How to Spot Legal Issues in Your Social Media Campaigns

Social media campaigns come fast and furious, here today and gone tomorrow. Brands may be tempted to skip legal vetting, assuming their offers will fly under the radar of regulators. Even if you don’t have inside counsel, your marketing team should have a vetting system in place. Marketers can learn to spot legal issues and work to reduce risk with outside counsel. Here are twelve laws with which social media marketers should be familiar when deciding when to turn to legal counsel.

1. Section Five of the FTC Act. While the First Amendment protects free speech, commercial speech is held to a higher standard than personal speech under section 5 of the Federal Trade Commission (FTC) Act. Advertising campaigns must not be deceptive or unfair, based on what a reasonable consumer would understand them to mean. You must have substantiation for all claims, both express and implied, about your products or services or a competitor’s products or services. In addition, each of the states has its own “little FTC Act” that mirrors the Federal standard. Advertisers who break these laws may be subject to both civil and criminal penalties.

2. The CAN-SPAM Act. If you are sending out commercial email campaigns, you would be well served to review your CAN-SPAM compliance. The statute has specific requirements governing subject lines and content of email to ensure that recipients understand it is a commercial message. The statute also delineates opt-out requirements. You should scrub your mailing lists and any affiliate marketers’ mailing lists against the opt-out requests they have received. Financial penalties for violating this law add up quickly, as each noncompliant email is subject to a penalty of up to $16,000. Often, the FTC simultaneously pursues actions under Section 5 of the FTC Act. In short, this could be an expensive statute to violate and not worth the risk.

3. Telephone Consumer Protection Act (TCPA). Your apps’ social sign-in functions, providing access to a user’s address book or invite-a-friend functions, could bring you in the cross-hairs for a legal challenge under the TCPA. The TCPA’s requirements changed in 2013 to require prior express written consent on paper or electronically before you market to a consumer via text or auto-dialer. (Some states have even more stringent requirements, e.g. California for physical mail.) Because each individual contact with the consumer constitutes a violation worth between $500 and $1500 in statutory damages, and the damages are uncapped under the statute, violators of the TCPA face potentially millions of dollars in damages. As you launch your text messaging marketing programs, particularly through apps, create your own to-do lists so that you steer clear of the active TCPA class action bar.

4. Lanham Act. This federal statute sets up our national trademark system. It outlines steps for registering trademarks and seeking redress for trademark infringement and unfair competition. Lawsuits for unfair competition do not require federally registered trademarks. Advertisers may also use the statute to complain about false advertising or passing off goods or services as connected to a trademark. When planning advertising campaigns, take care to use trademarks appropriately and clear new trademarks, including hashtags that could function as trademarks. In addition, you should have some system for clearing advertising copy, including social media copy, and be careful about comparative advertising. Finally, if you believe your competitor is engaging in unfair comparative advertising, the Lanham Act may prove useful to you if you want to enjoin or seek damages.

5. Copyright Act. Curated content is a hot trend in social media marketing, but remember that just because content, including photographs or videos, are on the Internet does not make them yours for the taking. Copyright laws protect this content. The fair use exception to copyright law is complex and fact specific. Contrary to urban myth, there is no 10% or 20% rule that allows you to take under a certain percent of content, particularly for commercial purposes. Your marketing team may be moving swiftly to engage the public with relevant and on trend content. You should have an internal system for vetting content you do not create to ensure you are not violating any copyrights.

6. FTC DotCom Guidelines. In 2013, the FTC announced its long awaited revised “.Com Disclosures: How to Make Effective Disclosures in Digital Advertising.” Asserting that advertisers need to make their disclosures clearly so that consumers understand their offers, the FTC decries hyperlinks, hashtags, and pop-ups. Regardless of the space-constraints of mobile space, banner ads, and tweets, advertisers must make clear and conspicuous disclosures to avoid complaints of deceptive advertising. The guides go to great lengths to describe what the standard “clear and conspicuous” means, using numerous examples. In addition, advertisers are responsible for monitoring the marketplace to ensure that its affiliated third parties are disseminating the disclosures properly and that consumers understand them. You should think what disclosures are necessary for your offers and the best way to make them so they meet the standards of these guides.

7. FTC Endorsement & Testimonial Guides. Working with bloggers or influencers? Familiarize yourself with the FTC’s Endorsement and Testimonial Guidelines. These guides provide that advertisers must disclose “material connections” between themselves and endorsers, and those endorsers, themselves, may bear legal liability for their statements. In two examples provided by the FTC, at Part 255.5 (examples 7 and 8), the FTC suggests that if a blogger receives behind the scenes compensation to try a product or receives a free sample of a product and then promotes the product online, the blogger should disclose the “material connection.” Similarly, if an employee posts reviews of his employer’s product on an online discussion board, the employee should conspicuously disclose his employment connection or the employer and employee could run afoul of the guidelines. Best practices, then, require a brand to develop policies regarding how it promotes its products or services, how it discloses its relationships with product promoters and employees, and how it monitors online activity of such people. Now is the time to review your blogger policies and make sure you are monitoring the bloggers to ensure compliance.

8. FTC Guide on “Free.” Free giveaways are big draws any time of the year. The FTC’s guidelines on “free” apply to offers that explicitly use the word free, as well as bonus offers, buy 1-get 1 free type offers, 2 for 1 sales, 50% off with purchase of two etc. Be sure to clear these offers with legal counsel, particularly all advertising copy related to the offer. You should not mark up the cost of the underlying offer to compensate for the cost of the free gift.       You should disclose fully, accurately, and conspicuously all material limitations on the offer. The disclosures must be large enough to be read without difficulty, and for state requirements, at least 1/2 the type size of the “free.” Keep in mind that using an asterix may not be sufficient to be conspicuous. But what about “free” offers that are done through social media? How would disclosures be made on these offers? The type size rules may apply depending on the platform, and certainly the FTC DotCom Disclosure rules would provide additional guidance. In short, to make sure you are executing “free” offers without exposing yourself to legal liability, have a system for your marketing team to vet its copy.

9. Sweepstakes laws. Sweepstakes and contests can violate 50 states’ lottery and gambling laws as well as telephone marketing laws, and deceptive advertising laws simultaneously if not structured appropriately. Social media increases the risks because of the space constraints on disclosures. Sponsors must accomplish full compliance with promotions laws and limit eligibility to those countries in which they have completed legal due diligence. It is essential to confer with legal counsel who specializes in this complex area of law to ensure that a promotion is not illegal. This will require examination of the thorny issues of consideration, alternate method of entry, skill, and prize structure. Public judging, a popular tactic, may render the promotion illegal if not done properly.

10. Gift Cards. Research done by the Schullman Research Center confirms that almost half of all adults plan to give gift cards as a holiday gift in 2014, regardless of income. In short, gift cards are big business, but they need careful legal planning due to a host of laws and class action lawsuits. Different legal provisions may apply to preloaded cards or reloadable cards, so the first question to ask is what kind of gift card are you contemplating. From there, your marketing team should work closely with legal counsel to vet any gift card program. In 2009 Congress enacted the Credit Card Accountability Responsibility and Disclosure (CARD) Act, providing in part that gift cards cannot expire within five years from the date of activation and restricting inactivity fees. Most states also have their own restrictions on gift cards to protect the public, and many states have revised these laws in the past two years. In addition to dealing with expiration dates and dormancy or service fees, these statutes may have provisions governing cash redemption or mandating specific disclosures. Gift cards may also trigger unclaimed property provisions in various states’ escheat laws. In addition, the practice of collecting zip codes from purchasers of gift cards may trigger requirements under some states’ gift card laws and various privacy laws.

11. FTC Green Guides. In 2012, the FTC revised its Green Guides for environmental claims in advertising. While the FTC did not tackle the words natural or sustainable and deferred to the USDA for regulation of the use of the word organic, the updated Green Guides regulate terms such as recyclable, biodegradable, compostable, ozone safe, non-toxic, carbon offsets, renewable, and “free-of.” The FTC also requires that marketers avoid unqualified general claims regarding environmental benefits, using specific, prominent, and substantiated language. The Guides also target marketers’ use of eco-seals and other kinds of seals of approval. If you are marketing “green” products, services or attitudes, be aware that these strengthened Green Guides give the FTC more authority to challenge your environmental marketing under general advertising law principles. 2014 has brought an uptick of enforcement of these Guides, so be green but be smart about your environmental claims.

12. COPPA. Marketing to children? The Children’s Online Privacy Protection Act (COPPA) governs advertising to children under age 13 and requires parental consent before interacting and collecting personally identifiable information from children. COPPA compliance should be built into your apps and your social media interactions with children. It is nearly impossible to do this on the fly at the last minute.

Working within the structures of all the above laws requires careful planning. Your marketing team may be tempted to launch social media campaigns quickly. Do you have a legal team ready to advise on short notice? In the best of all possible worlds, you would work legal vetting into your timeline and consult with them before committing to a creative campaign or any advertising/marketing spends.