1. © 2011 LOEB & LOEB LLP Blogs and Social Media Marketing: Complying with the FTC’s New Endorsement Guides Brian Socolow Loeb & Loeb LLP January 18, 2011

2. 2 Endorsements and Testimonials in New Media Endorsements and testimonials are governed by: state and federal advertising laws case law FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising FTC revised its Guides to include social networking, blogs and word-of-mouth marketing The Guides are “advisory” in nature Revised Guides took effect December 1, 2009

3. 3 FTC Endorsement Guides Define endorsements and testimonials broadly: – any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser Must reflect the honest opinions or experience of the endorser May not contain any representations that would be deceptive, or could not be substantiated, if made directly by the advertiser Must disclose a material connection that might affect the weight or credibility of the endorsement

4. 4 FTC Endorsement Guides The Guides specifically address blogs: A blogger may be liable – for representations made in the endorsement – if he or she fails to disclose clearly and conspicuously any payment or gift An advertiser may be liable for a bloggers false or unsubstantiated statements if the advertiser requested that the blogger try a new product and write a review FTC suggests that advertisers provide guidance and training for its blogger’s FTC also suggests that advertisers monitor bloggers who are being paid to promote their products

5. 5 FTC Endorsement Guides – Celebrity / Athlete Endorsers Celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads – Kim Kardashian and QuickTrim diet Celebrity endorsers may be liable for false statements –Celebrities may need to make “reasonable inquiries” regarding the basis for statements in the script –Shaquille O’Neal and Power Balance wristbands

6. 6 FTC Endorsement Guides The Guides specifically address word-of- mouth marketing: Incentives given to individuals by an advertiser should be clearly and conspicuously disclosed

7. 7 FTC Guides for Endorsements and Testimonials

8. 8 FTC sent a letter to retailer Ann Taylor regarding gifts given to bloggers who attended a fashion show FTC decided not to initiate any enforcement action because: –Small number of bloggers reviewed the show –Some of them disclosed the gifts –Ann Taylor had in place a written policy prohibiting gifts to bloggers without first telling them to disclose gifts

9. 9 FTC Guides – The Bottom Line Advertisers can be liable for false or misleading statements made in social media. Bloggers can be liable for false or misleading statements. Bloggers should disclose any material connection with an advertiser. Advertisers should provide guidance to bloggers and should monitor blogs to see that bloggers are not making false or misleading statements. Celebrities can be liable for false or misleading statements. Celebrities should disclose when they are promoting something outside traditional advertising such as on talk shows or social media sites. Advertisers engaging celebrity endorsers should make sure endorsers are familiar with the products and services they are promoting.

10. 10 Resources FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising http://business.ftc.gov/legal-resources/1/33 FTC Endorsement Guides: What People Are Asking (FAQs for Business) http://business.ftc.gov/documents/bus71-ftcs-revised-endorsement-guideswhat- people-are-askinghttp://business.ftc.gov/documents/bus71-ftcs-revised-endorsement-guideswhat- people-are-asking Social Studies: Applying the FTC’s Revised Endorsement Guides in New Marketing Media http://business.ftc.gov/documents/social-studies-applying-ftcs-revised- endorsement-guides-new-marketing-mediahttp://business.ftc.gov/documents/social-studies-applying-ftcs-revised- endorsement-guides-new-marketing-media When You Wish Upon a Star: Celebrity Endorsements & the FTC’s Revised Endorsement Guides http://business.ftc.gov/documents/when-you-wish-upon-star-celebrity- endorsements-ftcs-revised-endorsement-guideshttp://business.ftc.gov/documents/when-you-wish-upon-star-celebrity- endorsements-ftcs-revised-endorsement-guides

11. 11 Los Angeles New York Chicago Nashville Washington, DC Beijing www.loeb.com Blogs and Social Media Marketing: Complying with the FTC’s New Endorsement Guides Brian Socolow bsocolow@loeb.com