New FTC Rules Are Changing The eCommerce Marketing Playbook

The FTC has released new guidance (“Guides”) on how social media endorsements should be handled to prevent (or minimize) the prominence of misleading claims online.

First, a little context directly from the FTC:

The Guides, at their core, reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading. An endorsement must reflect the honest opinion of the endorser and can’t be used to make a claim the marketer of the product couldn’t legally make.

At the core of this discussion is a litmus test, “Will ‘a significant minority’ be misled by this post?” If the answer is yes, then the truth-in-advertising line has been crossed.

But what does that mean for eCommerce brands and marketers?

The FTC recently released a HUGE Q&A unpacking many angles of this new policy, and I will be quoting liberally from their guidance.

From influencers to product reviews, below you will find my summary of the most important items for eCommerce operators.

Who is impacted by these new rules?

The FTC Act applies to anyone who is given product or money in exchange for repping the product/brand to their audience. If you purchased or were given the product by a third party (ex. grocery store samples), the FTC Act does not apply.

Similarly, folks with a friends/family or employer/employee connection (regardless of receiving free product or payment) should also disclose their relationship.

Blame & Enforcement

Enforcement will primarily focus on advertisers, their ad agencies, and public relations firms, with the company ultimately responsible for what others do on their behalf. Enforcement against individual endorsers would be secondary and used only in extreme cases (ex. repeat offenders).

Law enforcement actions can result in orders requiring the defendants in the case to pay money that goes back to consumers harmed as a result of their violations and to abide by various requirements in the future

For example, if you distribute free product to individuals in hopes of endorsements, you are responsible for the outcome.

If a company sends influencers a free unsolicited product and nothing else, it should ask them to clearly and conspicuously disclose the gift in any resulting social media posts or other endorsements, tell them how it should be disclosed, and ask them to tag the brand. The company should monitor the resulting tagged posts.

It doesn’t matter if the gift influenced your review. What matters is whether the fact that you got product for free might affect how your audience views what you say about it.

That is truth-in-advertisement.

Influencers & UGC

• A post doesn’t have to include anything positive about the brand to be considered an endorsement. If you criticize a competitor of a brand that you are paid to endorse - aka “De-influencing” - you should disclose your paid relationship.
• Saying you use a product (or tagging a product in a post) without reviewing it still counts as an endorsement. However, simply wearing the product without acknowledging what the product is would not constitute an endorsement.
• International content creators making endorsements for US audiences are still bound by the FTC’s Guide.
• Liking a brand’s post (without compensation) does not constitute an endorsement.
• Placing #ad in the description or publicly thanking the brand does not satisfy the FTC requirements.
• If the disclosure is in the description and that description is truncated, requiring the user to click “More,” then the disclosure is insufficient.
• If you were compensated for a series of posts, each post must include the disclosure.
• Not all built-in features provided by social media platforms meet the FTC’s Guide on disclosure. Thereby using the built-in feature may not be sufficient on its own.
• What about the Stories format?

You can superimpose a disclosure on Snapchat or Instagram Stories, just as you can superimpose any other words over the images on those platforms. The disclosure should be easy to notice and read in the time your followers have to look at the image.

• There is no official wording that must be used.

The best disclosures are simple, like “This is an ad for BRAND” or “This video is paid for by BRAND” or “BRAND paid me to tell you about it.”

• You don’t need to outline how you got compensated or the details of the compensation. You are only required to disclose that you were compensated.
• You can’t talk about your experience with a product if you haven’t tried it.
• If you’ve only tried a product once, you can’t suggest you use it regularly.
• If you thought it was terrible or mediocre, you can’t say it’s good or terrific.
• You can’t otherwise misrepresent your experience with or opinions about a product.
• You shouldn’t make claims about a product that would require proof the advertiser doesn’t have.

Capturing Reviews

• You can not use review management software intended to suppress negative reviews or delay publishing negative reviews until brand responses are appended to them. All reviews must be treated equally.
• Limiting review intake to only satisfied (or more like satisfied) customers is considered deceptive. Similarly, reaching out to negative reviewers and asking them to edit/delete their reviews is also considered misleading.
• You can not rank the display of reviews on your PDP’s, for example, showing 5-star reviews above other reviews.

Endorsements must reflect the honest opinions or experiences of the endorser. You can’t condition an incentive – for example, a discount – on a review being positive, as that may motivate people to give a positive review for reasons unrelated to their honest opinion about your product.

• An advertiser buying fake “likes” is very different from an advertiser offering incentives for “likes” from actual consumers. If “likes” are from non-existent people or people who have no experience using the product or service, they are clearly deceptive, and both the purchaser and the seller of the fake “likes” could face enforcement action.

Review Websites & Channels

• If you have a review site and are compensated for some reviews and not others, a ‘some reviews are sponsored’ catch-all claim is not sufficient. You would need to specify which reviews are sponsored.
• You can’t hide disclosures. Including a disclosure behind links like “DISCLOSURE” or “LEGAL,” in the footer of your blog post, or in the comments of your post is insufficient.

Affiliate Program

Affiliate marketers or brand ambassadors are held to endorsement standards as well. They would be required to say something like, “I get commissions for purchases made through links in this post” on their endorsement posts.

Everything is an ad. Online advertisers have known that for a while. But now everyone else will know it too. Welcome to the new world of truth-in-advertisement.

These rules are in effect immediately. So swap out those ads, update your Okendo moderation settings, and get a one-pager together for your next wave of UGC creators. We’ve all got work to do. 😉

For more details on many of these items, check out the FTC’s whole Q&A.