Tweeting your favorite things


What your editorial staff must know about federal rules governing endorsements in print and online





In every student newsroom, a certain amount of free stuff will show up.

It just does. Sometimes it’s review copies of CDs. Sometimes it’s a T-shirt advertising a new flavor of a soft drink. Sometimes it’s a free ticket to a play with an invitation to write a review.

Marketers want to get their products and services in front of a student audience, and for some of these topics, there’s no review quite as valuable as the review from a fellow student. (If someone on your campus paper wrote that the new flavor of Mountain Dew was able to wash away the taste of the cold cafeteria pizza, who else would be able to tell you that?)

But according to the Federal Trade Commission, if you received anything of value in exchange for writing a review, you have to tell your readers about it. And while lots of journalists may understand that, they may not understand that the FTC thinks your personal tweets, Facebook status updates, and blog posts are “testimonials.”

That’s right: if you tweet that you like something, you’re reviewing it, as far as the FTC is concerned. And if you like it because you got a free sample, you’re supposed to disclose that.

Let’s take a look at the FTC’s rules, what they mean, and how to follow them.

Who is this FTC, anyway?

The FTC is a federal agency designed to protect consumers. Generally speaking, the FTC’s mission is to prevent deceptive and unfair trade practices.[1] It defines a practice as deceptive if it is likely to (1) mislead consumers and (2) affect consumers’ behavior. For a practice to be unfair, it has to be likely to cause (or actually cause) an injury that is (1) substantial, (2) not outweighed by other benefits, and (3) not reasonably avoidable.[2]

Periodically, the FTC publishes guides that explain how the agency believes advertisers and publishers should interpret its rules. While not technically binding law themselves, the guides serve as practical advice on how not to get in trouble.

In 2000, the FTC published “Advertising and Marketing on the Internet: Rules of the Road,” a guide that applied the FTC’s existing restrictions on marketing and endorsement to the Internet as it then existed.[3] Among its clarifications, the FTC declared that “advertising agencies or web designers are responsible for reviewing the information used to substantiate ad claims. They may not simply rely on an advertiser’s assurances the claims are substantiated.”[4]

Also in 2000, the FTC published a guide called “Dot Com Disclosures: Information About Online Advertising.”[5] In this guide, the FTC directed that, when disclosures are necessary to prevent an advertisement from being misleading, those disclosures must be “clear and conspicuous,” placed near the text to which they relate, and be prominent enough to be noticeable to consumers, among other things.[6]

After the publication of these guides, the rules were clear: advertisements and endorsements had to be honest and include disclaimers about any information that might confuse or mislead consumers. But as the socially generated “Web 2.0” came into existence, what became less clear was what, exactly, was an “endorsement.”

FTC rules vs. “commercial speech” cases

As a threshold matter, it’s worth mentioning three things about the FTC’s rules: one, they use a definition of commercial speech broader than the one used by courts; two, that means some potential applications of the FTC’s rule might violate the First Amendment; and three, the FTC has not, as of yet, attempted to enforce the rules in any of those “close call” situations.

The FTC’s definition of commercial speech is anything you write when “acting on behalf of an advertiser.”[7] But the Supreme Court’s definition of commercial speech is much narrower. Indeed, in Bolger v. Youngs Drug Products Corp., the Court considered advertising pamphlets discussing contraception and wrote, “[t]he mere fact that these pamphlets are conceded to be advertisements clearly does not compel the conclusion that they are commercial speech.”[8] Courts have defined commercial speech as speech that is driven by an economic motive that is part of a proposed commercial transaction.[9]

A reviewer typically has no expectation of gain after the review is written—he or she already has the product and has no further incentive to be nice about it, except the aspirational hope to receive more products in the future. Furthermore, the review proposes absolutely no commercial transaction, and the reviewer is in no position to complete such a transaction. Accordingly, under the definition used by the Supreme Court, reviews aren’t commercial speech and probably wouldn’t be subject to the FTC’s regulation.

The FTC’s enforcement actions thus far have not gone after speech promulgated by genuine reviewers. For example, Legacy Learning Systems paid $250,000 and entered into a consent order with the FTC after paying online “affiliate marketers” posing as neutral reviewers for sales made through the affiliates’ sites.[10] Reverb Communications entered into a consent order after paid employees posed as consumers and entered positive reviews of games on iTunes.[11] These are not neutral reviewers who happen to get free review products; they’re reviews by people incentivized to make sales happen.

Most student publications, however, don’t want to become the “test case” if the FTC decides to flex its muscle – even if ultimately the publication wins, years down the road. And from an ethical standpoint, disclosing that a reviewer received a product or service for the review is journalistically the right thing to do. Just be aware that, should the FTC actually come knocking, there is some question as to whether it has the authority to police as broadly as it purports to.

FTC rules vs. ethical guidelines

Let’s put aside our legal discussion for a moment and consider journalism ethics. While the FTC rules appear to restrict some First Amendment speech, they don’t quite hew to the contours of existing ethical guidelines, either.

For example, the Society of Professional Journalists’ Code of Ethics says that journalists should “refuse gifts, favors, fees, travel and special treatment... if they compromise journalistic integrity.”[12] It also says to resist pressure from advertisers trying to influence news coverage, which sounds like the entire purpose of free review products. Finally, it advises to “disclose unavoidable conflicts.”[13]

Taken together, this sounds as if the SPJ ethics code operates on the assumption that nominal gifts—ones of such low value that they wouldn’t really impact news coverage—may not constitute a conflict. For example, if Mountain Dew sends you a coupon for a free bottle of the drink, you’re unlikely to tell people you enjoyed the drink based on the hope that you might get another coupon in the future. The FTC rules, on the other hand, say that anything free, no matter how small, must be disclosed, if it is only given to potential reviewers (e.g., no disclosure is required if bottles of soda are being handed out on street corners to anyone passing by).[14]

The National Scholastic Press Association’s Model Code of Ethics also has a rule that appears more restrictive than the FTC’s guidelines: it states that a student journalist should “[a]ccept no gifts, favors or things of value that could compromise journalistic independence, journalistic ethics or objectivity in the reporting task at hand.”[15] It uses an example of a reporter covering a buffet event, explaining that the reporter should not stop reporting to eat.[16] It also advises disclosing any real or perceived conflicts[17] and not giving special treatment to advertisers.[18]

All of the ethical principles above are good advice, and worth following. But the FTC rules are the ones that purport to be interpreting federal law with federal penalties. To the extent there is ever a conflict between an ethical guideline and the FTC rules, the safest thing is to follow whichever is more restrictive.

What endorsements need to be disclosed?

Much of the confusion about the FTC rules is about deciding when a disclosure needs to be made.

Historically, identifying an endorsement was simple. When Wilford Brimley came on television during a commercial break on the History Channel to tell you how happy he was with his diabetes testing supplies, it was clear to everyone involved, without any special disclosure, that Brimley gets a check to promote the product. While FTC rules require that Brimley must be sharing his honest opinions of the product,[19] no special disclosure is required, because consumers understand that celebrities are paid to endorse products during television advertisements.[20]

But let’s say Wilford has a Twitter account, and he logs in and tweets: “Checking my blood sugar with my Acme Medical testing supplies. So easy! #checkitoften.” While celebrities may be paid to endorse products on television, it’s trickier to tell whether this is a paid endorsement or just Wilford’s enthusiasm for the product.

This becomes even trickier when the endorser isn’t a celebrity. Take, for example, a person on the campus paper who typically reviews video games. Assume he tweets: “Star Wars: Knights of the Republic is awesome. These ARE the droids I’m looking for.” Your readers might well assume this is a neutral review, just as the ones in the campus paper are. But now assume that the game’s publisher sent the reviewer a free copy of the Collector’s Edition of the game, which retails for $150. Under the FTC’s rules, this would be considered an endorsement and would need to be disclosed.[21]

This type of regulation punches through the wall newsrooms attempt to put between advertising and editorial, because it regulates based not on an economic incentive to publish the speech, but whether readers of the content would view it differently if they knew the reviewer had received something of value for providing the opinion.[22] In other words, it doesn’t matter that your reviewer makes no money from sales of the video game, because the FTC thinks consumers would care if they knew he was playing it for free.

Nor is there a bright line that says gifts of nominal value don’t have to be disclosed—in fact, one FTC guide suggests disclosing a $1-off coupon, if the coupon is given only to people reviewing the product.[23] If your movie reviewer writes a positive review of The Avengers, and it turns out the movie producers sent your staff four tickets to a preview screening, that would need to be disclosed.[24]

Social media coverage: Paid or free?

Some advertisers may actually want to negotiate positive social media coverage into their advertising contracts. While the FTC rules do not prohibit such arrangements, they do create certain obstacles—though, largely, this depends on whether what your advertiser is seeking is an “endorsement” in the first place.

Under FTC rules, an “endorsement” is an advertising message that “consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser,” even when the sincere belief of the endorser is identical to the advertiser’s.[25] Technically, organizations can be parties that make endorsements, but only to the extent consumers believe the organization has opinions, findings or experiences.

In other words, social media accounts that are not typically “personalized” by staff members are less likely to create any endorsement problems because readers are less likely to view what a faceless organization says as an endorsement. If the Washington Post’s official Twitter account tweeted, “We just had a six-piece McNuggets and they were delicious,” query whether a reasonable reader would understand this to reflect the beliefs, findings, or experiences of a corporate entity. Nevertheless, the FTC rules do require that this opinion “fairly reflects the collective judgment of the organization[,]” so you’ll want to cut those McNuggets into pretty small pieces for the taste-test.[26]

Most advertisers are probably going to prefer the personal touch, particularly if you have popular columnists. A local pizza place would probably love to negotiate into the advertising contract that your popular sports columnist tweet, “Join me at Joe’s Pizza after the big game!” before a school championship. That is precisely the kind of arrangement that the FTC wants you to disclose—and that tweet would have to carry, at a minimum, a hashtag that would tip off readers to the relationship. The FTC suggests #paidad, or even #ad, would work.[27]

What if it isn’t an ad, though? Let’s say Joe’s Pizza advertises in your newspaper. And let’s also say that, as it happens, Joe’s Pizza is fantastic. Your sports columnist raves about it all day in the newsroom to the point where you’re sick of hearing about how good the pizza is. The columnist goes on his personal Twitter account and tweets: “Join me at Joe’s Pizza after the big game!”

From the FTC’s perspective, the important question is whether your columnist received anything of value for his tweet. But this area gets even more gray when the twitter account is the “official” newspaper account for this columnist’s communications, or if he uses the account for both newspaper and non-newspaper tweets. While the FTC has shown no inclination to reach into these close calls, one way to avoid problems is to disclose the ad in the tweet itself. “Join me at Joe’s Pizza after the big game! See their ad on page 4!”

Form of disclosure

The FTC’s most recent guidance on the form of disclosures was in June 2010.[28] It encapsulates the most useful advice about the form of a disclosure in a single phrase: “What matters is effective communication, not legalese.”[29] In the example of the video game tweet, it would be enough to say, “Got a free copy of Star Wars: The Old Republic and these ARE the droids I’m looking for!”

The disclosures do have to appear either in the content itself or in close proximity. The guide specifically says that buttons linking to disclosures are not going to meet the FTC’s standards, because, as the guide points out, “[h]ow often do you click on those buttons when you visit someone else’s site?”[30]

There are two basic ways you can comply with the rule: either identify the content as a paid advertising message, or disclose in the body of the content the nature of the relationship between the author and the product/service being discussed. For legitimate editorial uses, it will almost always be preferable to disclose the nature of the relationship, because presumably most editorial content of this nature is not going to be produced specifically with the intent of creating a paid advertisement on behalf of the company.

What is equally interesting about the disclosure rule is that it does not require disclosing the origin of the product. The 2010 guide discusses disclosure of products from an advertiser “or someone working for an advertiser,” but only requires disclosure that the product was free, not where it came from.[31] But if a retail store sends you a product, is the retailer “working for the advertiser?”[32]

For example, if the local 7-11 sends you a free package of Double Stuf Oreo Cakesters to try, the local 7-11 presumably works for the national 7-11, who has a contract with a distributor, who has a contract with Nabisco. It’s hard to look at that chain of events and say that your reviewer’s opinion of the new Oreos is due to any relationship with Nabisco.

What editorial staff members need to know

While not every question is answered by the FTC’s current guides, there is enough information in the guides—when coupled with ethical guidelines—to create a few points of guidance that might help inform the editorial side of a publication in determining when and how to make disclosures under FTC rules:

1. Anytime a manufacturer or service provider offers you anything of value that you accept, you must disclose what was provided whenever you discuss the merits of the product or service in question, in any media.

2. Disclosures must appear on the page where the discussion occurs (or in the body of the text itself) and be prominent enough and clear enough for an average reader to understand them.

3. Disclosures must appear any time the qualities of the product or service are discussed, even if the disclosure was made in earlier media when the product was originally discussed.

4. The publication may want to adopt a standard hashtag for paid advertisements or for tweets that mention advertisers. For example, advertisers could be identified with “#SeeTheAd.”

At the end of the day, the best advice for student journalists is one rooted in ethical guidelines: if it makes you uncomfortable to disclose that you got something of value before you wrote about it, online or offline, then you shouldn’t be taking this thing in the first place. If you think it’d compromise your opinion in the eyes of your readers if they knew the relationship, it’s probably not ethical to write about it, even if the likelihood of FTC penalties is remote.

Adam Goldstein is the SPLC’s Attorney Advocate.

Endnotes

  1. Federal Trade Commission, Advertising and Marketing on the Internet: Rules of the Road, December 2000, available at http://business.ftc.gov/documents/bus28-advertising-and-marketing-internet-rules-road.
  2. Id.
  3. Id.
  4. Id. under “General Offers and Claims: Products and Services.”
  5. Federal Trade Commission, Dot Com Disclosures: Information About Online Advertising, May 2000, available at http://business.ftc.gov/documents/bus41-dot-com-disclosures-information-about-online-advertising.
  6. Id. at pp. 1-2.
  7. Federal Trade Commission, The FTC’s Revised Endorsement Guides: What People Are Asking, FTC: Bureau of Consumer Prot., Bus. Ctr. (June 2010), available at http://business.ftc.gov/documents/bus71-ftcs-revised-endorsement-guideswhat-people-are-asking (hereinafter FTC’s Revised Endorsement Guides) at “Don’t these guides violate my First Amendment Rights?”.
  8. 463 U.S. 60, 66 (1983) (note, however, the court ultimately did find that the pamphlets were commercial speech—but not merely because they were sponsored).
  9. See generally Jessica Shannon, Commercial Speech in User-Generated Media: An Analysis of the FTC’s Revised Guides Concerning Use of Endorsements and Testimonials in Advertising, 60 U. Kan. L. Rev. 461, 476 (2011).
  10. Legacy Learning Systems, Inc., FTC Docket No. C-4323 (Mar. 15, 2011) (consent order).
  11. Reverb Communications, Inc., FTC Docket No. C-4310 (Aug. 26, 2010) (consent order).
  12. Society of Professional Journalists, SPJ Code of Ethics, available at http://www.spj.org/ethicscode.asp.
  13. Id.
  14. FTC’s Revised Endorsement Guides, supra n. 7.
  15. National Scholastic Press Association, Model Code of Ethics for High School Journalists at 5.5 (2009), available at http://studentpress.org/nspa/pdf/wheel_modelcodeofethics.pdf.
  16. Id. One wonders whether this is because the guide does not envision the concept of a nominal gift (in which case, there would be no need to qualify that only gifts that could compromise independence or objectivity should be refused) or if, for a student journalist, a free lunch isn’t “nominal.”
  17. Id. at 5.6.
  18. Id. at 5.10.
  19. See 16 C.F.R. Sec. 255, example 6.
  20. See 16 C.F.R. Sec. 255.5, example 2.
  21. See id. at example 7.
  22. See FTC’s Revised Endorsement Guides. See also Shannon, supra note 9, at 475.
  23. FTC’s Revised Endorsement Guides, supra n. 7.
  24. What this means for review CDs is unclear. Typically these are identified as remaining property of the record label; nevertheless, the regular practice is to permit the publications to retain these discs and dispose of them however the publication sees fit. A CD reviewer who takes the copy home, presumably, is as obligated as the movie reviewer who takes a free ticket.
  25. 16 C.F.R. Sec. 255.0(b).
  26. 16 C.F.R. Sec. 255.4.
  27. See FTC’s Revised Endorsement Guides, supra n. 7, at “What about a platform like Twitter?”
  28. See FTC’s Revised Endorsement Guides, supra n. 7.
  29. Id. under “How should I make the disclosure?”
  30. Id.
  31. Id. under “When do the Guides apply to endorsements?”
  32. An even more bizarre series of events would be the speculation surrounding Snooki’s handbag change between seasons of MTV’s Jersey Shore. One commenter noted that Snooki’s change from a Coach bag to a Gucci bag led to widespread Internet speculation that Coach had sent Snooki their competitor’s bag to rid Coach’s brand of any association with her. See Leah W. Feinman, Celebrity Endorsements in Non-Traditional Advertising: How the FTC Regulations Fail to Keep up with the Kardashians, 22 Fordham Intell. Prop. Media & Ent. L.J. 97, 116-17 (2011). In that case, disclosing the origin of the bag without disclosing where it came from could actually mislead consumers.


reports, Spring 2012