Misleading Use of Social Media Could Warrant Federal Fines

Thinking of having your employees pose as customers and post positive reviews of your company online? You might want to think again, Shady McSketchball. The Federal Trade Commission now has precedent to drop the proverbial hammer on your business if you’re caught in such acts. The California Chamber’s HR Watchdog blog explains:

The New York Times recently reported that a California-based company settled charges with the (Federal) Trade Commission (FTC). The FTC alleged that the company engaged in deceptive marketing practices by encouraging its employees to post favorable reviews for its clients’ games on iTunes. The employees did not disclose that they were being paid to write favorable reviews.

Late in 2009, the FTC made changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising. The FTC’s guides address endorsements by consumers, experts, organizations and celebrities. The FTC said the revised Guides also add new requirements that mandate that “material connections” between advertisers and endorsers (sometimes payments or free products) must be disclosed because consumers would not expect these connections to exist.

These examples define what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The guides stipulate that the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement.

Inform your employees that they should not post testimonials or endorsements on social media Web sites about your company or any of its products or services without disclosing their relationship to your company.