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New FTC Guidelines May Subject Employers to Liability for Blogging Employees

January 2010
Executive Compensation, Benefits, Employment and Labor Focus
Tal Marnin

DOWNLOAD PDF: Executive Compensation, Benefits, Employment and Labor Focus

Employers should be aware that final guidelines issued by the Federal Trade Commission ("FTC") last year, and effective December 1, 2009, may create liability for certain blogging activities of their employees. Specifically, under the FTC's revised Guides Concerning the Use of Endorsements and Testimonials in Advertising(16 CFR Part 255)("Guides"), an employer may be liable under certain circumstances if an employee makes statements about the employer's products or services in blogs or social media websites (e.g., Facebook) without disclosing the connection between the employer and the employee or if the employee has made "false or unsubstantiated statements" regarding such products or services.* The Guides provides the following example regarding employers:

"An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer's product. Knowledge of this poster's employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board."

In its comments to the revised Guides, the FTC stated that it would consider "[an employer's] establishment of appropriate procedures" in determining whether to seek legal enforcement against the employer because of inappropriate endorsements or testimonials made by its employees. The FTC further stated that "it is not aware of any instance in which an enforcement action was brought against a company for the actions of a single 'rogue' employee who violated established company policy that adequately covered the conduct in question." The FTC chose, however, not to specify what procedures should be put in place by companies to monitor their employees' compliance with the Guides. Given the foregoing, employers should revise any existing social networking policies to address endorsements and testimonials by employees.

* - The FTC's Guides define an endorsement as "any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings or experiences of a party other than a sponsoring advertiser."

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