The use of bloggers to promote a product or event has become an integral part of most marketing campaigns for action sports. Blogging allows action sports companies to reach their target demographic, often by relying on a celebrity endorsement. Laws and guidelines governing advertising apply to bloggers’ activities, and sports marketers have to know how to comply so that the reference to the latest product being used by Kelly Slater or Shaun White doesn’t lead to a lawsuit.
The Federal Trade Commission (FTC) recently revised its Guides Concerning the Use of Endorsements and Testimonials, which provide guidance to advertisers that ask others to endorse a product, including bloggers. (The Guides are on the FTC website at http://www.ftc.gov/os/2009/10/091005revisedendorsementguides.pdf) The Guides are “advisory” in nature – not binding law – but the FTC uses them to evaluate whether an endorsement or testimonial violates Section 5 of the FTC Act, which prohibits unfair and deceptive or misleading practices.
The Guides define endorsements and testimonials broadly to mean any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser. As the FTC said in recently posted Facts for Business, the Guides apply to bloggers receiving free products or other perks with the understanding that they’ll promote the advertiser’s products in their blogs, as well as bloggers who are part of network marketing programs where they sign up to receive free product samples in exchange for writing about them or working for network advertising agencies.
The Guides also apply to celebrity endorsers who write about themselves, and the products they use, on their own blog, social networking site, or using other social media such as Twitter. A manufacturer’s own website, where employees can blog about the manufacturer’s products, is covered by the Guides as well.
According to the Guides, endorsements and testimonials must reflect the honest opinions, findings, beliefs, or experience of the endorser, and endorsements may not contain any representations that would be deceptive, or could not be substantiated, if made directly by the advertiser. In a famous lawsuit filed by the FTC against baseball star Steve Garvey, the FTC charged Garvey with false advertising relating to commercials that advertised the weight-loss products Exercise in a Bottle and Fat Trapper. Fortunately for Garvey, he had used the products and had lost weight, leading the court to rule that his use of the product constituted an adequate basis for his statements in the commercial about how much weight he lost using the product. If he hadn’t actually used the product, or if he hadn’t actually lost weight using the product, the FTC probably would have prevailed in the lawsuit.
When there is a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement, the connection must be fully disclosed. The FTC suggests that bloggers should mention this connection each time they review a product, rather than posting a one-time disclaimer saying that the blogger sometimes receives free products in exchange for writing a review. The FTC recently investigated a clothing retailer that invited bloggers to attend a fashion show and gave bloggers gifts. Eventually, the FTC said it would not charge the company with violating the FTC Act because the company had a policy of telling bloggers that they must disclose any gifts they receive.
A more difficult issue for advertisers is the Guides’ position on liability: if an advertiser requests that a blogger try a new product and write a review, the advertiser may be subject to liability for false or unsubstantiated statements made through the blogger’s endorsement. The FTC recently said that it usually pursues the advertiser, not the blogger or endorser, when there is a concern about false or unsubstantiated statements.
The FTC suggests that advertisers provide guidance and training for its bloggers concerning the need to ensure that statements bloggers make are truthful and substantiated. The FTC also suggests that advertisers monitor bloggers who are being paid to promote their products and take steps necessary to halt the continued publication of deceptive representations when they are discovered. How much an advertiser should monitor bloggers depends in part on whether physical injury or financial loss might occur as a result of an unsubstantiated claim. The FTC has specifically said that the scope of the monitoring program depends on the risk that deceptive practices by bloggers could cause consumer harm, such as physical injury or financial loss. The higher the risk of harm, the more active the advertiser should be in monitoring what its paid bloggers are saying and the more aggressive it should be in following up on questionable blog entries.
The Guides also apply to other social networking campaigns. In its Facts for Business, the FTC provided the following example of an athlete using Twitter to promote products: “A famous athlete has thousands of followers on Twitter and is well-known as a spokesperson for a particular product. Does he have to disclose that he’s being paid every time he tweets about the product?” The FTC’s answered by saying it depends on whether his readers understand he’s being paid to endorse that product. “If they know he’s a paid endorser, no disclosure is needed. But if a significant number of his readers don’t know that, a disclosure would be needed. Determining whether followers are aware of a relationship could be tricky in many cases, so a disclosure is recommended.”
The Guides also address word-of-mouth marketing: if an advertiser provides free products or other incentives (such as points that can be redeemed for prizes) to individuals every time they mention the advertiser’s products or services to their friends, these incentives should be clearly and conspicuously disclosed, and the advertiser should take steps to ensure that these disclosures are being provided.
The rules and regulations that apply to bloggers are still evolving. Sports marketers should understand how these rules and regulations apply to bloggers so that the focus of promotional campaigns stay on the action sports product or event and not legal troubles.
Brian R. Socolow is a partner at Loeb & Loeb LLP. He represents individuals and organizations in the sports industry in contracts, intellectual property and related matters. He is based out of the New York office and can be reached at email@example.com.
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