Social Media Compliance Policy and the FTC

Many companies have internal social media policies. Most of these policies are taken from templates online, and many social media compliance policies tend to be created by corporate counsel. What many don’t realize is that corporate counsel may not be experts in social media law, social media compliance and social media regulation. The policy challenge can be one of the largest challenges inside of any corporation as it is a multi-tiered process that needs to include many players (HR, marketing, C-levels, IT, and the CFO.) Each department has opinions and may want to lead the direction of the policy creation and have input on how that policy will be enforced. In order to create and manage truly effective policy, you need to get everyone in the room alongside experts that include social media managers (not internal, but external consultants) compliance officers, counsel, and IT risk audit professionals.

The next step after coordinating the key players, is analyzing what controls are in place at the moment and creating policy that reflects these controls. Also included in the policy are any new controls that will be put in place, but this comes only after analyzing the current situation. It is best to create a CUSTOM policy (not a template policy stolen from another high-profile company). The policy must make sense for how you use and need social media. All of this policy creation must be thought about carefully, and any new updates to social media laws must be kept in mind.

For example, in October of 2009, the FTC came out with changes to guidelines that affect all advertising, blogging and social media. Becoming knowledgeable about how the FTC views adherence to FTC compliance can only benefit a corporation and save them lots of headaches, time, and money in the long run. Many companies and individuals are curious about how the FTC views the following categories: FTC endorsements, FTC social media, FTC Facebook, and FTC Twitter. Any social media platform will be viewed and must abide by regulations. It does not matter whether someone is participating in social media on behalf of a corporation’s marketing department, an employee within the corporation, or just an outside individual. One thing to remember is the FTC is the governing body that monitors these regulations and there are other layers depending on the subject matter. For example, in the financial industry you must also abide by FINRA regulations and within the medical industry you also have the layers of FDA regulation. To touch on the FTC changes, here are five basic things you need to know about FTC compliance. When there is a reference to “advertisement” this would include any type of static post on a social media platform.

FTC Guides Governing Testimonials

Advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. There is no more safe harbor using the disclosure “results not typical.” In the past, this disclosure allowed advertisers to describe unusual results in a testimonial. This is no longer the case. Also, a company needs to make sure that the actual published results are documented and can be retrieved easily if asked. Testimonials also need to be current and not outdated.

Disclosing Material Connections

The term “material connections” means that there is some type of an exchange of payment or free products between the advertiser and the endorser. An example of an endorser could be a blogger or other “word-of-mouth” marketer. If there are connections that a consumer would not expect, then the material connection must be disclosed. The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Bloggers who make an endorsement must  disclose the material connections they share with the seller of the product or service. The key here is transparency. The FTC wants better transparency between the customer, the company and the endorser.

False and Misleading Claims

Like any other advertisement, an endorsement is considered deceptive if it makes false or misleading claims. The relationship between the endorser and the company must be disclosed or else the practice is considered deceptive.

Company Sponsored Research

If a company refers in an advertisement to findings of a research organization, the advertisement must disclose the connection between the advertiser and the research organization.

Advertiser Responsibility

Advertisers are no longer off the hook when it comes to any type of affiliate or entity speaking on behalf of their products. A company is liable for any claims made by anyone who is indirectly advertising on behalf of the product. As a company you must have controls in place to monitor this third party activity.

There are also other details included in the Act, and companies must take the changes to the guideline seriously. You can find the entire guideline on the FTC site here.

Now that you have some knowledge of some of the FTC endorsement guidelines, you must fully equip yourself with how this affects your company’s marketing goals. The next important step in the process is training. All internal employees need proper training first to understand the company’s stance on social media and also training on the applicable social media tools that may affect a job’s position. And good training goes beyond “sign this new policy.” Good training sets REAL examples that resonate with everyone on your team and cross over to other departments.

We work with companies big and small to create thoughtful policy that is presented in intriguing and interesting ways to keep your company and your team out of regulatory trouble.

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