ADventures in Law

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The topic of material disclosures was a running theme at this year’s NAD Conference. Following the one-year anniversary of the FTC’s updates to the <a href="https://www.federalregister.gov/documents/2023/07/26/2023-14795/guides-concerning-the-use-of-endorsements-and-testimonials-in-advertising" target="_blank" rel="noreferrer noopener">Endorsement Guides</a> (Guides), NAD staff shared how they were applying and adjudicating the new guidance.

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<strong>Disclosure, Disclosure, Disclosure</strong>

As the title of one of the panels on influencers and disclosures suggested, not much has changed with the updates. However, NAD seems keenly focused on how disclosures are made on various platforms and whether such disclosures are adequately designed to follow the endorsements as they are reposted across various social media platforms.

Although use of a social media platform’s “paid partnership tools” is helpful (and often required by the platform itself), NAD made clear that such tools are currently insufficient to satisfy advertiser material disclosure requirements under the Guides.

First, the “paid partnership” tag does not always appear “above the fold.” This makes such disclosures easy to miss and avoidable – a violation of the updated Guides.

Second, while a “paid partnership” tag may be clear and conspicuous on the content when it is originally published, those tags do not always travel with the content when it is reposted to another platform (or even reposted on the same platform to another page). This means that in the absence of additional disclosures (e.g., #brandpartner and an audio disclosure, if the content is a video), the endorsement would contain no disclosures, and a consumer may not understand the material connection. &nbsp;

Third, simply including a “paid partnership” tag is insufficient if the sponsor (brand) itself is not clearly disclosed in connection with the promoted content. &nbsp;

As advertising content blurs with editorial content in the “advertorial,”&nbsp; NAD emphasized that the onus is on the advertiser to make the required disclosures about the sponsor of such content when that content is paid advertising and not independent editorial content. If the content has been paid for or incentivized by an advertiser – regardless of the format such content may take – material disclosures still apply, and the advertiser will be held responsible for the lack thereof.

NAD also previewed that it was increasing its internal monitoring program of brands and influencers alike to ensure that adequate disclosures were being made in connection with all forms of advertising.

Bottom Line: (1) make sure you are contractually obligating your influencers, endorsers, and brand partners to disclose their material connection to the brand clearly, conspicuously, and unavoidably in any/all posts on social media or websites, and (2) make sure you have a sufficient system in place to monitor such compliance.

NAD Conference Recap: Who’s Your Sponsor?