Carol S. Maue

In my last column (March 2012), I addressed the FTC guidelines issued to protect consumers from the negative consequences of deceptive online posts by businesses and its advocates when endorsing that company’s services or products. I urged all companies who engage in any kind of social media marketing activities to promote their products or services to adopt a social media policy that complied with the FTC guidelines to provide some protection against legal claims.

Last week, on Aug. 14, the Word of Mouth Marketing Association (WOMMA) just issued an updated version of its “Social Media Marketing Disclosure Guide,” originally issued in 2010 at the time the FTC regulations became effective.

As discussed in my earlier article, to avoid liability for deceptive practices, the FTC guidelines require that all “material connections” between a company selling its products and services and those endorsing or otherwise advocating the purchase of those products and services be appropriately disclosed.

These material connections include any connection between someone advertising or endorsing a product or service and the company producing the advertised or endorsed product or service that has the potential to affect the credibility that consumers give to the advertiser or endorser’s statements.

Material connections that must be disclosed include the existence of employment, vendor or other contractual relationships between the advertiser or endorser and the company, or payment of monetary compensation and other benefits and incentives by the company to the advertiser or endorser, including free product or services, gifts, gift cards, discounts, free vacations or other non-monetary incentives that can be reasonably expected to incentivize a positive comment about the product or service by the advertiser or endorser.

According to WOMMA’s online announcement, the updated guide is intended to function as a “living document” and “will continue to be revised to reflect changes in regulation and in the marketplace,” to support “WOMMA’s continuing effort to advance and advocate ethical word of mouth marketing.” The guide is a succinct eight pages and is an excellent starting place for any company interested in designing a functional social media marketing policy that will keep the company out of hot water with the FTC.

The updated guide covers all currently existing marketing platforms, including blogs, microblogs (Twitter), online commentary, social networks (LinkedIn or Facebook), video sharing websites (YouTube), photo-sharing websites (Shutterfly), curated and sponsored content, affiliated and referral networks, and podcasts, and makes clear that as the social media marketing landscape changes to add new platforms, these will also be covered by the guide.

The updated guide also includes helpful definitions of the participants in the online social media marketing space, referring to any person or entity “with a material connection to a marketer sharing a message in connection with a marketing initiative” as an “advocate” and broadly defining “marketer” as “any individual or entity engaged in the promotion and/or selling of a product or service of that entity as part of a marketing initiative.” The definitions are deliberately broad to provide maximum coverage and the updated guide makes clear that both marketers and advocates have significant disclosure requirements that must be addressed in the adopted policy to avoid unwanted FTC scrutiny.

As the guide also states, it is not enough for your company to have a good social media marketing disclosure policy in place; all affiliated entities and vendors with whom your company works must likewise have adopted an “aligned policy.” The guide sets a well thought-out standard for these “aligned” policies to be formulated and adopted.

The updated guide sets forth in detail five different ways in which marketers must disclose their relationships to advocates under the FTC guidelines to provide relief from a FTC claim. These include: (1) educating advocates, agencies and vendors with whom they work on marketing campaigns about the specific circumstances when disclosure is required; (2) monitoring their marketing campaigns to ensure that advocates are complying with the policy and making adequate disclosures and that any claims made about their products and services are not false or misleading; (3) employing “commercially reasonable efforts” to address non-compliance, including in egregious cases, pulling the content; (4) insuring that all third parties responsible for engaging advocates on their behalf have an “aligned” policy in place; and (5) educating employees regarding the nature of the required disclosures to ensure that employees disclose the employment relationship when making claims about the company or its products and services and insuring that they do not misrepresent themselves as “ordinary customers” when reviewing or endorsing products or services on the employer’s behalf.

The updated guide also emphasizes that disclosures must be “clear and prominent” to meet the FTC guidelines. Disclosures must be proximate to the message conveyed and cannot be buried in the text. Likewise, all disclosures must be consistent across all platforms, in a reasonable font size and color that is both readable and conspicuous to consumers and that provide context to the nature of the relationship disclosed.

One of the most useful sections of the updated guide is its “Disclosure Best Practices” section that provides recommended disclosure language for each platform and that also recommends posting a link on the company’s home page to the company’s full “Disclosure and Relationship Statement.”

WOMMA’ s updated guide and its rich website provide valuable information to the online business community engaged in social media marketing. Complying with the guide’s recommendations will go a long way to preventing an actionable FTC claim. WOMMA’s press release with a link to its updated Social Media Marketing Disclosure guide can be found at http://womma.org/ethics/disclosure.

Carol Maue is a partner and chair in the Business Law Group at Boylan Code LLP, concentrating her practice in general corporate, intellectual property, and employment law matters. For more information, contact Carol at (585) 232-5300 or cmaue@boylancode.com.

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