7 Legal Issues to be Aware of for Social Media Marketing

As social media continues its pattern of rapid growth, marketers are discovering new and innovative ways to reach consumers, and in some cases, social media has replaced traditional marketing altogether. Though new and exciting, the social media marketing frontier is still largely unsettled and self-governed.

Concerned about the potential for advertiser abuse, the Federal Trade Commission has been working on regulations for companies to adhere to when engaging in social media. Presumably, the final regulations will be much like the standards that the FTC has had in place for years concerning Ethics and Deceptive Trade Practice Standards.

1. Respect State Laws
   Be mindful of which states your message is reaching, and what the laws are in that area. Violating a state law can lead to prosecution regardless of where you are physically located. For instance, if you tweet about a sweepstakes and one of your followers resides in a state where sweepstakes are prohibited, you could be fined.
2. Use Disclaimers
   Disclaimers must be used in all acts of social media when representing a client or affiliate. Some common examples of disclaimers:

   
   

   • I work for…
   • Paid for by…
   • I was gifted by…
3. Sponsors Are Liable Too
   Sponsors are obligated to monitor endorsers and their actions and ethics. If a disclosure is not made, a sponsor can be held liable.
4. Endorsements Must Be True
   Any endorsement you make must be true. If you falsely indicate that you use or prefer a particular product and it is later found to be untrue, you can be held liable and charged with deception. (Note, the FTC tends to make exceptions for celebrities, because most people assume that if a celebrity promotes something, he or she must be getting paid.)
5. Don’t Falsify Testimonials
   Testimonials must be true and accurate. For example, using a physician to endorse a pharmaceutical product that is not in direct relation to his or her field of practice is considered to be deceptive. The FTC would argue that the advertiser has no right to present this person as an “expert” in the specific field in question. (Here’s an example of a real case: Pfizer to End Lipitor Ads by Jarvik.)
6. Show Real Results
   If a client claims that their product has a specific (or even general) success rate or some other statistical claim, they must have the proof and they must share their studies. The FTC no longer considers “Results May Vary” to be an acceptable statement in advertising.
   
7. Agency Employees Must Provide Full Disclosure
   Any employee of an advertising agency who promotes a client and/or a client’s products and services through social media, even in a casual exchange, must provide full disclosure of the client/agency relationship. Let’s see an example:

   
   

   
   

   • Wrong: Got to love this!! Visit Baltimore is offering an amazing Harbor Pass deal, check it out! http://baltimore.org/harborpass
   • Right: One of our clients, Visit Baltimore, is offering an amazing Harbor Pass deal, check it out! http://baltimore.org/harborpass

   Of course, providing full disclosure is difficult to do on Twitter, given the 140-character limitation per tweet. One convention that seems to be gaining ground is to use the #ad hashtag, indicating the tweet is an ad or endorsement. However, please note the acceptable usage of #ad could change at any time per the FTC’s guidelines.

Many companies outsource their marketing campaigns to agencies like us, but be advised that if the agency is running a social media campaign, then the client company still remains liable for anything said or done by that hired agency. In other words, you need to be constantly aware and monitoring what is being said by all parties. It is for this reason that Web Ad.vantage usually recommends hiring an agency to build the strategy and plan for the campaign, but leaving the execution up to the PR or Communications department. We do things like this with our Social Media Strategy offering. (If you are interested give us a call or drop us a line today to learn more.)

With social media continuing to break new ground, advertisers must learn to grow and evolve along with it. It will be interesting to see where the chips will fall—which companies will have their hands slapped by the FTC, and which ones will get it right? When in doubt, you should always defer to the FTC’s ethics guidelines for the advertising industry, which are already in place, and of course, use your best judgment!

Related posts:

1. 5 Tips for Social Media Marketing Success
2. Email Marketing & Legal Constraints
3. Hey Health Care Industry…Social Media is Here to Stay!
4. Retailers On A Social Media Holiday Blitz

1 Comment »

1. A very good article, but one issue is that 1. needs to recognise that SM are global. If you will accept responses from outside your own country, then you may have to consider other countries’ laws. If you won’t, you should make it clear who your audience is.

     Comment by Jeremy Kriewaldt — August 18, 2010 @ 4:17 pm

Leave a comment

 back to top