Endorsement Deals and FTC Compliance
“A famous athlete has thousands of followers on Twitter and is well-known as a spokesperson for a particular product. Does he have to disclose that he’s being paid every time he tweets about the product?
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Actors, athletes, models, musicians are usually thrilled when an endorsement deal is finalized. They might receive free products, cash upfront or even cash for every tweet that mentions a product. It's rumored Kim Kardashian receives $10,000 a tweet for certain brands she endorses.
In drafting and implementing talent and/or brand endorsement deals, it's important both the brand and talent comply with Federal Trade Commission (FTC) Revised Endorsement Guidelines.
The revised Endorsement Guidelines reflect three basic truth-in-advertising principles:
- Endorsements must be truthful and not misleading;
- If the advertiser doesn’t have proof that the endorser’s experience represents what consumers will achieve by using the product, the ad must clearly and conspicuously disclose the generally expected results in the depicted circumstances; and
- If there’s a connection between the endorser and the marketer of the product that would affect how people evaluate the endorsement, it should be disclosed.
Talent, to protect their integrity, should always use their best efforts to disclose their endorsers. That disclosure becomes tricky in 140 characters on Twitter. If followers understand the talent is being paid to endorse a product, then no disclosure is necessary. What if a significant number of followers don’t know? In that case, a disclosure would be needed. Determining whether followers are aware of a relationship could be tricky in many cases, so a disclosure is recommended.
Also, talent should investigate any product claims before they endorse a product. In 2014 the FTC cracked down on Sensa, L'Occtaine and HCG Diet Direct for deceptive advertising claims. Talent would regret associating with a product or service that runs afoul of the FTC.
Remember, you don't have to be rock-star or pro-athlete to be subject to the Endorsement Guidelines - bloggers and affiliate marketers must also comply.
Texas media and entertainment lawyer Tamera Bennett can answer questions on endorsement deals and FTC compliance.
