At the end of June 2023, the Federal Trade Commission, the US regulator for advertising rules released an updated version of its Guides Concerning the Use of Endorsements and Testimonials (also simply known as the “Endorsement Guides”). The updated Guides include various important changes to the guidelines that the FTC enforces with advertising on social media.

Here are some of the most important changes to the guidelines that brands, influencer marketers, and creators need to be aware of: 

Catching up with the social media age

Until the recent update in June, the Endorsement Guides hadn’t been refreshed since 2009, before social media and influencers needed to be considered. So the updated guidelines are effectively catching up with the reality of today’s advertising landscape.

The central principle of the (new and old) Guides is that if there’s a “material connection” (eg. a sponsorship deal) between someone and a brand because they are “endorsing” said brand (eg. a social media creator discussing a product they were paid to promote in their content), that would affect how consumers who are exposed to the endorsement would evaluate it. This connection should be disclosed.

So what’s actually changed? 

The original central principle still stays the same, however, some extra clarifications have been introduced: 

1. “Clear and conspicuous” disclosures on social media posts:

A disclosure must be “clear and conspicuous”, which means that the disclosure must be easily understandable, and as far as social media advertising is concerned, be “unavoidable”.

This approach isn’t new as such. Back in 2020, the FTC sued Teami, a company that sells teas and skincare products as the company had worked with a large number of Instagram influencers where the ad disclosure in the sponsored content wasn’t viewable to social media users unless they clicked the “read more” option below the posts. This scenario (hiding a disclosure behind the “read more” fold of a social media post) has been included in the FTC’s examples of disclosures that fall short of being “unavoidable”. It has also clarified that simply relying on the “Paid partnership” feature on social media platforms as the ad disclosure is insufficient.

2. “Endorsements” include more scenarios than before:  

The FTC’s understanding of "endorsements" has been expanded to make it clear when they also include fake reviews, endorsements by virtual influencers (so 3D-animated or AI influencers for example), and tags in social media posts.

3. “Intermediaries” are now clearly defined: 

The FTC has also added clarity to the previously undefined term of “intermediaries''. This now means entities such as advertising agencies and PR firms, who may be liable for participating in or facilitating misleading ads involving endorsement or review practices outlined in the Guides.

What does this all mean for Influencer Marketers? 

• Including #ad in the caption of a TikTok is not enough

It needs to be overlaid in the video itself (and/or included as a voiceover). The method of the specific endorsement will determine how to disclose it. Audio disclosure may also be necessary where the influencer verbally mentions the product and/or brand. 

• A post doesn't have to mention anything positive about the brand to be considered an endorsement 

Simply posting a picture of a product will suffice. Equally, posting something negative about a competitor of the brand you’ve been paid to endorse (i.e. "de-influencing") requires disclosure.

• Influencer agencies are directly responsible for compliance with the Guides

Complying with the Guides may result in liability for an influencer marketing agency that is mediating between a brand and an influencer and therefore directly implicated in the production of misleading content. The FTC can impose fines on liable parties but also take other actions like order takedowns of the non-compliant posts (which can obviously derail a campaign for a brand and reflect negatively on an agency). 

Let’s round things up

The updates aren’t totally new, because the FTC has been applying the principles now encoded in the updated Guides for some time in its enforcement action and rulings. But the fact that they’ve been set in stone - that’s new!

We note that the updated Guides certainly bring helpful clarity to the FTC’s enforcement principles, but some areas have not been entirely clarified and remain to be expanded on in future action by the FTC, such as situations where a brand sends a creator free product, but there is no expectation for the creator to post about it. But overall, this is a step in the right direction for Influencer Marketing regulation. For a deeper understanding of the new Guides, it is also worth visiting the “Questions People Are Asking” page published by the FTC, which acts as a companion resource to the official Guides and discusses various questions received from the public on navigating the new guidelines.