Much has changed in the world of advertising and promotions since 1980 when the Federal Trade Commission (FTC) first published its “Guides Concerning the Use of Endorsements and Testimonials in Advertising,” more commonly known as the Endorsement Guides (the “Guides”). The Internet has become a staple of modern life and the backbone for social media platforms, which seemingly multiply in number each day.
Frequently found on these platforms are social media influencers – individuals who, through their large number of followers, trending content, or general popularity, leverage a high degree of social “influence” on other users on the platform. Influencers often monetize their reputations on social media platforms by partnering with companies to endorse products and services through sponsored posts. Despite the clear technological advancement and evolution in advertising methods, the Endorsement Guides were last amended over a decade ago in 2009. The FTC recently sought public comment on the current state of the Guides and opportunities for reinvention.
At the close of the comment period in late June, the FTC received over 100 comments from companies, trade associations, consumer advocacy groups, and consumers. Commenters were keen on having their voices heard to shape the FTC's approach in this brave new world of advertising, particularly with respect to the behaviors of (and the FTC’s approach to) social media influencers.
We combed through the areas where the FTC requested comment and the responses received – so you don’t have to. We also analyzed the responses based on the identity of the commenter to search for common themes and were able to streamline the dozens of comments into a handful of key takeaways. Let’s take a look at some of the issues on the commenters’ minds.
No consensus as to the effectiveness, format, and clarity of the Guides
The FTC called for comment as to the effectiveness of the Guides and whether their flexible nature should be maintained. In response, the majority of commenters call the Guides a necessary tool to navigate the maze of online endorsement activities, but insist that the Guides’ associated materials remain as guidance and not be codified into further regulations. Commenters also appear united on the need for further clarity in the Guides, specifically surrounding disclosure obligations.
Although most commenters, particularly companies, industry associations, and consumers, agree on the form of the Guides and need for greater clarity in certain areas, numerous industry associations disagree on whether the Guides are ultimately effective or not. Roughly half of the substantive comments, including those from the Association of National Advertisers and Consumer Reports, suggest the Guides are too outdated to be effective. However, many organizations favoring industry self-regulation, such as Better Business Bureau (BBB) National Programs and the Interactive Advertising Bureau, argue the current Guides are effective and should remain flexible to adapt to technological innovation.
Some argue for self-regulation, others more enforcement
The Guides currently allow significant flexibility in disclosure obligations – that is, how and where an advertiser, influencer, or endorser reveals that they have “material connection” to the brand or product they’re promoting. While about half of the commenters, mainly consumers and consumer advocacy groups, advocate for clearer, bright-line rules to standardize disclosure practices, others prefer continued self-regulation, especially within particular industries.
For example, the Entertainment Software Association (ESA) expresses specific apprehension over how stricter, uniform rules would affect the video game industry, which frequently has product endorsements in the form of long-form videos called playthroughs. Such content, the ESA argues, in which influencers record themselves playing and commenting on new games, are well understood to be endorsements among their consumer base and therefore should not be held to the same standard disclosure obligations as are applied to other goods or services.
Others, including Consumer Reports and Truth in Advertising, Inc., argue that allowing industries to self-regulate their advertising leaves room for bad actors to justify deceptive practices. These commenters contend that the FTC's current enforcement of the Guides (or lack thereof, in their view) has enabled fraudulent activity and misinformation to permeate all types of promotional material on the web, warranting more aggressive implementation of the Guides. Consumer Reports goes even further, suggesting that the FTC's authority may be insufficient to address widespread issues and legislative solutions may need to confront the violations. By contrast, other commenters, such as the Association of National Advertisers, contend that certain practices should be exempt from enforcement, advocating instead for safe-harbor provisions in the Guides so long as an advertiser follows the spirit of the Guides.
Commenters like Consumer Reports also suggest that the current media landscape actively disincentivizes social media platforms and influencers from following the Guides. Amplified engagement, even if artificial, they claim, attracts users and investors to platforms and consumers to marketers. As a result, these commenters argue, platforms and influencers should have some responsibility to monitor their content for proper disclosure practices.
Alignment as to need for clearer guidance on social media disclosure obligations
Commenters nearly universally agree that the FTC should provide further clarity on influencers' disclosure obligations. This not only includes the types of relationships and content requiring disclosure, but also how such disclosures should be displayed on various platforms. Many commenters request guidance on what relationships warrant disclosures. Specifically, there is concern around companies incentivizing consumer or reviewer engagement without disclosing these incentives. Commenters like BBB National Programs and the American Influencer Council also suggest that promotion and engagement through fake social media accounts should either be disclosed or prohibited.
In terms of how to present disclosures, many commenters agree that the Guides need to mention whether the default disclosure buttons provided on social media platforms are sufficient. The American Influencer Council even suggests that the FTC collaborate with the "Big 6" social media platforms – Instagram, Twitter, Snapchat, TikTok, Facebook, and YouTube – to standardize disclosure practices across platforms when displaying sponsored content.
A call for action regarding children's advertising and consumer research for all ages
Some consumer advocacy groups, especially those with a special interest in children's advertising, strongly believe that children cannot adequately understand disclosures of material connections and, as a result, the Guides should contain targeted guidance for children's advertising, especially native advertising directed at children. Notably, groups like the Center for a Commercial-Free Childhood (CCFC) and Common Sense Media's policy arm, Common Sense Kids Action (“Common Sense”), propose hard line rules, such as prohibiting influencer or native advertisements to children below the age of 12 or 13. Research conducted by these commenters purport to show that most children under the age of 12 do not possess the cognitive ability to discern when an ad is an ad and, even if they can recognize content as an advertisement, they do not fully comprehend what that means.
Moreover, both Common Sense and the CCFC take issue with the practice of encouraging young people to post photos or participate in viral meme challenges that are product-based or company-driven, turning children and teenagers into unwitting influencers. These commenters believe these practices to be exploitative and inherently unfair. The BBB's Children's Advertising Review Unit (CARU) similarly agrees that the FTC should provide more explicit guidance regarding children's advertising in the age of influencers, and asks the FTC to conduct additional research to better understand children's comprehension of native content versus advertising across the numerous platforms now available to them. However, some commenters, including the Association of National Advertisers, argue against specialized guidelines for children as they could prove challenging to implement and fairly enforce.
Relatedly, commenters suggest that the FTC should itself invest time and resources into conducting more research regarding consumer understanding in the age of social media and influencers, both for children and for all consumer age groups. These commenters request additional research regarding many topics, including whether how much, if at all, incentives affect consumer reviews. Some commenters, including the Interactive Advertising Bureau, note such research has already been conducted by external trade associations, opening the door for further FTC consideration.
Next steps
The FTC’s comment request was merely that – a call for comments in response to a number of open-ended inquiries the agency is considering addressing. There is no clear timeline for when – or even whether – the FTC would issue a notice of proposed rulemaking with revisions to the Endorsement Guides. The collection of comments makes clear, however, that the public is interested in receiving additional clarification on various aspects of the Guides and wants the agency to stay current with advertising issues in the age of social media, even if there is still a strong preference for industry self-regulation.
The Regulations.gov docket, where all public comments can be found, is located here.
If you have questions about your company’s social media disclosure practices or working with social media influencers, please contact Meryl Bernstein and Brendan Quinn.
Authored by Meryl Bernstein and Brendan Quinn, with significant contribution by Celine Dorsainvil, Emily Jenkins, Danielle Litwak, and Molly Berg Mulligan.
