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

FINRA Releases Additional Guidance Related to Social Media

FINRA social media

The Financial Industry Regulatory Authority recently released Regulatory Notice 17-18, which contains guidance pertaining to social networking websites and business communications.

FINRA clarified a number of topics, including:

  • Member firms are obligated to retain a record of communications that occur via text messaging applications and chat services between its registered representatives and investors in accordance with Rules 17a-3 and 17a-4 promulgated under the Security Exchange Act of 1934, as amended, and FINRA Rule 4511.
  • An associated person may, in a personal communication, link to content made available by its firm that does not pertain to the firm’s products or services without implicating FINRA Rule 2210.
  • If a firm shares or links to content posted by a third-party website (e.g., an article or a video), the firm has adopted such content and must ensure that the content, when read together with the firm’s original post, complies with the same standards applicable to communications created by the firm. If the shared or posted content contains links to other content, a firm generally does not adopt that other content, although the firm may be deemed to have done so in certain circumstances (e.g., if the firm controls such other content). A firm may link to a section of a third-party website without adopting the content of such website if the link is continuously available to investors via the firm’s site (regardless of whether the linked site contains favorable information about the firm), the linked site could be updated by the third party and investors would still be able to use the link, and the firm does not influence or control the linked content.
  • Firms may use native advertising (i.e., advertising that appears alongside and in a manner similar to content posted by the publisher) provided that such advertising complies with FINRA Rule 2210, among other requirements.
  • Comments or posts about a firm’s brand, product or services that the firm has arranged to be posted must be labelled as advertisements. In addition, if a registered representative likes or shares favorable comments about him or herself that are posted by third parties on an unsolicited basis to such registered representative’s business-use social media website, the registered representative would be deemed to have adopted the comments and such comments would be subject to FINRA’s communication rules, including the prohibition on misleading or incomplete statements.

The guidance supplements, but is not intended to alter, guidance contained in previous FINRA regulatory notices pertaining to social media.

Regulatory Notice 17-18 is available here.

©2017 Katten Muchin Rosenman LLP

#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.

LinkedIn: A Lawyer’s New Best Friend

Linkedin LawyersWhile there are plenty of books written about social media, I’ve found that most attorneys have little time to invest in such trivial pursuits. I’m sure you’ve rolled your eyes a few times when perusing Facebook or Twitter and reading some of the material on those sites. Many of these negative opinions stem from reality, whereas others come from a disappointing lack of knowledge as to the sites’ benefits.

In order to effectively utilize social media, it’s important to recognize what you want social media to do for you. Are you looking to grow originations, develop a cult-like following, or brand yourself to get speaking engagements? By answering this question first, you can focus on investing your time in the most effective social media forums.

There are literally hundreds of social media channels to choose from. Being selective and focused on the right one will help you get results more quickly. For most attorneys, developing your brand in the business community is most important. In addition, you’re most likely to get results from a social media channel that allows you to be proactive in developing new contacts and ultimately new business. In my experience, the best and fastest way to get results using social media is through LinkedIn.

Over the past 10 years, LinkedIn has become the number one resource for helping brand and generate new business for service-based professionals. In many ways it’s better than Google because it’s a business networking platform rather than a general search platform. The ability to search and target people and organizations is unlimited.

LinkedIn is a fantastic brand-building tool that allows you to literally post your resume online. LinkedIn also helps you leverage your best contacts to make inside connections. Done properly, this can create a massive universe of followers, possible connections, and, most importantly, a cast of personal advocates willing to make quality introductions on your behalf.

Imagine being able to look at your client’s list of friends, vendors and associates prior to asking for a referral. You can search through LinkedIn’s 50 million users to find the best inside connections for you.

While there are hundreds of different tools on LinkedIn, I want to give you the top three keys to effectively using LinkedIn. As with anything that’s worthwhile, it’s imperative that you try to have an open mind and invest a few hours exploring the site to see where the value is for you.

The first key to effectively using LinkedIn is to create a complete profile that best represents your expertise and experience in your field of practice. The second key is to develop your LinkedIn universe by adding the right contacts. The third key is to leverage those contacts and turn them into quality introductions. These three keys should initially take only a few hours to implement, and then as little as an hour a week to start producing results.

The First Key: Writing a LinkedIn Profile That Represents You Beautifully

In order to be effective on LinkedIn, you must have a professionally written and completed profile. Think of your LinkedIn page as your online resume and personal website. If the information online is incorrect, incomplete or poorly written, it might stop someone from reaching out to you.

Imagine you’re looking online for a remodeler for your home. The first site that comes up on Google looks fantastic. You click through to see some of the remodeling work the company has done, and the site says, “Sorry, cannot open this page.” So you try another one. The same message comes up. If you’re like me, you’re done at that point. You just move on to the next search result. This is exactly what happens on LinkedIn without a skillfully written and finished profile.

Here are three tips to ensure your LinkedIn profile makes you look your best to potential clients and strategic partners:

Tip #1: Use a recent professional photograph on your LinkedIn page.

Most people are visual and want to see whom they’re going to be speaking with. As important as content is on a website, you’ve never seen an exceptional one without images to back it up. Use the photo from your website if it’s good, or get a headshot taken right away. It’s not hard to do and it can make all the difference when someone is checking out your profile. This may seem obvious, but don’t post a cutesy picture with your kids, pet, or Halloween costume.

Tip #2: Have a professionally written background/summary.

Since your LinkedIn profile will be someone’s first impression of you, failure to capture the reader’s attention can move the reader quickly away. Personally, I like to see a summary written in the third person. It has the appearance of someone else boasting about your successes and best qualities without seeming egotistical.

If possible, keep your profile to three solid paragraphs. I enjoy reading profiles that read a little like a story. The first paragraph pulls you in. The second gets you familiar with the character. The third wraps things up and motivates you to take action. It might make sense to look up some other attorneys in your practice area to see what they’ve written. This will help you identify the best profile style for you.

Tip #3: Develop a strong list of skills that best represents your expertise.

If you take a few minutes and search some of your colleagues and competitors, you can quickly begin to formulate such a list. For example, an estate planning attorney would want to have the words “wills,” “trusts” and “estate planning” listed among his or her skills, thus enabling people searching for an estate planner to more easily find the attorney.

Once your skills are posted, people in your network will then have the ability to endorse you. Essentially, when you have a skill that someone agrees with, they’ll endorse you for that skill. While this might seem like “fluff,” it’s an important factor that people use to determine who are experts and who are not. For example, if you had to choose between two referred doctors, one who has hundreds of positive endorsements on LinkedIn and one who has none, which would you choose? While this might seem insignificant, in the competitive legal environment everything counts.

Read Part 2 here: LinkedIn for Lawyers – Strengthening Your Circle by Establishing the Very Best Connections Part 2

Read Part 3 here: Effectively Using LinkedIn for Lawyers: Going Beyond Connecting and Turning LinkedIn Relationships into Better Introductions Part 3

Copyright @ 2016 Sales Results, Inc.

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.

Microsoft Acquiring LinkedIn as Move into Enterprise Social Media

Linkedin MicrosoftMicrosoft has announced that it is buying LinkedIn for $26.2 billion, one of the largest tech acquisitions in history, and that it intends to use the business social media giant to put Microsoft at the center of our work lives.

Currently, LinkedIn has 433 million members in 200 countries. Microsoft has 1.28 billion Office users worldwide. Microsoft CEO Satya Nadella said in an interview with Bloomberg:

“This is about the coming together of the leading professional cloud and the leading professional network. This is the logical next step to take. We believe we can accelerate that by making LinkedIn the social fabric for all of Office.”

Nadella said that Microsoft’s vision is to place your LinkedIn profile at the center of your online work life, connecting it with Windows, Outlook, Skype, PowerPoint and other Microsoft products.

For example, Cortana (Microsoft’s digital assistant) could provide users with information on other participants in an upcoming meeting by pulling data from LinkedIn profiles. Members working on a project could pull up LinkedIn articles concerning their project or use LinkedIn profiles to search for an “expert” to help with the project.

Microsoft also sees LinkedIn playing a major role in developing a new customer relationship management (CRM) tool for sales organizations. LinkedIn analytics could be integrated with Microsoft’s Dynamics tool, which competes with Salesforce.com, to assist companies with managing their customers.

Here’s a CNBC interview with Nadella and LinkedIn CEO Jeff Weiner explaining the opportunities.

© The Rainmaker Institute, All Rights Reserved

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.