Avoid Liability: Monitoring Bloggers for False Statements

True False Question

If you are at all active in social media, then you know that the Federal Trade Commission (FTC) has issued its guideline concerning the use of endorsements and tesimonials in advertising. Bloggers that do reviews have been a-twitter about the requirements for disclosure of endorsement relationships. And yes, the new guidelines require bloggers to disclose endorsements beginning on December 1, 2009. 

Personally, I don’t think that the disclosure requirements are such a big deal. I’ve always been a proponent of ethical blogging and disclosing relationships. However, I do think that companies must realize that they have potentially significant exposure under the new guidelines. The new guidelines can result in the imposition of  significant liability on companies seeking to use social media to promote their products, particularly in the green arena, if they don’t take steps to protect themselves. Why? Companies must realize that they can not only be held liable for failure to disclsoe a material relationship but also for misleading statements made by their endorsers. And it is this misleading statement category that seems particularly dangerous in the green arena.

Of course, a company can only be liable if an endorser-sponsor relationship exists. That is the critical threshold determination. But simply soliciting bloggers to review your product and sending them free product to review is enough to create that endorser-sponsor relationship. Specifically, an endorsement is defined to mean “any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.” Several examples are given in the guide to demonstrate when an endorser-sponsor relationship is created. One of the most telling is a consumer that has joined a marketing program and receives products periodically for review. If she receives a free product and then writes a review, her review is an endorsement.

So, if you are company using social media – by sending free product to bloggers, by hiring a marketing company to target bloggers, by inviting bloggers to events and providing them with free product – you are creating potential endorser-sponsor relationships. Your company can now be potentially liable if the blogger doesn’t disclose the relationship and/or the blogger makes false statements in her review. The disclosure obligation you may understand, but also be aware that “advertisers are subject to liability for false or unsubstantiated statements made through endorsements  . . . ” (Sect/ 255.1(d).)

That doesn’t seem like a big deal to most companies – why would a blogger make a false statement? But the example given in the guideline indicates how easily this could happen. The blogger reviews a skin care product and, although the company makes no claim about its ability to cure eczeman, the blogger states that it does. Now the company is potentially liable for that false statement.

Or, take a prominent purportedly green baby skincare line. The company advertises itself as “free of dioxanes from sulfates.” Okay, if you have any chemistry background, you know this is sort of a silly statement. But the presence of 1,4-dioxane in baby bath products is important to many, so the blogger reads the product literature and adds the statement the products are free of dioxane, without the careful qualification. Now the company is liable for the false statement.

Or, let’s consider SIGG. If the FTC regulations have been in effect the last couple of years, wouldn’t SIGG be arguably liable for all those countless blogs talking about how SIGG bottles are free of bisphenol A (BPA), assuming, of course, that the bloggers were endorsers. SIGG knew that the bottle liner was not free of BPA, it was just free of leaching above 2 ppm.

Okay, what can a company do? The guidelines indicate that a company can limit its potential liability by ensuring “that the advertising service provides guidance and training to its bloggers concerning the need to ensure that statements they make are truthful and substantiated.” Also, and more critical, the advertiser “should also monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered.”

So, any company that has endorser relationships in social media MUST have in place now (Dec. 1 is just a few short weeks away) a social media policy and monitoring program. The policy should require, at a minimum, bloggers provide certain guarantees about their FTC compliance statements. Training and guidance documents also are required. Further, it is critical that the program has a monitoring component to verify the disclosure. Even more critical is that the monitoring program includes follow up on reviews each and every time product is sent out for review. This is more than just a Google alert for a company or product name, but a true analysis of the review to verify that it does not contain any false statements. And if there are any false statements, the advertiser must act to prevent the continued publication of the false statements.

I personally don’t think that can be done simply by computer software, although such software can be of use. Instead, I think a company must do more. I believe that the monitoring component must include trainsed staff familiar with the product/company, especially in the non toxic/eco-living/green arena where labels, standards and definitions are not constrained by regulations.

(Shameless self promotion – 3 Green Angels provides monitoring, of course, and we would be happy to discuss with you. And as an attorney, I help companies develop social media policies and programs.)