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Tech

Tired Of Bogus Twitter Ads? The FTC Is Still Figuring That Out

As the marketplace shifts from brick-and-mortar shops to online retailers, so shift the advertising techniques that get you to click “buy.” Door to door flyers might be a thing of the past, but ad-folk are still finding ways to sneakily use social...

As the marketplace shifts from brick-and-mortar shops to online retailers, so shift the advertising techniques that get you to click "buy." Door to door flyers might be a thing of the past, but ad-folk are still finding ways to sneakily use social media and user generated review sites to inundate consumers with ads. While user generated blogs and reviews have created a forum for transparency (for the people, by the people) they have also provided a temptation for fabrication and deception. Companies can pump up reviews on Yelp, they can pay employees to disparage competitors, lure consumers by promising free products in exchange for positive reviews or use .5 font to state "results not typical."

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In 2009, the Federal Trade Commission (FTC) set out revised guidelines for testimonials in advertising, spurred on by the growing trend of bloggers writing reviews in exchange for free products. The guidelines (PDF) sought to require disclosure where an online reviewer (or any testimonial) was connected to the retailer.

The guidelines state that "[e]ndorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser."1 The revisions indicate examples of potential deceptive practices in online advertising, one of which considers "a blogger who receives cash or in-kind payment to review a product" as an endorsement. While the guidelines recognized a mounting fear of fabrication and manipulation in user reviews, they say nothing about disclosure on posts to Facebook, Yelp, or Twitter.

The regulations do state that endorsements from consumers should be free from deception, and connections to the retailer that "might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed."2 It's not at all clear what this means for social media sites, and it doesn't take an attorney to see that "might materially affect" is an incredibly malleable phrase.

In the context of celebrities, we might not worry as much because we assume any company they speak about is paying them to do so. For example, if Michael Phelps, a seasonal spokesman for Subway, tweets that he is "loving my 5-dollar-footlong," he might not even need to disclose it as an ad because we all know Phelpsy can't get enough of that black forest ham he’s paid to like. But what if Phelps, who is also sponsored by Omega Watches, tweets "Decided to do some laps with my killer new @Omega watch, finished 100M free in my fastest time yet." It is not as readily apparent that Phelps was paid to say this, or if it was him just being honest, or even him just looking for a retweet from the company. But if he was paid to say it, the FTC requires a disclosure.

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But it’s not just celebrities that the FTC is worried about. Imagine a restaurant that gives you a free bottle of wine when you "check-in" on Yelp. Arguably, "checking-in" is a person's endorsement of the restaurant, which was procured by the promise of some house red. Does your post need to be accompanied by an explanation that you actually checked-in because you got a discount? The FTC's position seems to be yes — you need to disclose anything that affects the credibility of your endorsement, although, again, it could be argued that checking in isn’t clearly a positive review.

Who will believe or care about the fact that "@JoeRogan lost 50lbs using Weight Supreme #resultsnottypical"?

Over the last few years, the FTC has pressed actions against companies who have failed to disclose that certain reviews were created by their own employees, or for outright hiring third parties to write positive reviews about their products. In January 2012, questions arose as to the legality of a Kindle cover retailer who offered to refund the purchase price of the product if the consumer left a 5-star review on Amazon.com. Amazon busted these jokers pretty quickly, but the FTC has yet to weigh in on whether the sin would be purged simply by stating "Full disclosure: I'm getting paid to give a 5-star review," which would still allow the company to bump up its star rating.

Twitter presents a particular conundrum, because posts are limited to 140 characters. With such precious little space to spew forth advertisements, tweeters must come up with a way to conspicuously display that the tweet is a paid endorsement. The problem is that it's pretty unreasonable to expect people to use their last 20 characters to say "Results not typical" or "paid advertisement." The FTC has yet to indicate what specifically needs to be said, but perhaps hashtags will ubiquitously take over as disclosure devices. Celebrity endorsers might save a few characters at the end of a tweet to say #paid or #ad.

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When the FTC Endorsement Guidelines were drafted in 1980, social media was not addressed. Thus the FTC has tended to focus on consumer protection and deceptive practices, such as falsely advertising health benefits of a product, or engaging in anti-competitive activity. But truth in advertising is important in all forms of media, and as that landscape changes, the FTC is slowly reacting to new platforms for endorsement. The regulations were only drafted in 2009, so the FTC is still ironing out the wrinkles, but its lumbering actions have already caused many bloggers to seek shelter so as to avoid any penalties. In the end, the FTC may not be targeting bloggers, but rather trying to ensure that consumers are given as much relevant information as possible.

Much to the chagrin of advertisers, social media marketing loses its edge when it's presented as a blatant advertisement; the post becomes impotent. Just think of the paid ads on Google; my Russian grandmother wouldn't even click on those. So who will believe or care about the fact that "@JoeRogan lost 50lbs using Weight Supreme #resultsnottypical"?

Since a bold disclosure can be like a kiss of death, advertisers will likely cut every corner possible to avoid hashtags like #paidad or #disclosure. Currently, the most common method to disclose a tweet is either #ad, or to simply include a link to the product website, where there is a disclosure page. Until the FTC weighs in on this, I will just assume that #ad is enough of a disclosure, and that people are smart enough to steer clear of any tweet that ends in it.

1 16 C.F.R. § 255.1

2 16 C.F.R. § 255.5