SOCIAL MEDIA LEGAL DO’S & DON’TS - ENDORSEMENTSPresented at NY Technology Council Event

April 12, 2012

Michael B. Schiffer

Section 5 of the FTC Act

• Prohibits “unfair or deceptive acts or practices”

The FTC Endorsement Guides

• Updated in 2009, in part,to address new media

• Endorsements =

“Any advertising message . . . that consumers are likely to believe represents the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser . . .”

• Celebrity, expert or regular folks like us

• They are all about credibility

Endorsements – Material Connections

• Connections between the endorser and the advertiser, which might materially affect the weight or credibility of the endorsement, should be clearly and conspicuously disclosed

• Connections that are “not reasonably expected by the audience”

• Does the consumer understand the relationship between the endorser and the advertiser?

Old MediaSony Pictures

• Sony employees, posing as consumers, were used to promote the movie

• Not disclosed

• Consent decrees with Connecticut and Oregon (2002)

New York v. Lifestyle Lift

• NYAG alleged that Lifestyle Lift published anonymous fake positive reviews and created fake consumer websites

• The reviews appeared to be from actual consumers

• Consent order with $300k penalty (2009)

Email of the Day

To: Lazy Employee

From: Your Boss

_______________________________________

“Friday is going to be a slow day - I need you to devote the day to doing more postings on the web as a satisfied client.”

FTC v. Reverb

• FTC charges PR agency with posing as ordinary consumers and posting reviews on the iTunes store– “Amazing new game”– “ONE of the BEST”

• Agency was hired by video game developers

• FTC says that the agency should have disclosed that it was paid to post the reviews

• Consent order (2010)

FTC v. Ann Taylor

• “Exclusive blogger preview” event for the LOFT Summer 2010 Collection

• Offered gifts to bloggers to attend

• Offered gift cards (worth between $50-500) to all bloggers who posted content about the event within 24 hours

ESRP V. HCG

ERSP v. HCG cont.

• ERSP also challenged claims on what appeared to be independent social media sites

• Posts linked to the HCG website

• ERSP said that the advertiser is responsible for the false claims

“simply because the marketer did not know about a consumer making a particular claim, it is not somehow absolved from responsibility

about the accuracy of the claims”

-- ERSP

How to Disclose Connection:

• How do you effectively disclose the connection in emerging media?

• Are the principles workable for text messages, Twitter, etc.?

• Ad hoc disclosures

Who’s Watching?

• FTC, competitors, other regulators, consumers

Questions?

Michael B. Schiffer

Counsel

Frankfurt Kurnit Klein & Selz

212-705-4827

mschiffer@fkks.com