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FTC Disclosure requirements

FTC disclosure requirements

FTC AND SOCIAL MEDIA: WHAT YOU NEED TO KNOW

The FTC works with a simple goal in mind, in this case, the protection of consumers as they navigate the market. To understand this, look at it simply, as we navigate the demand and supply market we are often faced with situations of high information asymmetry. This is where one party knows information and has the ability to conceal it.  As a result we make purchases not having the full picture. This is not the only thing the FTC attempts to protect consumers from, deceptive practices are also of concern such as labelling a product organic or vegan where the product is anything but.  Simple things that reduce the complications of our daily interactions. The legal basis for this is section 5 of the FTC Act which simply prohibits deceptive advertising.

Social Media Influencers and Disclosures
Why disclosures are important

Disclosures allow consumers to make informed decisions and encourage honesty. People rely on others who perceivably share their interest in making product purchase decisions.  As a creative with reach or an influencer, people often rely on your opinions on certain products to decide whether it is a fit for them. 

The FTC guidelines then mandate disclosure as part of consumer education and protection. The guidelines on disclosure apply to persons with a social following (celebrity and influencers) and guide the manner through which disclosure should be made. 

When to disclose

It is important to make known that there is a connection with a brand where there has been a personal, financial, family or employment relationship with the brand. This may apply when companies send you free/ discounted goods (as long as they are of value) for product review. 

Thus, even if you are using your platform to help out a friend who has opened up an amazing product line. This relationship must be made known and falls within the same guidelines as when reviewing products from established brands.

How to disclose

Disclosure can be done using tags such as #sponsored #promoted #advertisement. Other acceptable terms include ‘brand partner’ and ‘Brand ambassador’. 

The language used should be simple and clear to promote understanding. Use of words such as “Thanks to Brand (Insert the name of company) for sending this free product for review” or “I am the brand ambassador for (Insert name of the company) and will be reviewing this product”. 

For further protection, one can use tags such as #advertisement #sponsored as mentioned above. This makes the relationship clear to the consumer and avoids violation of FTC rules. 

The placement should be done in a manner that ensures it is hard to miss. It should be placed within the endorsement message itself. Thus it is not compliant to hide the endorsement within many hashtags without mentioning it on the post or in a video, as well as placing it in the description/ about me pages. On a livestream, disclosure must be mentioned periodically in order to protect the consumer. 

It is the responsibility of each influencer to ensure adherence to the FTC guidelines

What else to know

The main point of emphasis is honesty:

  • One should not state a product as being amazing if the product is below par. 
  • One should not provide reviews of products that they have not personally tried. 
  • One should not make up claims about a product that require proof that the advertiser does not have. For example, claiming that a herbal tea supplement has a higher health impact than scientifically proven. 
Additional Helpful Q &A

1. Q:  Do you need a lawyer to help in writing disclosures:

A: No, what is important is honesty and placement. The guides are written simply for this reason.

2. Q: Must I make a disclosure where I got the product for free or bought it personally?

A: No, if the advertiser is issuing free products to its customers, you are in the clear. The same applies if you bought the product. The FTC is simply interested where endorsements are made on behalf of a sponsoring advertiser.

3. Q: What if all I get from a company is a dollar coupon, or a product that is not worth much?

A: The question is whether that amount is likely to affect the review you give and affect your credibility when speaking of the product. Also, continuously getting free products from the same advertiser could suggest an expectation of future benefits. The guide’s outline that even incentives with no financial value may affect credibility such as being given the opportunity to appear on television tends to sway people into giving positive product reviews. 

Free travel and accommodation paid for by the advertiser prior to reviewing a place or a product is also important to disclose even where the product itself is of little value.

4. Q: Do the rules apply when endorsing aspirational products?

A: Yes, say a company asks you to write reviews of bikes you would wish to purchase and you provide a link to their bike website. This counts as an endorsement. If you were paid to write that blog, disclosure must be made.

5. Q: Do I need to disclose everything including how much as I was paid?

A: Not necessarily. If you were paid 1000$, it is sufficient to simply state that you were paid. The amount is not necessary to detail. This changes if you are a co-owner or an employee, in which case further disclosure is necessary. 

6. Q: is a hyperlink to the full disclosure enough, especially where they are placed boldly and in capital?

A: No, a hyperlink is not sufficient as a sole means of providing disclosure. 

7. Q: How do I make disclosure on snapchat or Instagram stories?

A: You can superimpose a disclosure just as you can superimpose words on any images on that platform. Factors to consider include, the complexity of the wording, the length of the text and the time given to read the text. 

8. Q: Does it work if I place the #ad in the middle or end of the post?

A: Whereas the FTC does not mandate where to place the ad, it won’t be as effective when placed in the middle of the post. Similarly, confusions such as where a brand is called Amazing Le and the disclose #AmazingLead is made. The placement of the word ad at the end is confusing. 

9. Q: is it sufficient to note that I am an ambassador as part of the disclosure?

A: The word #ambassador on its own is confusing however placement of the name of the brand first e.g.  #INCMMNAmbassador  is better where the brand name is placed first suggesting a relationship. 

10. Q: How do I navigate disclosure where brands pay for a free time and I am to write about my experience?

A: In this scenario, simply saying ‘Thank you (Insert brand name) for the free trip’ or ‘ XYZ brand paid for my trip’ would be sufficient as disclosure. 

INCMMN ensures that all creatives working with them have access to and full understanding of how to navigate the disclosure requirements. We provide periodic trainings and send detailed updates to our partners in line with relevant FTC updates. 

For further information kindly visit the FTC website for detailed analysis as well as to answer more frequently asked questions.