The Federal Trade Commission updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising to require employees to disclose their employment relationship when “endorsing” their employer or the employer’s goods or services, or even defending the employer online. The “Endorsement Guides” have real implications for employers in today’s Web 2.0 world, where CEOs blog, customer-service representatives tweet, and everything in between. If you’re not familiar with the endorsement guides, you can get up to speed by reading this post, Another Reason Employers Need a Social-Media Policy: New FTC Regulations.
In that post, I cautioned readers that the FTC appeared to mean business with these rules and that we could expect some enforcement efforts shortly. Looks like I wasn’t far off–and Ann Taylor Loft has the unlucky honor of being the first high-profile enforcement story.
Mashable.com reported this about the incident:
Ann Taylor invited bloggers to preview its Summer 2010 LOFT collection, promising attendees a “special gift” and entry into a “mystery gift-card drawing” for those who submitted [blog] posts to the company within 24 hours of the event. Ann Taylor avowed to reveal the value of the gift cards, which ranged from $50 to $500, to bloggers after receiving their posts. . . .
A sign was posted at the event advising bloggers to disclose the proffered gifts, however the FTC expressed concerned about the number of bloggers who actually saw the sign.
The Endorsement Guides states that bloggers must disclose “any material connections they share with the seller of the product or service” when writing about it. Failure to comply can carry a hefty penalty, including a fine of $11,000 for disclosure violations. FTC has indicated that it’s not as interested in the individual bloggers as it is in the organizations and brands whose goods and services are being endorsed. Ann Taylor received a letter but no fine was issued.
Employers should be proactive with social media, especially if making a conscious effort to encourage employees to engage online for their employer. Even those organizations that do not necessarily encourage employees to participate in online brand building should review their social-media policy and follow up with meaningful education of employees to ensure compliance.