free

The blogger updates her social networking page to say how great it is to finally find tick medicine that worksThe tick medicine was sent to the blogger free of

charge by a marketer reaching out to potential influencers

Because it wouldn’t be obvious to the cat lover’s readers that she received the medicine for free from the marketer, this fact should be disclosed – on both her blog and her social networking page

Context Matters

Is the connection between the reviewer and the marketer obvious from the context?

Independent product review sites/articles, whether online or offline: When audience reading product review

article or visiting product review website understands the relationship between the reviewer and the marketer (that the reviewer didn’t buy the products she’s reviewing), disclosure is not needed to avoid deception

Free Products – product review site example

A dog groomer has a blog devoted to the review of a variety of pet care products

Product manufacturers regularly send the blogger free samples in the hope she will write about them

The blogger writes a favorable reviewGiven the blog’s nature as a product

review site, it’s obvious to readers that the blogger doesn’t pay for the products she reviews

The blogger does not need to disclose that she received the products free of charge

How Should Material Connections Be Disclosed?

Disclosure should be part of the message so it can’t be missed. E.g.:ABC Co. sent me this productI was given this product to try by ABC

Co.On Twitter: #paid, #ad

Word of Mouth Marketing Association has a Social Media Marketing Disclosure Guide

Wrapping Up

Value of social media marketing depends on transparency of relationships

FTC will rely on complaints to decide what practices to investigate

FTC enforcement will focus on advertisers, agencies – not individual bloggers, brand ambassadors

Thank You!

For more information, visit www.ftc.gov