Business Blog
FTC-FDA warning letters: Influential to influencers and marketers
The FTC and FDA just sent warning letters to four sellers of e-liquids, the nicotine-laced liquid used in vaping. But even if you don’t have clients in that industry, keep reading. The letters have a lot to say about social media marketing and influencers, regardless of the products they pitch.
What kind of ads do the warning letters address? That’s where it gets interesting. The FDA and FTC sent the letters to companies whose flavored e-liquids are featured on other people’s Facebook, Twitter, and Instagram accounts.
The warning letters explain FDA’s position that under the Food, Drug & Cosmetics Act, the social media posts are ads or labeling on behalf of the companies receiving the warning letters. Because the posts don’t include the FDA-required warning that the promoted e-liquids contain nicotine, an addictive chemical, FDA determined that the featured e-liquids are misbranded.
From the FTC’s perspective, the FTC Act’s prohibition on unfair or deceptive practices includes the failure to disclose material health or safety risks in advertising. According to the staff letter, “Given the significant risk of addiction, failure to disclose the presence of and risks associated with nicotine raises concerns that the social media postings could be unfair or likely to mislead consumers.”
The warning letters raise a related FTC issue about the use of influencers in social media marketing. According to the FTC’s Endorsement Guides, if there is a “material connection” between an endorser and the marketer of a product – in other words, a connection that might affect the weight or credibility consumers give the endorsement – that connection should be “clearly and conspicuously” disclosed. Examples of material connections include business, family, or personal relationships, cash payments, or free products.
Furthermore, the wording of the disclosure should be unambiguous and consumers should be able to notice it easily – a consideration that requires careful thought on social media platforms. For example, consumers viewing posts in their Instagram streams on mobile devices typically see only the first two lines of a longer post unless they click “more.” Therefore, the disclosure of a material connection between a marketer and an endorser should appear above the “more” button. Another consideration in social media is hashtag overload – multiple tags or links that readers may just skip over #especially #at #the #end #of #a #long #post. It’s unlikely that hashtags displayed that way meet the “clear and conspicuous” standard.
The letters direct the recipients to get back to the FDA and FTC within 15 days. But other companies can glean some takeaway tips now from what the two agencies have said.
Comply with all legally mandated advertising requirements even if you’re promoting products through social media posts. Whether you’re advertising tobacco products or any other item, the burden is on you to ensure legal compliance.
If you use social media marketing, it’s wise to have a written policy in place. The worse time to consider your company’s approach to advertising in social media is after the fact. The better approach is to think through your practices, put your policies on paper, make sure the employees who handle your social media accounts are clear on the dos and don’ts, and educate influencers who act on your behalf. What should your policy include? Certainly the disclosure of material connections. For other considerations, consult The FTC’s Endorsement Guides: What People Are Asking and resources on our Endorsements page.
Monitor what endorsers and influencers are doing on your behalf. Advertisers are responsible for monitoring what endorsers and influencers are doing to promote their products. If their posts don’t include required disclosures, if they aren’t making those disclosures clearly, or if they’re conveying misleading or unsubstantiated claims about your products, don’t sit on the sidelines. Insist on corrective steps or cut them loose.
FTC law applies to endorsers and influencers, too. The Endorsement Guides and decades of caselaw establish that the FTC Act is broad in scope. Endorsers, influencers, and other marketing partners shouldn’t assume legal compliance is someone else’s job.
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