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Know the Law: Make Sure Business' Social Media Marketing is Legal

Written by: Michael E. Strauss

Published in the Union Leader (11/20/2017)

Q: My business wants positive online customer reviews and endorsements on social media websites like Facebook, Instagram and Yelp. To get these, my business is planning to pay or provide free products and services to reviewers, bloggers and popular social media users (typically called “influencers”) that favorably endorse my business or its products and services. Can we? 

A: Yes. But: If incentivized to favorably review or endorse your business, the reviewer, blogger or influencer must disclose it. 

You, like your customers, probably check Yelp reviews to find a good dinner spot downtown; read Facebook comments on a retailer’s page about a winter jacket you want to buy; or follow a popular travel blogger on Instagram to see where she likes to stay. 

Consumers use social media for insight on purchasing decisions. They want to see pictures of appetizers, read about another user’s experience with jacket sizes, and learn from their favorite travel blogger about whether the thread-count made a difference worthy of paying more money to stay at a particular hotel. At the same time, however, consumers are cutting the cord on cable to binge-watch television without interruption, listening to commercial-free streaming radio, and using ad blockers to stop the onslaught of advertising pop-ups, pop-unders, and anything that pops in-between. 

Given consumer demand for social media insight, but resistance to traditional advertising, businesses like yours shifted (or are shifting) marketing budgets to less-intrusive yet more persuasive marketing efforts like incentivizing favorable online reviews and endorsements. But business beware: This marketing strategy presents legal risks about which your business should be mindful. Your business is responsible for ensuring its marketing practices are neither deceptive nor misleading, regardless the medium. 

Regulators — specifically, the Federal Trade Commission (“FTC”) — are closely monitoring social media marketing practices like the one your business is contemplating. Under federal law and FTC guidance, material connections — for example, compensation, free meals, free travel, employment — between a business and a person who reviews or endorses that business must be disclosed so consumers can meaningfully assess the credibility of that review or endorsement. 

When and how to properly disclose these material connections are nuanced considerations that depend on the context of the review or endorsement. But know: Your business and the reviewer, blogger, or influencer share in the responsibility for compliance. 

Noncompliance can, and has, resulted in costly FTC enforcement actions against businesses and, most recently, individual endorsers. If your business’s marketing efforts include incentivizing social media reviews or endorsements, you should consult with legal counsel about your disclosure practices and social media policy.

Michael can be reached at [email protected].

Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association. We invite your questions of business law. Questions and ideas for future columns should be addressed to: McLane Middleton, 900 Elm St., Manchester, NH 03101 or emailed to [email protected]. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.

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