Earlier this year the Federal Trade Commission announced updates to its Endorsement Guides ("Guides"), which provide direction to advertisers to ensure that advertising using endorsements is truthful. The updated Guides address new and changing issues presented by the contemporary advertising landscape, with a significant focus on social media advertising, and provide many examples of the types of advertising practices that may be considered unfair or deceptive under the FTC Act. The FTC recently put the Guides into action when it sent warning letters to two trade associations, 12 registered dieticians, and other online health influencers regarding their failure to comply with the updated Guides. The warning letters provide valuable insight into the types of social media advertising practices the FTC sees as violating the updated Guides and the FTC Act.
According to the warning letters, the American Beverage Association ("AmeriBev") paid various influencers to create and post content endorsing the safety of the artificial sweetener aspartame and the Canadian Sugar Institute paid various influencers to create and post content endorsing the consumption of products containing sugar. While the specific content at issue (available on Instagram and TikTok) varied across creators, the posts made claims related to either the safety of aspartame or the benefits of consuming products containing sugar. Some influencers even went so far as to claim that the World Health Organization's classification of aspartame as a possible carcinogenic to humans was inaccurate and that the artificial sweetener does not increase the risk of cancer.
The FTC's primary concern with the sponsored content stemmed from the inadequacy of the disclosures contained in it. The FTC identified numerous videos that were apparently paid for by AmeriBev or the Canadian Sugar Institute that either did not disclose that they were made as part of a sponsorship or contained inadequate disclosures of a paid partnership with the trade associations. While some of the posts did include "#ad" or "#sponsored" in the captions or relied upon the "paid partnership" disclosure tools provided by the social media platforms, the FTC expressed concern that these disclosures were too limited and did not adequately identify the connection between the content creators and trade associations. The FTC reiterated its belief that built-in disclosure tools alone do not meet the "clear and conspicuous" requirement of the Guides because such disclosures are too easy for viewers to miss. While the FTC encouraged use of the built-in disclosure tools, it emphasized that these tools should be used in addition to other disclosures.
The FTC also took issue with the placement of the words "#ad" and "#sponsored" in posts where they were present because the hashtags appeared many lines into the post captions. The agency noted that, when such disclosures are buried in captions, they are not easily noticeable by the consumer and therefore do not meet the "clear and conspicuous" requirement. And even if viewers read these terms, the disclosure may still be inadequate because it does not identify the sponsors of the post. The FTC noted that sponsor identity is important because, if consumers do not know who sponsored the content, they may not be able to adequately evaluate the weight and credibility of the endorsement. With some of the posts at issue here, failure to identify the sponsor meant that consumers may not understand that the sponsor of the content is promoting the sale of aspartame products. As such, the FTC noted in the warning letters that an adequate disclosure requires not only a disclosure that the content has been paid for or sponsored by a third party but also a disclosure of the third party itself.
The FTC also commented on disclosures in TikTok and Instagram Reels text descriptions, noting that it does not believe these disclosures meet the "clear and conspicuous" requirement because the "text description is in small print, at the bottom of the screen, sometimes poorly contrasting, and doesn't stand out." Lastly, the warning letters reminded recipients that where a post has both text and video, and an endorsement is made in both text and video, a disclosure must also be made in both text and video because a viewer can easily watch a video without reading the text description. In these scenarios, the FTC recommended superimposing much larger text containing the disclosure over the video so that the disclosure is visible in the video itself.
The warning letters notified the trade associations and content creators that future violations of the Guides could subject them to civil penalties and required that each recipient remedy the inadequate disclosures and report back to the FTC within 15 days. The FTC also urged the trade organizations to review their social media policies and review their endorsers' posts to ensure that they contain adequate disclosures.
The FTC's press release and copies of the warning letters are available here.
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