1. FTC Endorsement Guidelines: Managing the Legal Risks Presented By Social Media Daniel T. Rockey Bullivant Houser Bailey PC San Francisco Dan.rockey@bullivant.com

2. The Rise of Social Media and its Use in Marketing Social media (Blogs, Twitter, Message Boards, You Tube, etc.) as a marketing tool PayPerPost, Izea Blurring the line between what is advertising and what is simply expression of opinion

3. FTC: Background FTC Act gives the FTC broad power to regulate "unfair or deceptive acts or practices in or affecting commerce” Power to impose civil penalties, fines, obtain injunctions

4. FTC Guidelines Concerning Use of Endorsements and Testimonials in Advertising FTC issues Guidelines (16 CFR Part 255 et seq.) in October 2009; effect. December 1, 2009 Covering “any advertising message... that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser”

5. FTC Guidelines Concerning Use of Endorsements and Testimonials in Advertising In general, prohibits false or unsubstantiated claims Requires disclosure of “material connections” – A connection “that might materially affect the weight or credibility of the endorsement” “Practices inconsistent with these Guides may result in corrective action taken by the Commission”

6. FTC Endorsement Guidelines: Examples Must disclose when connection is “not reasonably expected by the audience” Example: Physician appears in ad for anti-snoring device Paid for appearance: no disclosure required Paid per unit of sales: disclosure required

7. FTC Endorsement Guidelines: Examples Example: Sports figure touts laser eye center in magazine ad No disclosure required Same sports figure touts laser eye center in interview, on Twitter Must disclose relationship

8. FTC Endorsement Guidelines: Social Media Example: Cosmetics company uses social marketing service (e.g., PayPerPost or Izea) to identify blogger to try out new lotion Blogger touts lotion in blog, claims it cured her eczema FTC: Company is liable for false, unsubstantiated claims made by blogger Blogger is liable for unsubstantiated claims, failure to disclose relationship

9. FTC Endorsement Guidelines: Social Media Example: College student writes popular blog on video games, systems System maker provides free machine to blogger, who touts machine on blog FTC: Company is liable for false, unsubstantiated claims made by blogger Blogger is liable for unsubstantiated claims, failure to disclose freebie

10. FTC Endorsement Guidelines: Social Media Example: Employee of company that makes MP3 players posts comment on message board devoted to MP3’s, devices FTC: Employee must disclose employment relationship Company liable for statements of employee, failure to disclose?

11. FTC Endorsement Guidelines: Protecting Yourself and Your Company Companies must carefully manage new media marketing efforts Advise ad partners, endorsers of obligation to disclose and make record of disclosures Actively monitor statements by endorsers and take prompt corrective action Monitor employees’ use of social media Implement and enforce company-wide policy re use of social media by employees