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It started as one of those “run it up the flagpole” ideas to enlist big-name gymnasts to promote a brand of mosquito repellent just as news stories about the 2016 Brazil Olympics were sounding warnings about the Zika virus. Public relations firm Creaxion Corporation and specialty sports magazine publisher Inside Publications used a variety of digital strategies on behalf of the brand: athlete endorsements, social media posts, “advertorials,” and consumer reviews. But according to the FTC’s complaint, their efforts violated established FTC advertising principles. Which of those strategies are you using? And are you avoiding legal pitfalls by making appropriate disclosures?

Creaxion exhibitsCreaxion – an Atlanta-based marketing and PR company – was approached by client HealthPro Brands to help launch its mosquito repellent. They agreed Creaxion would produce a “strategic media relations campaign” that would be “tied to the worldwide outbreak of the Zika Virus.” Creaxion then contacted Inside Publications, publisher of magazines like Inside Volleyball, Inside Cheerleading, and Inside Gymnastics, to broker a partnership with HealthPro.

You’ll want to read the complaint for details about the “Social and Digital Media Activation and Athlete Engagement” agreement between HealthPro and Inside Publications, but here are some of the things HealthPro paid for: endorsements by leading gymnasts, magazine “articles” featuring the repellent, the product’s placement in “Good Luck” gift baskets from Inside Gymnastics to top U.S. gymnasts, and social media posts touting the product by Inside Publications and athlete endorsers.

According to the complaint, Creaxion president Mark Pettit acted as an intermediary between Inside Publications and HealthPro. Ultimately, 2004 Olympic gold medal gymnast Carly Patterson Caldwell agreed to become a paid spokesperson. She received several thousand dollars for social media posts and an Inside Gymnastics advertorial. (She decided not to attend the Brazil Olympics because of her concerns about Zika.) Olympic gold medal gymnast Jake Dalton also signed on and was paid for promoting the repellent to his fans and followers.

The two gymnasts posted endorsements of the repellent on social media without disclosing their paid promotional relationship. For example, Ms. Patterson Caldwell said on Facebook, “I was definitely bummed to have to make the decision to not go to Rio for the summer Olympics because of the threat of the Zika virus, but working on starting a family and being safe and protecting myself was way more important to my husband and me! I am so thankful to have found a safe and organic product (FIT Organic) that will ease my worries as mosquito season approaches.” Similarly, Mr. Dalton posted on Twitter, “Getting Rio Ready! Not worried about Zika. Fit Organic has my back and body covered. Love the Fit mosquito repellent.”

Inside Publications also posted and reposted statements on social media about the repellent, primarily through its Inside Gymnastics account, including some featuring Patterson Caldwell and Dalton. According to the complaint, Inside Publications didn’t disclose the spokespersons’ paid promotional relationships with HealthPro or that its own posts were paid ads. Nor did it disclose that the “Caring for Carly,” “The latest on Zika” and “Move Over Mosquitos” articles were really paid ads.

The FTC also says Creaxion conducted an online consumer review program that reimbursed Creaxion employees and “friends” for buying FIT repellent and reviewing the product online without disclosing their affiliation with the brand.

The complaint charges that the gymnasts’ statements about the repellent were falsely represented as the independent experiences of impartial users, rather than paid endorsements. In addition, the FTC says that Creaxion’s online review program created the false impression that some of those five-stars reviews had been posted by regular users of the product, when they had actually been posted by people with a material connection to Creaxion, including company president Pettit himself. The FTC also alleges that the social media posts by Inside Gymnastics and other Inside Publications magazines and the articles mentioned above were falsely represented to be independent statements by impartial publications, when in fact they were ads.

The proposed settlements with Creaxion and Inside Publications prohibit misrepresentations about the status of any endorser or reviewer, require the clear and close-by disclosure of any unexpected material connection, and prohibit any misrepresentation that paid advertising is coming from an independent or objective publisher or other source. In addition, the respondents will have to implement an effective program for monitoring what endorsers are doing on their behalf. The FTC is accepting public comments about the proposed settlements until December 13, 2018.

Before working on your next digital campaign, here are some points to ponder.

Don’t assume Section 5 compliance is someone else’s responsibility. In evaluating liability for any allegedly deceptive marketing campaign, who did what is a fact-specific inquiry. The complaint discusses in detail the roles that Creaxion and Inside Publications played in creating and disseminating what the FTC says were misleading representations. Also notable is that the complaint names Creaxion CEO Mark Pettit and Inside Publications owner Christopher Korotky individually.

Disclose connections clearly. As the FTC Endorsement Guides establish, if there is a “material connection” between an endorser and advertiser – in other words, a connection that might affect the weight or credibility that consumers give the endorsement – disclose it clearly. That standard doesn’t go out the window just because a person (let’s say a well-known athlete) is in the public eye. Unless it’s clear from the context it’s a paid endorsement, disclose the connection. Read FTC’s Endorsement Guides: What People Are Asking for a compliance refresher.

Is it news or is it an ad? The FTC has been challenging misleading formats for close to a century, so it’s not news that paid ads shouldn’t mimic the look of independent content. As the Commission’s Enforcement Policy Statement on Deceptively Formatted Advertisements puts it, “advertising and promotional messages that are not identifiable as advertising to consumers are deceptive if they mislead consumers into believing they are independent, impartial, or not from the sponsoring advertiser itself.”

Eschew the skewed review. Online reviews can be a great source of information for prospective purchasers, but not if marketers tout a product without disclosing their connection to the brand. This isn’t the FTC’s first allegation of “insider rating.” Savvy professionals train their staff to avoid this deceptive practice and educate their affiliates, too.

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