The FTC's Division of Advertising Practices investigated whether Hyundai Motor America violated the FTC Act in its campaign to encourage bloggers to write about its Super Bowl XLV ads, according to a letter sent to the automaker in November. The act requires that endorsers disclose any material connections between themselves and advertisers.
In the end, the commission determined that Hyundai was not aware in advance that gift certificates were provided to "a relatively small number of bloggers" as an incentive to post about the car ads. Hyundai's use of an outside firm to handle the social media effort seemed to be a saving grace, despite the fact that advertisers are legally responsible for the actions of the companies they work with in such cases. The FTC did not disclose the name of the media firm working with Hyundai.
Noted the letter to Hyundai, "the actions at issue here were contrary both to Hyundai's established social media policy, which calls for bloggers to disclose their receipt of compensation, and to the policies of the media firm in question. Moreover, upon learning of the misconduct, the media firm promptly took action to address it."
The letter and the Endorsement Guides revised by the FTC in 2009 are "worth a read if your company has added social media to your marketing arsenal," suggested Lesley Fair of the FTC's division of advertising practices in a blog post yesterday.
Fair laid out three rules of thumb for social media marketers: "1) Mandate a disclosure policy that complies with the law; 2) Make sure people who work for you or with you know what the rules are; and 3) Monitor what they're doing on your behalf."
However, the decision not to take enforcement action against Hyundai, and the FTC's reasoning behind it may only cause confusion. "The FTC's reliance on the social media policies of Hyundai and its marketing agency is interesting and yet another data point in favor of adopting a social media policy," wrote Eric Goldman, associate professor at Santa Clara University School of Law, on his Technology and Marketing Law Blog on December 20 - before Fair's post was published.
Goldman questioned "whether the FTC's reliance on these policies is inconsistent," adding, "The FTC doesn't seem to accept affiliate agreements at face value for the proposition that companies are policing their affiliates. It's odd for the FTC to accept a social media policy for the same purpose."
Goldman updated his original commentary after Fair's post was published, calling it, "a nice explanation for the FTC's rationale in this matter." However, the FTC's explanation leaves room for interpretation.
In related news, deputy director of the FTC's Bureau of Consumer Protection, Jessica Rich, will lead the Bureau's Division of Financial Practices starting Jan. 9, 2012. Former staff attorney in the Division of Advertising Practices, Daniel Kaufman, will fill Rich’s current role.