by Ann M. Begley, Lawrence C. Lanpher and Carolina M. Heavner
The Federal Trade Commission’s (“FTC”) recent action against a company and its owner in connection with the allegedly deceptive promotion of music teaching tools signals FTC’s continued intention to keep social media promotional activity as an enforcement priority. In its third public investigation and second enforcement action since issuing its revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (hereafter, FTC Endorsement/Testimonial Guides) in December 2009, FTC continues to expand advertisers’ responsibility to monitor third party interactive media communications containing endorsements of advertisers’ products.
In finding the advertiser and its owner, an individual, responsible for assuring that endorsers adequately disclose any material connections with the advertiser, FTC states that an advertiser agreement that requires endorsers to comply with FTC guidelines and disclosures is insufficient in the absence of an advertiser monitoring program that ensures clear and prominent disclosure of the relationship with the advertiser.
Thus, in addition to a $250,000 penalty against the company and its owner, FTC has required a far-reaching monitoring program – a potentially expensive and burdensome commitment for the future.