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2024 ADventures in Law CLE Webinar Series: A Closer Look at the FTC’s Final Rule on Consumer Reviews and Endorsements

James Sherer Presents at PLI’s Trial Evidence 2024

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AD Nauseam: We Give This Podcast 5 Stars – A Closer Look at the FTC Rule on Consumer Reviews and Testimonials

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Congress Faces Pre-election Budget Vote to Avoid Government Shutdown

<img decoding="async" loading="lazy" class="alignright wp-image-5452" src="https://adttorneys.bakerhostetlerblogs.com/wp-content/uploads/sites/33/2020/05/cell-phone-mobile-GettyImages-832158646_1200x630_72dpi.jpg" alt="" width="438" height="230" />If you learned a new dance routine, tie-dyed clothing, made whipped coffee or took part in a “challenge” while staying safely at home during the COVID-19 pandemic, you probably have TikTok to thank. TikTok, which has more than 800 million active users, became the go-to social media platform to keep people engaged and entertained while stuck at home. Understandably, brands and their marketing teams quickly learned how to incorporate TikTok into their social strategies. As with any new platform, there was a bit of a learning curve to ensure compliance with the Federal Trade Commission (FTC)’s <a href="https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-publishes-final-guides-governing-endorsements-testimonials/091005revisedendorsementguides.pdf">Guides Concerning the Use of Endorsements and Testimonials in Advertising</a> (the FTC Guides). A recent National Advertising Division (NAD) monitoring case, however, sheds some light on best practices when engaging influencers on TikTok.
NAD brought the monitoring case against a consumer goods company (the Advertiser) in relation to a TikTok influencer campaign for a line of paper towels. The influencers took part in a dance challenge using cleaning-themed music and featuring the Advertiser’s paper towels in the background of the video. Importantly, NAD found that the influencers adequately disclosed their material connection to the Advertiser through a #BrandPartner hashtag (“Put another way, consumers viewing the TikTok videos on TikTok would understand that the influencers are being compensated . . .”), as is required under the FTC Guides. The issue, interestingly, had nothing to do with sharing the videos on TikTok at all. Instead, NAD found that when these videos were shared on other social media platforms, the material connection disclosures were sometimes stripped from the videos because they were platform overlays and not embedded in the videos.
The Advertiser explained the “disclosure loophole” created when TikTok users share their content on other platforms. TikTok is unique in that the user can strip away contextualizing text or disclosures prior to sharing the content on another platform. To do this with content first created on other platforms, users would have to use a third-party app. Thus, in order to avoid losing the material connection disclosure for TikTok videos shared on other platforms, NAD would recommend that advertisers require their influencers to embed the disclosure in the video itself. This is one of the first instances where we see in practice the FTC’s admonition to make sure any needed disclosure travels with the content as it goes viral and is shared. This was a concept discussed in the <a href="https://www.ftc.gov/tips-advice/business-center/guidance/native-advertising-guide-businesses">Native Advertising Guides for Business</a>. The NAD’s recommendation would essentially hardwire disclosures into place. This situation also points out another potential weakness in platform disclosure tools. The <a href="https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking#onlinereviewprograms">FTC has looked upon these tools with skepticism</a>, largely over concerns with whether the auto-disclosure is clear and conspicuous. If the platform disclosure stays with the platform, this is another, potentially bigger, failing.
Takeaways: Without a material connection disclosure – in other words, a disclosure that there is a paid connection between the influencer and a brand, that the influencer received free product in exchange for creating the content or that the person featured in the content is a brand employee, for example – consumers may not understand that the video they are viewing is commercial in nature. Furthermore, the FTC and NAD are concerned that in the absence of a disclosure, consumers are unable to factor in the material connection when assessing the weight or credibility of the influencer’s endorsement. Thus, the FTC Guides and NAD precedent require that the material connection disclosure be made clearly, conspicuously, and in a manner consistent with the type of content and the platform on which the content appears. This monitoring case reminds advertisers that it is not enough to have a disclosure; it is also necessary to make sure the disclosure sticks with the content. The best practice for video content is to embed the disclosure in video content to ensure it is maintained across platforms. For other content, take a close look at whether there is an ability to share the content on other platforms and if so, whether the disclosure stays put or needs some added staying power.

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ADventures in Law

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NAD Clarifies Material Connection Disclosure Requirements for TikTok Videos Gone Viral

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