FTC Provides Guidance to Social Media Influencers in Live Twitter Chat

Influencer marketing is the popular practice of using individuals with large social media audiences—known as “influencers”—to advertise products and services through their social media accounts. The Federal Trade Commission (FTC) has made it clear that influencers must clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media. To emphasize this point, the FTC sent letters to 90 influencers and marketers earlier this year reminding them of their obligation to make appropriate disclosures on ads. The FTC has also provided Endorsement Guides with answers to frequently asked questions from advertisers, ad agencies, bloggers, and others.

Most recently the FTC hosted a live Twitter chat to answer questions and provide guidance on influencer marketing. The FTC covered a number of topics during the chat, from the use of the hashtag “#ad” as a disclosure to built-in disclosure tools on popular social media platforms. Key takeaways from the Twitter chat are:

  • Using “#ad” is a sufficient disclosure, as long as it is hard to miss in the post.

  • Even if an influencer posts from abroad, U.S. law still applies if it is reasonably foreseeable that the posts will affect U.S. consumers.

  • Built-in tools such as the “Paid” tag on Facebook and “includes paid promotion” mark on YouTube are not sufficient to disclose that a post is an ad.

  • For Snapchat and Instagram posts, the FTC suggests superimposing a disclosure over the images. For a series of images, a disclosure on the first image may be sufficient, as long as it stands out, and viewers have time to see it.

The Twitter chat followed shortly after the FTC announced its first settlement with two social media influencers, Trevor Martin and Thomas Cassell, for endorsing the online gambling service CSGO Lotto without disclosing that they were the owners of the company, as well as paying other well-known social media influencers to promote the company without requiring them to disclose the payments in their posts.

Click here to read a transcript of the questions and the FTC’s responses during the official Twitter chat.

This post was written by Edward J. McAndrewPhilip N. YannellaKim Phan & Roshni Patel of Ballard Spahr LLP Copyright ©
For more legal analysis go to The National Law Review

#ShowMeTheMoney: Sofia Vergara’s Settlement of Social Media False Endorsement Lawsuit Highlights Modern Legal Issue

Social Media false endorsementLast month, Sofia Vergara, star of ABC’s Modern Family, reached a settlement in a lawsuit brought by the actress against beauty company Venus Concept for alleged improper use of her likeness on television and in social media, which Vergara alleged created the false impression that she endorsed the Venus Concept brand or its treatment products. In the lawsuit, Vergara claimed $15 million in damages.

The origin of the dispute dates back to 2014, when Vergara posted a selfie to her WhoSay account (an Instagram-like social media app) during a “skin tightening” massage with the Venus Legacy machine. The posted image featured a close-up of a portion of Vergara’s face, with a massage technician using the machine on her lower back, and a large poster of Marilyn Monroe’s laughing face hanging on the wall in the background. In the post, Vergara included the caption “What is so funny Marilyn?? Legacy massage at @drlancerrx.”

Venus Concept later used the photo during a television segment on the show “Extra!,” and posted it to several social media pages, using captions such as “Loved by bombshell actress Sofia Vergara[,]” which, in her suit, Vergara alleged made it appear like she endorsed the massage treatment. However, according to her claims, Vergara thought the treatment was a “waste of time and money with little in the way of any results” and that she “would not use it again and certainly would not endorse it nor agree to appear in an international advertisement campaign to promote it.”

Vergara, alleged to be the highest-paid woman in television, claimed she in the past made $15 million for endorsement deals, and therefore sued Venus Concept (and various affiliated companies) for that exact amount, i.e., what she allegedly would have been paid for an endorsement. Previously, Vergara has appeared in campaigns for such brands as CoverGirl, Diet Pepsi, Kmart, Comcast Xfinity, State Farm, Rooms To Go, Head and Shoulders, and Quaker Oats.

While the lawsuit did not reach a final ruling on the merits (and the settlement amount is undisclosed), the case is yet another illustration of the very real modern phenomenon of implied false endorsement litigation surrounding companies’ use of celebrities’ image, likeness, or work in social media promotion or advertising. For example, in 2015, the pioneering hip-hop group Beastie Boys successfully sued Monster Energy based on the beverage company’s unauthorized use of certain Beastie Boys songs in an online promotional video. The Beastie Boys claimed false endorsement and copyright infringement after the montage of Beastie Boys hits was posted on YouTube and Facebook. The Beastie Boys have long declined to license their music for use in advertisements, and, similar to Vergara’s claim, maintained that use of their songs without permission in Monster’s online commercial gave the consuming public the false impression that they endorsed Monster, its advertising campaign, or its products.

The omnipresence and popularity of social media platforms such as Twitter and Instagram have led to a sea change in how brands and advertisers seek to reach consumers, with paid (but not always disclosed) social media endorsements by celebrities and athletes driving consumer demand for products like never before, as well as the creation of a cottage-industry of “social influencers,” namely, aspirational fashionistas, models, or musicians, paid by brands to endorse particular products via social media due to the volume of their Instagram account followers. Indeed, partnering with such popular social media content creators is now one of the most effective ways for brands to reach and engage with consumers who spend hours each day on social media platforms and look to top Instagram influencers to make purchasing decisions.

In that past, celebrity false endorsement suits often involved an advertiser imitating a celebrity’s likeness or voice to sell a product without that celebrity’s consent, to create the impression of some association with that celebrity; in those cases, the advertisers were the creators of the allegedly problematic content. However, as the Vergara case illustrates, in this modern social media landscape of re-tweeting and re-posting, brand owners may still face liability even if they are not the creators of the content, and celebrities are keenly aware of the value of a paid social media endorsement. Merely reposting a celebrity’s Instagram account (or a paparazzi photo), even if well-intentioned, may open a brand owner up to a false implied endorsement claim if consent of the celebrity is not first obtained.

Under Lanham Act case law, a false implied claim is one that may be literally true but nonetheless deceives or misleads consumers by its implications. The FTC’s “Guide Concerning the Use of Endorsements and Testimonials in Advertising” defines endorsement as any advertising message “that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.” A celebrity’s unpaid mention or use of a product in a social media post is certainly valuable to a brand owner as a “free” endorsement. And it may be tempting for brand owners to immediately re-post a celebrity’s social media account which features or seemingly approves of that brand owner’s product. But, as the Vergara case illustrates, consideration needs to first be given to the implications of re-posting the celebrity’s account, and any related captions or editorializing, so as to not create the impression of endorsement, authorization, or sponsorship by the celebrity without his or her prior consent.

Copyright © 2017, Sheppard Mullin Richter & Hampton LLP.

Social Media Policy Checklist For Employers

Social Media PolicyA social media policy or a set of guidelines helps your employees make smarter decisions when marketing your brand, products and services online and may mitigate the risk of coming under the radar of the FTC or another regulatory agency or simply avoiding bad PR.

Key Players.  Legal should play a key role in creating a social media policy or set of guidelines, but it is wise to involve personnel from marketing, IT, and HR.   Also consider including representatives from a selection of departments to get valuable input from employees that the policy is intended to guide.

Identify and Evaluate.  Before drafting a social media policy, the key players must carry out internal due diligence.

  • Identify and evaluate the categories of confidential information that your employees have access to and may inadvertently share on social media.
  • Identify and evaluate the type of content that employees post on social media platforms.  Is the content generally created in-house?  By an ad agency?  From other third-party sources?  Are social media campaigns usually text-only or do they include photos, music, videos, endorsements?  Understand the legal issues associated with posting content online.
  • Identify and evaluate other legal risks associated with the use of social media in your business, including third-party terms of use, employment laws, privacy claims, securities laws and other laws that may be triggered by the use of social media by employees. For example, the National Labor Relations Board has found overly restrictive social media policies to violate employees’ protected rights.

Purpose and Scope.  The policy should reflect the type of social media engagement that your company and employees actually use.  For example, does your company maintain a Facebook® page or a blog?  Use LinkedIn® to post articles?  Run promotions on Instagram®?  Do your employees use personal social media accounts to post on behalf of the company or only employer-created accounts?  The answers to these questions will affect the types of social media guidelines that you should create for your employees.

Be Practical, Positive and Consistent.  The policy should be easy to read and interpret.  The intent is not to discourage social media use, but to make use smarter.  Try to phrase the guidelines as things employees “can” do rather than cannot do.  Use terms that employees engaged in social media will understand.  For example: avoid using terms from the Copyright Act such as “reproduce, distribute or display,” and instead use “post, tweet or pin.”  The policy should also match the general values and culture of your company and the other policies that you may have in place that overlap with social media policies.

Training.  Training is essential.  Do not just add the policy to the employee handbook and hope that your employees will read it.  Explain why social media guidelines are important to the company and the company’s reputation and relationship with customers, vendors and other third parties.  Explain the legal risks of “social media posts gone wrong.”  Arrange a lunch and learn to walk through the policies and provide examples of “Dos and Don’ts.”  Create a short checklist of key takeaways from the policy and post the checklist in areas where employees who regularly post on social media work.

Monitor and Re-visit.  Monitor compliance and ensure enforcement is uniform.  Social media changes quickly, so the policy should also be re-visited frequently to make sure that new forms of social media engagement are captured.

Copyright © 2016 Womble Carlyle Sandridge & Rice, PLLC. All Rights Reserved.

Federal Trade Commission Continues to Scrutinize Social Media Influencer Programs

Social Media Influencer ProgramsThis week, as part of its ongoing focus on influencer programs, the Federal Trade Commission (FTC) settled charges against Warner Brothers Home Entertainment, Inc. regarding its use of such a campaign to market the video game Middle Earth: Shadow of Mordor. This investigation of Warner Bros. was brought under the FTC Act, which prohibits deceptive marketing, and requires that endorsers “clearly and conspicuously” disclose any “material connection” to the brand they are endorsing.

In late 2014, Warner Bros. and its advertising agency, Plaid Social Labs, LLC, hired “influencers” (i.e., individuals with large social media followings) to create videos and post them on YouTube, and promote the videos on Twitter and Facebook.  One of the influencers hired for the program, PewDiePie, is the most-subscribed individual creator on YouTube, with more than 46 million followers. Warner Bros. paid each of the influencers from a few hundred to tens of thousands of dollars for the videos, in addition to providing free copies of the game. Under these contracts, Warner Bros. had the ability to review and approve the videos.

The FTC alleges that Warner Bros. failed to require sponsorship disclosures clearly and conspicuously in the video itself, where viewers were likely to notice them. Instead, Warner Bros. instructed influencers to place the disclosures in the description box below the video. Warner Bros. also required the influencers to include other information about the game in the description box, so most of the disclosures appeared “below the fold,” visible only if consumers clicked on the “Show More” button. Additionally, when influencers embedded the YouTube videos on Facebook or Twitter, the description field (and thus, the disclosure) was completely invisible.  Some of the disclosures also only mentioned that the game was provided free, and did not disclose the payment.

This continues the FTC’s focus on influencer programs with insufficient disclosures. In March, the FTC settled charges against national retailer Lord & Taylor related to its use of an Instagram influencer program with insufficient disclosures, where the influencers were paid and provided with a free dress. The influencers were required to make a post with the hashtag #DesignLab, and tagging @LordandTaylor, but were not instructed to disclose the payment or the free goods. At the same time, Lord & Taylor placed a paid article in Nylon, an online magazine, and purchased a paid placement on the Nylon Instagram account. Neither the post nor the article indicated they were paid advertising.

Likewise, in September 2015, the FTC settled charges against Machinima, an online entertainment network. Microsoft, through its advertising agency, hired Machinima to promote its Xbox One gaming console and video games. The  FTC alleged Machinima gave pre-release versions of the console and games to influencers, as well as payments of tens of thousands of dollars in some cases, in exchange for their uploading and posting endorsement videos.  Machinima did not require that the influencers disclose the sponsorship.

In each of these cases, the FTC entered consent agreements that require the brands to closely monitor and review its influencer content for appropriate disclosures, and terminate influencers who fail to accurately and conspicuously disclose their paid endorsements. The brands must keep records of their compliance and the FTC may review them at any time—with penalties of $16,000 per violation.

As marketing teams continue to try to reach consumers in new and creative ways, the FTC continues to signal its intention to closely scrutinize each development. As these methods evolve, brands should be conscious of their obligations to ensure appropriate disclosures in every format and to monitor for compliance.

© 2016 Neal, Gerber & Eisenberg LLP.

Friend Request Denied: Judge Asks Attorneys to Refrain from Social Media Searches of Jurors

In late March 2016, a California federal judge asked both Google, Inc. and Oracle America, Inc. to voluntarily consent to a ban against Internet and social media research on empaneled or prospective jurors until the conclusion of the trial.

The case at issue is Oracle America, Inc. v. Google, Inc., a long-standing copyright infringement suit in which Oracle claims Google’s Android platform infringed various Oracle copyrights. This “high-profile lawsuit” has been making its way through the courts since 2010. Before the voir dire commenced in the current proceedings before the Northern District of California, Judge William Alsup realized that the parties intended to “scrub” Facebook, Twitter, LinkedIn, and other social media sites to gain personal information about the potential jurors.

In response to this realization, Judge Alsup issued an order asking the parties to voluntarily refrain from searching the Internet and social media accounts for personal information about the empaneled or prospective jurors prior to the verdict. While Judge Alsup stated that it was within the discretion of the court to order a complete ban, the court stopped short of issuing an outright ban.

Despite his objections to Internet research, Judge Alsup accepted the premise that social media and Internet searches of jurors are useful to attorneys. Information pulled from these searches can help attorneys during the voir dire process. For example, attorneys can use this personal information strategically while exercising their preemptory challenges or can rely on personal information about a potential juror to support a for-cause removal. Even during the trial, ongoing searches of social media sites can shed light on whether a juror gives or receives commentary about the case.

Despite the potential benefits, however, Judge Alsup issued three reasons in support of restricting these Internet searches.

  • First, if jurors knew that attorneys had conducted Internet searches of them, jury members would be more likely to stray from the Court’s admonition not to conduct Internet searches about the case. Because this high-profile case has been widely discussed in the media, the court warned of an “unusually strong need” to prevent jury members from conducting Internet searches.

  • Second, if attorneys learn of personal information about jury members from social media websites, they may be tempted to make personal appeals during arguments and witness interrogations in an attempt to pander to a jury member’s interests. The court warned that this behavior was out of bounds.

  • Third, the privacy of the jury members should be protected. Judge Alsup noted that empaneled or prospective jurors are not “celebrities,” “public figures,” or “a fantasy team composed by consultants.” Because jurors are citizens willing to serve their country and bear the burden of deciding disputes, Judge Alsup emphasized that their privacy matters.

In his order, Judge Alsup referenced Formal Opinion No. 466 from the American Bar Association. This formal opinion held that it is ethical, under certain restrictions, for attorneys to conduct Internet searches on prospective jurors. The ABA determined that a “passive review” of a juror’s website or social media page (i.e., a review that does not make an “access request” and of which the juror is unaware) is not considered an ex parte communication with jurors. Judge Alsup noted, however, that just because these searches are not unethical does not mean that attorneys have an inalienable right to perform these searches.

According to Judge Alsup’s order, if the parties do not voluntarily agree to refrain from Internet and social media searches, they will have to abide by certain rules during the jury selection process. First, the attorneys will be required inform the jury pool upfront about the nature of their searches prior to jury selection. Also, once the attorneys have made this announcement, they will then have to allow the potential jurors a few minutes to adjust their social media privacy settings on their mobile devices.

In short, the judge’s order emphasized the court’s “reverential respect” for juries, asking the attorneys to refrain from performing Internet and social media searches for jurors’ personal information until the trial is over.

© 2016 Proskauer Rose LLP.

Busted [Bracket]: Facebook Posts From Employee’s Vacation Undermine FMLA Claims

Ah, the tell-tale signs of March are here.  The winter is starting to dissipate in the northern climes, we’ve set the clocks forward, and Syracuse is bound for another Final Four run.  Unfortunately, most teams won’t be so lucky and many coaches will soon find themselves on a beach.  And why not?  After a long, hard-fought season that fell just a bit short, might as well take a warm-weather vacation – go for a quick swim, maybe hit the amusement park, and take a few pictures of all the fun in the sun and post them to Facebook.  Sounds like a marvelous idea for many NCAA coaches, but not so much for employees out on FMLA leave.  The plaintiff in Jones v. Gulf Coast Health Care of Delaware, a recent case out of a Florida federal court, learned this the hard way.

Background

Rodney Jones, an employee of Accentia Health, took 12 weeks of FMLA leave for shoulder surgery, but was unable to provide a “fitness for duty” certification because, his doctor said, he needed additional therapy on his shoulder.  Accentia permitted him to take an additional month of non-FMLA leave.  Towards the end of his FMLA leave and during his non-FMLA leave, Jones took trips to Busch Gardens in Florida and to St. Martin.  Jones posted several pictures of his excursions to Facebook – including, for example, pictures of him swimming in the ocean (this, of course, during the time in which he was supposed to be recovering from shoulder surgery).

Accentia discovered the photos Jones posted to Facebook and provided him with an opportunity to explain the pictures.  When he could not do so, Accentia terminated his employment.  Jones then sued Accentia, claiming it interfered with his exercise of FMLA rights and retaliated against him for taking leave under the FMLA.

Termination Not Illegal

The court sided with Accentia.  First, Jones’ interference claim failed because Accentia provided him with the required 12 week leave and did not unlawfully interfere with his right to return to work thereafter.  Accentia had a uniform policy and practice of requiring each employee to provide a “fitness for duty” certification before returning from FMLA leave.  When Jones failed to provide such certification at the end of his FMLA leave, he forfeited his right to return under the FMLA.

Second, Jones’ retaliation claim failed because he failed to show Accentia terminated his employment because he requested or took FMLA leave.  Rather, Accentia terminated his employment for his well-documented conduct during his FMLA leave and non-FMLA leave.

Takeaways

This case provides several important lessons for employers.

  1. It is important to provide employees with an opportunity to explain conduct that appears to be an abuse of their FMLA leave entitlement. Employers who defend FMLA retaliation cases based on their “honest belief” that employees were misusing FMLA are much more likely to succeed if they conduct a thorough investigation into the employee’s conduct and give the employee an opportunity to explain the conduct.

  2. Ensure that any “fitness for duty” certification requirement applies uniformly to all similarly-situated employees (e., same job, same serious health condition) who take FMLA leave. The court in this case found that Jones’ interference claim failed, in part, because Accentia’s “fitness for duty” certification requirement applied to all employees similarly-situated to Jones.  Had it enforced this policy on an ad hoc basis, the outcome may have been different.

©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Burrito Bowls, Guacamole, &. . .Tweets? NLRB Judge Finds Social Media Policy Unlawful

There’s more bad news this week for restaurant chain Chipotle Mexican Grill, but this time it has nothing to do with the food.

Last year, we heard about an NLRB decision upholding an administrative law judge’s (ALJ) finding that the restaurant had committed an unfair labor practice. According to the decision, Chipotle had allegedly threatened and interrogated employees who engaged in discussions about their pay. The employee at issue in the case had worked at a Chipotle restaurant in St. Louis, Missouri. He was also a union member who participated in strikes and was involved with the “Show Me 15” campaign for a higher minimum wage.

That decision is currently pending appeal, and Chipotle has suffered another NLRB loss this week. An ALJ ruled against the restaurant and found an unfair labor practice charge for what the judge described as the company’s unlawful social media code of conduct. The case involves a Chipotle employee in Havertown, Pennsylvania, named James Kennedy. By way of background, Chipotle employs a national social media strategist who is responsible for reviewing employees’ social media posts to determine whether any of them violate the company’s social media policy.

In early 2015, some of Kennedy’s tweets were reviewed by the strategist, including one where Kennedy had replied to a few customers’ tweets. For example, in response to a customer who tweeted “Free chipotle is the best thanks,” Kennedy tweeted “nothing is free, only cheap #labor. Crew members only make $8.50hr how much is that steak bowl really?” Then, replying to a tweet posted by another customer about guacamole, Kennedy wrote “it’s extra not like #Qdoba, enjoy the extra $2.

Chipotle’s social media strategist emailed the regional manager, forwarded the tweets, and told the manager to ask Kennedy to delete the tweets and to review the company’s social media policy with him. Kennedy was subsequently terminated following a dispute with management over an unrelated issue.

The ALJ evaluated whether Chipotle maintained an unlawful social media policy based on the following provisions:

  • If you aren’t careful and don’t use your head, your online activity can also damage Chipotle or spread incomplete, confidential, or inaccurate information.
  • You may not make disparaging, false, misleading, harassing or discriminatory statements about or relating to Chipotle, our employees, suppliers, customers, competition, or investors.

Generally a violation of the act based on an unlawful work rule is dependent upon a showing of one of the following: “(1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.” Lutheran Heritage Village-Livonia, 343 NLRB 646, 646–647 (2004). The ALJ found that the company’s social media policy failed on the first and third prongs.

Picking apart the provision, the ALJ relied on other Board decisions which found rules prohibiting “derogatory” statements to be unlawful. The ALJ also took issue with the prohibition on “false” statements, saying, “[M]ore than a false or misleading statement by the employee is required; it must be shown that the employee had a malicious motive.” The ALJ also found no relief based on the policy’s disclaimer which said “This code does not restrict any activity that is protected or restricted by the National Labor Relations Act, whistleblower laws, or any other privacy rights.”

Although the employee was not ultimately terminated for posting the tweets, employers can still get in trouble with the NLRB where social media policies are concerned. Considering NLRB decisions regarding work rules and handbook policies apply regardless of whether the employees are unionized. We’ll follow this case as it makes its way to the full Board.

© 2016 BARNES & THORNBURG LLP