Last week, the FTC sent more than 700 warning letters, each called a “Notice of Penalty Offense,” to brands and agencies around the country.
The letters list a series of marketing practices that the FTC has determined to be deceptive, including:
-Falsely claiming an endorsement (e.g., “used by Clint Eastwood” if that’s not true)
-Misrepresenting an endorser recently (or ever) used the product
-Using an endorsement to make deceptive performance claims (e.g., “I lost 150lb in a week”)
-Misrepresenting that a review or endorsement represents the actual experience or opinion of a user (e.g., giving reviewers a script that doesn’t match their honest belief)
-Misrepresenting that a review or endorsement reflects the typical user experience, and
-Failing to disclose a material connection with an endorser.
That last one is most relevant to influencer marketing.
The FTC requires disclosure of “material connections” between someone endorsing a product or service (like an influencer) and the business itself.
The idea is that a consumer might give less weight to a product review if they knew the brand was compensating the reviewer, so it’s a deceptive practice to hide the relationship from people making purchasing decisions based in part on the reviews.
This is why we have things like “# ad,” though that’s not the only way to disclose the connection.
While these FTC letters don’t accuse the brands and agencies of wrongdoing, they have the effect of giving notice that violations can result in penalties of up to $43,792 PER VIOLATION.
It’s been about a year and a half since we saw an FTC enforcement action targeting influencer disclosure issues.
These 700+ letters, and the FTC’s 5-0 vote to authorize them, show that these issues are back in the spotlight.
Now is a great time to take a look at your campaign compliance.
Earlier this year, U.S. Sen. Richard Burr, R-N.C., introduced Senate Bill 203, titled the Recognizing the Protection of Motorsports Act of 2017. The RPM Act would amend the Clean Air Act to clarify that it is legal to modify a road-going automobile into a racecar used exclusively on racetracks regardless of whether the car thereafter complies with the CAA’s emission standard. The RPM Act would also confirm that it is legal to manufacture, distribute, sell and install racing parts used to convert these vehicles for exclusive track use.
Read more about the possibility of EPA action in our Daily Journal article by clicking here.
On Jan. 13, 2015, the United States Supreme Court issued its long-awaited ruling in Jesinoski v. Countrywide Home Loans, Inc., No. 13-684, 2015 WL 144681 (U.S. Jan. 13, 2015) resolving a circuit split over the notice requirements that must be complied with under the Truth In Lending Act (TILA), 15 U.S.C. § 1601 et seq., for rescission of a home mortgage loan.
View full article on The National Law Review.