Celebrity spokespersons and the Federal Trade Commission

Since Twitter allows users only 140 characters, any celebrity endorsing a product via tweet must leave room for “#ad” or “#spon” – at least according to the Federal Trade Commission (FTC).

The FTC has long required advertisers and endorsers to disclose their material connections. Thus, when a celebrity has been paid to endorse a product or service and they fail to disclose that fact, both the advertiser and endorser can be liable.

The issue of celebrity endorsements on social media was first addressed by the FTC in its 2009 update to the Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Guides”). Now, five years later, seemingly every celebrity has, at minimum, a Twitter account. So the need to hold them and advertisers accountable for potentially misleading endorsements on social media is even more significant today.

In March 2013, in light of the rapid rise of individuals and businesses’ use of social media, the FTC updated its “Dot Com Disclosures” guidelines. In this update, the FTC emphasized that consumer protection laws apply to both traditional media and social media. Specifically, advertisers using “space-constrained” advertisements (translation: Twitter) must make the same disclosures required of them in traditional print or broadcast media.

As with other media, under the Code of Federal Regulations, the FTC requires that celebrities communicate only their “honest opinions, findings, beliefs, or experience(s)”; a celebrity can continue his or her endorsement so long as the advertiser “has good reason to believe that the endorser continues to subscribe to the views presented”; the endorser “must have been a bona fide user of [a product] at the time the endorsement was given”; and “the advertiser can run the campaign only to the extent it reasonably believes he or she “remains a bona fide user of the product.”

Thus, in the event these rules are violated, both a celebrity and the advertiser can be held liable for the misrepresentations or misleading statements. The FTC is most likely to issue a warning, but fines could follow.

Illustrating Deceptive Advertising on Twitter

In the Guides, the FTC uses examples to illustrate the principles of fair advertisements. In one example, the FTC creates a hypothetical scenario of a famous female tennis player appearing on a TV talk show. Let’s call her “Maria.”

It is often no secret when a celebrity goes on a talk show and talks about a product or service that he or she is being paid to do so. In the example, Maria attributes her recent success to laser eye surgery, raving about the particular clinic, staff and procedure. If viewers would not realize she had been paid by the clinic, without any disclosure regarding the contractual relationship, the endorsement will most likely be considered deceptive.

When it comes to social media, however, things are murkier. For example, if Maria promotes her recent surgery on Facebook, Twitter or Instagram – where her followers might not expect or realize she was being paid – this contractual relationship should be disclosed.

For example, after the FTC released its updated “Dot Com Disclosures,” a particular tweet from Kim Kardashian garnered widespread media attention. On April 16, 2013, she tweeted a photo with the accompanying text: “Can’t live without my @EOS lip balm!”

It was immediately unclear whether she had been paid to tweet that to her nearly 18 million followers, or if she just really liked the product. The following month, the Huffington Post reported Kardashian was believed to be accepting $20,000 per endorsed tweet.

Clearly, it is often difficult to know what is legitimate and what is an endorsement online, especially with a character limit of 140 on Twitter and often no photograph. Thus, to avoid misleading practices, the FTC requires that both the advertisers and celebrities should be disclosing their relationships.

Properly tweeting endorsements

The FTC advises including “Ad:” to begin a promotional tweet. In the “Dot Com Disclosures,” the FTC illustrated this by creating a fictional celebrity, @JuliStarz, and tweeting about losing 30 pounds in six weeks for a beach movie scene, praising a product and also including a link. The FTC did not consider this acceptable.

Instead, the FTC recommend @JuliStarz tweet “Ad: Shooting movie beach scene. Had to lose 30lbs in 6 wks. Thanks Fat-Away Pills for making it easy. Typical loss: 1lb/wk.”

Until a celebrity actually gets fined for misleading tweets, however, it is unlikely a celebrity will use FTC’s ideal format. Nevertheless, celebrity endorsers and paying companies should ensure the spokesperson is disclosing sponsorship, so as to avoid any potential liability.

Furthermore, if a celebrity posts a series of tweets as part of a single endorsement, he or she should signify in every tweet that it is an ad, since followers may not see the first tweet.

Most celebrities who do obey the FTC rules – despite not completely living up to the FTC’s high expectations for endorsement tweets – typically use #ad or #spon (sponsor) at the end of a tweet.

For example, on June 16, Modern Family actor Eric Stonestreet tweeted: