Strategy Needed for Regulating Misleading Online Advertisements Endorsed by Influencers?
The Federal Trade Commission (FTC) has revised its Endorsement Guides for the first time since 2009, aiming to provide clarity on the rules of the road for endorsement and testimonial advertising in the digital age. The updated guidelines, effective from June 2023, place a strong emphasis on transparency and disclosure in virtual celebrity and influencer endorsements.
The updated Endorsement Guides are a series of examples and guidelines designed to assist businesses in conforming their endorsement and testimonial advertising practices to meet FTC requirements. These guidelines are applicable across all media, including social media platforms like TikTok, Instagram, podcasts, and online reviews, reflecting the evolving landscape of advertising.
Key points in the updated guidelines include the requirement for clear disclosure of any material connection between the endorser and the brand or product being promoted. A material connection can encompass contracts, payments, free products, discounts, family relationships, or any benefit received that might affect the endorsement's credibility. Endorsers must not assume their followers know about the relationship, and disclosures must be clear, conspicuous, and unambiguous—for example, using explicit tags like #ad, verbal statements, or clear labeling on any platform.
Endorsers are also mandated to have actually used the product and to refrain from making unsubstantiated claims or lying about their experience. Ambiguous or confusing shorthand, such as “sp” or “spon,” is insufficient, and disclosures placed only in less visible areas, such as below "view more" buttons, are not compliant.
On December 8, 2022, from 11:00 AM to 12:00 PM (EST), the Center for Data Innovation will host a panel discussion on the future of the Endorsement Guides and how platforms and policymakers can work together to protect consumers, promote innovation, and improve advertising online. Speakers at the event include Christopher Terry, Professor at the Hubbard School of Journalism and Mass Communication, University of Minnesota; Amanda Anderson, Government Relations Director at the American Association of Advertising Agencies (4A's); Becca Trate, Policy Analyst at the Center for Data Innovation (who will moderate the discussion); Po Yi, Partner at Advertising, Marketing and Media, Manatt, Phelps & Phillips, LLP; and Irene Ly, Policy Counsel at Common Sense Media.
The rapid evolution of social media and endorsement advertising has created new challenges, such as how to disclose financial relationships between social media influencers and brands properly. The panel discussion will delve into these challenges and discuss strategies for protection of consumers and promotion of innovation, including enforcement actions against deceptive or non-disclosed endorsements, the encouragement of clear, standardized disclosure mechanisms, and the promotion of innovation by allowing social media influencers and brands to continue collaborating with clear guidelines.
As new Web 3 platforms, including the metaverse, emerge, they are likely to create new questions, such as the rules around virtual celebrity endorsements. The panel discussion will also address these questions and provide insights into the future of endorsement and testimonial advertising in the digital age.
[1] Federal Trade Commission. (2023). Revised Endorsement Guides. Retrieved from
- The revised Endorsement Guides by the Federal Trade Commission (FTC) aim to provide clarity on endorsement and testimonial advertising for businesses in the digital age, including platforms like TikTok, Instagram, podcasts, and online reviews.
- Key points in the updated guidelines require endorsers to disclose any material connections with brands or products being promoted, using clear, conspicuous, and unambiguous methods, such as the use of explicit tags like #ad or clear labeling on any platform.
- In the general-news, the Center for Data Innovation is hosting a panel discussion on December 8, 2022, focusing on the future of the Endorsement Guides and strategies to promote innovation and protect consumers in the digital advertising landscape, discussing new challenges such as proper disclosure of financial relationships between social media influencers and brands, the rules around virtual celebrity endorsements, and the evolving landscape of endorsement and testimonial advertising with the emergence of new technologies like Web 3 platforms and the metaverse.
