Influencer Marketing Programs: The FTC is Watching

The FTC recently closed its investigation of the Hewlett-Packard Company and its public relations firm, Porter Novelli, Inc. for violations of the 2009 Endorsement and Testimonial Guidelines.  In a case that closely mirrors the Ann Taylor investigation of 2010, the FTC provided insight into how it determines whether to proceed with charges. (To read its closing letter, click here.)

Hewlett Packard had provided gifts to bloggers in exchange for urging readers to use HP printer ink and other HP products. Bloggers received two $50 gift certificates, one of which they could give away to a reader, and other low-end printable items.  The FTC was concerned that HP’s bloggers “failed to disclose that they received the $50 gift cards to keep for posting blog content about HP Inkology.”

As in the 2010 Ann Taylor case, the FTC did not commence an enforcement action first, because only a “relatively small number” of bloggers actually posted about HP, and a number of those who did blog about HP did make adequate disclosures.  In addition, both HP and Porter Novelli revised their social media policies to demand clear compliance with FTC rules.

The case is instructive in several ways:

1)   DISCLOSURES MUST BE REASONABLE: Porter Novelli cited examples of a blogger who referred to herself as “a compensated brand ambassador” and another blogger who referred to the “goodies” she had received from HP before blogging. The FTC did not affirmatively endorse either type of disclosure, but its letter of closing suggests that a broad range of disclosure types could suffice, so long as the brand is taking “reasonable” steps to monitor bloggers’ compliance. UPDATE (POSTED 4/2013) : On the other hand, the FTC’s “.com Disclosure Guides”, released in March, 2013, suggest that vague hashtags and hyperlinks will not suffice. Similarly, disclosures that are not “unvaoidable” to the consumer will not protect the brand. For more of a discussion of how to do disclosures in social media, click here.

2)   FACTS MATTER: As in Ann Taylor, had HP’s program reached a wider sphere of bloggers, the FTC’s investigation could have ended very differently. Similarly, the companies’ willingness to revise their social media policies helped stave off an enforcement action. In addition, just because the FTC dropped the matter, does not mean that HP had not violated the FTC’s rules. In evaluating the level of risk associated with a blogger influencer program, it is crucial to evaluate the facts surrounding the specific program as well as the efficacy of a brand’s social media policies.

3)   POLICIES PROTECT: We have seen repeatedly, whether in this case, Ann Taylor, or Hyundai, that policies protect brands from FTC enforcement, provided they are sufficiently robust and carefully enforced. All brands should conduct audits of their social media policies at least biannually to ensure that they are properly worded to keep pace with current marketing strategies and to investigate compliance measures.

For previous blogs about the FTC’s enforcement of its Endorsement and Testimonial Guides, click here (for a case that led to financial penalty) and here (for a discussion of the Hyundai matter.)