On November 25, 2014, the United States Federal Trade Commission (“FTC”) proposed consent orders regarding two companies who allegedly mislead consumers. Specifically, the FTC alleged that Sony Computer Entertainment America (“Sony”) and Deutsch LA (Sony’s advertising agency for the PS Vita game console launch), misled consumers with deceptive product endorsements for the PS Vita. The allegations against Deutsch LA are particularly of importance to any business attempting to harness the power of its own employees to “promote” (i.e. employee advocacy programs) their employer’s and/or client’s products or services via Twitter and other social media platforms.
The Allegations Against Deutsch LA:
According to the FTC’s press release regarding the allegations against Deutsch LA and Sony, Deutsch LA used the term “#gamechanger” in its ads to direct consumers to online conversations about Sony’s PS Vita console on Twitter. About a month before the gaming console was launched, one of Deutsch LA’s assistant account executives sent a company-wide email to staff asking them to help with the ad campaign by posting comments about the PS Vita on Twitter and using the same “#gamechanger” hashtag, according to the complaint.
The FTC alleged that, in response to the company-wide email, various Deutsch LA employees posted positive tweets about the PS Vita to their personal Twitter accounts, without disclosing their connection to Deutsch LA or Sony. The FTC charged that the tweets were misleading, as they did not reflect the views of actual consumers who had used the PS Vita, and because they did not disclose that they were written by employees of Deutsch LA.
The proposed order against Deutsch LA bars it from misrepresenting that an endorser of any game console product or video game product is an independent user or ordinary consumer of the product, according to the press release. In addition, the proposed order requires Deutsch LA to disclose a material connection, where one exists, between any endorser of a game console product or video game product and Deutsch LA or other entity involved in the manufacture or marketing of the product. The complete proposed consent order between the FTC and Deutsch LA can be found here.
The FTC’s Guidance on Endorsements:
These consent orders with Sony and Deutsch LA are among the first regarding employees and Twitter/social media use. However, the requirement that employees disclose their employment relationship while providing testimonials and/or endorsements of their employer’s (or client’s) products or services is not new. Indeed, the FTC issued endorsement guidelines in 1980, and issued updated guidelines in 2009 to address social media and the evolving marketing world. As fellow Maximize Social Business contributor Kyle-Beth Hilfer wrote in her December 10, 2014 post Twelve Laws for Social Media Holiday Campaigns”, “advertisers must disclose ‘material connections’ between themselves and endorsers, and those endorsers, themselves, may bear legal liability for their statements. . . [I]f an employee posts reviews of his employer’s product on an online discussion board, the employee should conspicuously disclose his employment connection or the employer and employee could run afoul of the guidelines.” So what can we learn from Deutsch LA’s over-eager account executive?
Tips for Employers and Employees:
1. Create A Policy: While the intentions of the Deutsch LA account executive may have been pure, the company-wide email should also have included a reminder to employees to disclose their employment status along with the product endorsement. The fact that the email did not contain such a reminder may demonstrate that the email author did not know of (or understand) the necessity to reveal the connections. Thus, step one for any business is to create an internal social media use policy. This is particularly true if the business is embracing the “employee advocacy” movement by encouraging employees to use social media (or any marketing platform) to promote the business. To create a policy, businesses may wish to first review the various FTC guidelines on endorsements, FAQs provided by the FTC including “The FTC’s Revised Endorsement Guidelines: What People Are Asking,” and, the FTC’s “.com Disclosures: How to Make Effective Disclosures in Digital Advertising,” published in March 2013, which contain numerous examples of acceptable and unacceptable methods of advertising via social media.
2. Provide Training: Even with a state-of-the art policy drafted by a top-notch employment law attorney, employees (including managers) must be appropriately trained on the company’s policies and the FTC’s guidance. Simply, it would not be effective to provide these written resources to employees and managers without engaging a professional social media consultant to help train the workforce about the best (and lawful) use of social media for work purposes. This video from the FTC regarding endorsements begins the training process. A social media consultant can help determine the best strategy for the employer’s particular needs, goals, workforce composition, and target market. The last thing an employer should want is its employees sending conflicting Tweets, or disjointed messages.
3. Keep an Eye on Employee Posts: To ensure compliance, employee posts/social media activity should be reviewed. For purposes of this article, companies should know what their “advocates” are saying, making sure employee endorsements contain the necessary disclosures, and do not otherwise mislead consumers or guarantee particular results. It is also a good idea, while performing such monitoring, to also keep an eye open for inadvertent (or malicious) disclosure of confidential/trade secret information. The company should also have a quickly accessible mechanism in place to remove any offending posts or Tweets, and provide appropriate counseling (and disciplinary action, if necessary) to employees to prevent further misleading or inappropriate posts.
Ultimately, even though marketing platforms may have evolved from direct mail, print advertisements, and television commercials to Tweets, Instagram photos, and Facebook posts, the law prohibiting deceptive advertising remains in full force. It is not an excuse for businesses and marketers to be unaware of endorsement guidelines, or to otherwise claim that it is impractical to include a disclaimer within a character-capped tweet. Indeed, the FTC guidance has been updated to address the new marketing platforms. Like the FTC, business and employees should update their practices as well.
DISCLAIMER: Information provided on this website is not legal advice and it does not create an attorney-client relationship, nor should you act on anything stated in this article without conferring with the Author or other legal counsel regarding your specific situation.
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