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FTC New Media Rules - Companies Beware
Corporate & Business Law Group Update | 12/9/2009

On December 1, 2009, the FTC released revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR 255). Any advertisement must disclose the “generally expected performance” for the product or service. The Guides are expanded to include New Media, such as Facebook, Twitter, YouTube, MySpace, websites and personal blogs.

The Guides require that any material connection between an endorser and advertiser be clearly disclosed in any endorsement , testimonial or advertisement. This would apply if, for example, your company gives away free product samples in exchange for a product review, even if the review is negative. The Guides expand the definition of “endorser” to include individuals, groups, institutions and even employees. If an employee makes a statement on his or her personal blog or Facebook page and such statement is an “endorsement”, both the employee and employer may be liable for any misleading content. The new FTC Guides are particularly important for employers whose employees, sales representatives or independent contractors would receive a direct benefit from the sale of the employer’s services or product.

The advertiser (which now includes employers) must:

1. Establish procedures to advise endorsers of the disclosure requirements
2. Provide training and /or clear obligations regarding compliance with the new requirements
3. Monitor conduct for compliance

Although it is unclear how the FTC will enforce these new Guides, advertisers and employers should prepare policies and training regarding compliance for all endorsers, as well as develop procedures for monitoring endorser conduct.

For any questions regarding the FTC Guides concerning Endorsements and Testimonials, please contact Melissa Sayer or any member of the firm's Corporate & Business Law Group.

For more information regarding the new FTC Guides, please join us for a brief conference call on December 15, 2009 at 9:00 a.m. To participate, please call Dinorah Baker at (805) 988-8337 or email dbaker@nchc.com.

NCHC attorneys Karen Gabler and Melissa Sayer will also present "Are Your Employees Blogging Your Company Into Bankruptcy?", a roundtable on the impact of social media trends upon the workplace and employee liability, at NCHC's Oxnard offices on January 12 and 26, from 7:30 a.m. - 9:00 a.m.

Seating is limited to 22 participants, so please make your reservations promptly. Please confirm that space is available by calling Dinorah Baker at (805) 988-8337 or email dbaker@nchc.com. A continental breakfast buffet will be provided.