Advertising Law Blog

The Proposed Federal Register Notice (“Notice”) seeks public response to 22 separate and detailed questions related to the Guides and endorsements. Some of the key questions asked by the FTC include the following:

• “Are the deceptive or unfair practices addressed by the Guides prevalent in the marketplace? Are the Guides effective in addressing those practices?”
• “What is the degree of compliance with the Endorsement Guides?”
• “What benefits, if any, have the Endorsement Guides provided to consumers? Do the Guides impose any significant costs on consumers?”
• “What changes, if any, should be made to the Endorsement Guides to increase their benefit to consumers? How would these changes affect consumer benefits or business costs?”
• “Have consumer perceptions regarding endorsements changed since the Guides were last revised and, if so, do these changes warrant revising the Guides?”
• “What modifications to the Guides, if any, should be made to address technological, economic, or environmental changes that have occurred since the Guides were last revised?”
• “How well are advertisers and endorsers disclosing unexpected material connections on social media platforms?”
• “Some marketers give incentives (e.g., free or discounted products) to consumers in exchange for posting reviews of their products or services without specifically requiring that the reviews be favorable. Do such incentives skew or bias the resulting reviews?”
• “What disclosures, if any, do advertisers or the operators of review websites or review platforms need to make about the creation, collection, processing, or publication of reviews or ratings in order to prevent those reviews or ratings from being deceptive or unfair?”

FTC Commissioner Rohit Chopra also issued a separate statement as to the current state of social media and influencer marketing, further indicating the direction he would like the FTC to pursue in the wake of the public comments it will receive in response to the Notice. Commissioner Chopra calls for a focus on advertisers as opposed to small influencers. In addition, Commissioner Chopra criticized the FTC’s pursuance of “no-money, no-fault” consent orders in related enforcement actions, stating that going forward, the FTC needs “to seek tougher remedies for companies that are illegally astroturfing or disguising their advertising as an authentic endorsement or review.” Specifically, Commissioner Chopra states that he hopes the FTC will “consider taking steps beyond the issuance of voluntary guidance, including:

• Developing requirements for technology platforms (e.g. Instagram, YouTube, and TikTok) that facilitate and either directly or indirectly profit from influencer marketing;
• Codifying elements of the existing Guides into formal rules so that violators can be liable for civil penalties under Section 5(m)(1)(A) and liable for damages under Section 19; and
• Specifying the requirements that companies must adhere to in their contractual arrangements with influencers, including through sample terms that companies can include in contracts.”

The Notice will be published in the Federal Register soon and the comment period will be open for 60 days thereafter.

Takeaway: Social media advertising, in particular influencer advertising, has been on the FTC’s radar for some time. However, the Notice and Commissioner Chopra’s statement signal that the FTC is focusing on this type of advertising and is open to making changes to both the existing guidance and its enforcement efforts. It may be beneficial for interested and potentially impacted advertisers, influencers, and other stakeholders to submit a comment to the FTC in response to the Notice. In doing so, such advertisers and influencers would seize this opportunity to advise the FTC on the current state of the marketplace and how the FTC’s guidance could be revised to provide more clarity to advertisers with regard to their obligations.