FTC Concludes Investigation Concerning Gifts to Bloggers in Exchange for Endorsements

The Federal Trade Commission (“FTC”) recently closed its investigation of Hyundai Motor America’s (“Hyundai”) alleged violation of Section 5 of the FTC Act (15 U.S.C. § 45) in connection with a blogging campaign conducted to spark interest in Hyundai’s Super Bowl XLV ads. The inquiry focused on whether bloggers were given gift certificates as an incentive to comment on or post links to the ads and if they were explicitly told not to disclose this information in violation of the FTC Endorsement Guides.

The Endorsement Guides require the disclosure of any material connection between an endorser and an advertiser that is not reasonably expected by the audience. In its closing letter, the FTC stated that a gift to a blogger for posting specific content promoting an advertiser”s products or services is likely to constitute such a material connection.The FTC cited several reasons for its decision to end the investigation, including that:

§  Hyundai did not appear to know in advance about the use of gift certificates as incentives and a relatively small number of bloggers received the certificates (some of whom disclosed this information);

§  An individual working for the media firm that was hired to conduct the blogging campaign was responsible for the gift certificates. Although Hyundai could be held responsible for such conduct, it was in violation of the media firm’s and Hyundai’s social media policies; and

§  The media firm promptly took action to address the issue upon learning of the alleged misconduct.

The FTC’s actions serve as a reminder to agencies and advertisers that establishing clear policies on endorsements and promptly addressing any compliance issues may save them from potential endorsement problems in the long run.

If you have any questions about this investigation or the FTC Endorsement Guidelines, please contact Terri Seligman at (212) 826-5580, tseligman@fkks.com; Jeffrey Greenbaum at (212) 826-5525, jgreenbaum@fkks.com; Claudine Wilson at (212) 705-4842, cwilson@fkks.com, or any other member of the Frankfurt Kurnit Advertising Group.