Employees who post reviews of their employer’s products and services on social media sites, without disclosing their corporate affiliation, can land their employer in an FTC enforcement action. The FTC’s second enforcement action for violation of the agency’s endorsement guidelines, announced on August 26, makes this point.

According to the FTC, Reverb Communications, an on-line public relations firm, sought to boost sales of its clients’ gaming applications by having its employees post positive reviews on iTunes. Over the course of nine months, Reverb employees, posing as disinterested users, gave clients’ games a rating of 4 or 5 and posted comments, such as “Amazing new game,” “ONE of the BEST,” and “Really Cool Game.” According to the FTC, these reviews were misleading because they did not, as suggested, come from independent, ordinary consumers, but from Reverb employees who had a financial incentive to provide a positive endorsement.

In the agreement resolving the FTC’s complaint, Reverb agreed, among other things, (a) not to permit its employees to endorse any product without conspicuously disclosing the employee’s connection to Reverb and/or the manufacturer or advertiser of the product; (b) to take reasonable steps to remove the endorsements that were posted without full disclosure; (c) to maintain for five years all documents related to the company’s compliance with the agreement; and (d) to obtain for five years all current and future employees’ acknowledgement of receipt of the company’s agreement with the FTC.

With social media sites offering endless opportunities to recommend and review products and services, and employers increasingly pushing into Web 2.0 to promote their own products and services, well intentioned but misleading endorsements can easily mushroom throughout the Web. Employers can reduce this risk by explaining in a social media policy how the FTC defines an endorsement and by requiring any employee who provides an endorsement to disclose conspicuously his or her corporate affiliation. In addition, employers, as part of their social media training, should explain that even a numerical score or a brief comment about the employer’s products or services on a site not sponsored by the company could constitute an “endorsement” under the FTC’s guidance. The training also can provide the employee with different ways to disclose their affiliation with the employer, such as by stating, “I work in Employer’s product development department, and I think our product is the best in its class,” or by including the employer’s name and the employee’s job title when posting a comment.

This entry was written by Philip L. Gordon.

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