Complying With the Federal Trade Commission’s Disclosure Requirements: What Companies Need to Know When Using Social-Media Platforms as Marketing and Advertising Spaces

Social-media platforms have become huge marketing and advertising spaces for both well established and start-up companies. In the 1990s, the Internet became a means for companies to communicate with customers and to promote their products and services. Throughout the past decade, the Internet has become a powerful platform that has changed the way companies do business and communicate with their customers. The growth of digital marketing through the Internet resulted in new forms of marketing and advertising space. Nowadays, any business can reach a large market with a very small investment, and anybody that can read and write has the ability to have access to and presence on the World Wide Web. By blogging and maintaining social-media accounts, social-media users express and publish their ideas and opinions. At the same time, companies leverage these types of communication to advertise their products. As the variety and audience of online advertising through social-media platforms continues to increase, new legal issues are arising, and the necessity to set a legal framework to regulate online advertising has emerged. Historically, legal rules regulating advertising have not been generally limited to any particular medium through which an advertisement is communicated and have been applicable to the online context as well. The public’s interpretation of these rules is not always clear, which raises issues of interpretation when applied to online communications. The application of these rules, which were written at a time when such technologies were not yet created, has caused confusion amongst advertisers. With the growing number of companies using social-media and consumer-generated content for marketing and advertising purposes, the Federal Trade Commission’s (“FTC”) updates to the FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”) are not specific enough to address the up-andcoming social-media platforms that are becoming widely used by consumers. This Article will discuss the balance between companies that use social-media platforms for marketing and advertising purposes and the FTC’s attempt to address these usages to help protect consumers through its Endorsement Guides. First, this Article will take an in-depth look at the relationship between regulation and online advertising, including the history behind the creation of the FTC and its regulations surrounding the truth-in-advertising principle. This Article will then examine how the FTC has responded to the rapid growth and change in the world of social-media and socialmedia marketing, and the updates made by the FTC in order to address the creative ways companies are using new digital and social channels for marketing. Finally, this Article will discuss the types of safe harbor provisions that the FTC can put in place as a response to new technologies surrounding social-media platforms, and best practices that companies can turn to when using social-media platforms as marketing and advertising spaces