More FTC scrutiny of endorsements puts sports category into crosshairs, experts say
Last week the US Federal Trade Commission sent notices to more than 700 companies about how to market products in this way without violating federal guidelines. A key issue is whether the relationship of the endorser to the company whose products he or she is endorsing is made clear in marketing materials.
Even if they were just notices, companies still need to take notice, attorney says
“The interesting thing about those letters is that they weren’t warning letters. Yet it is still very important for companies to get out ahead of this,” said Katie Bond, a partner in the law firm Lathrop GPM.
Bond said this is especially true in the sports nutrition realm, as the use of testimonials from high profile sports figures is ubiquitous.
“For example, you see Serena Williams everywhere these days. She has almost become the Kim Kardashian of the sports world,” Bond said.
How to do it right, or not
In one example of a compliant claim, ChromaDex, which markets Tru Niagen, a finished product based on its Niagen ingredient, a patented, branded form of nicotinamide riboside, has been aiming the supplement at both sports nutrition/energy audience as well as its foundational position in the anti aging category.
The company employs NFL Hall of Famer Shannon Sharpe as a spokesman. Sharpe is a well known public figure, but the website nevertheless clearly identifies him. Sharpe’s endorsement, prominently displayed as a quote on the first page, carries this qualifier: “True user and paid spokesman of Tru Niagen.”
On the flip side of the coin is another company that markets a CBD product for sports nutrition whose website carries a testimonial from a woman who is named and further identified simply as ‘athlete.’ There is no more detail about who this person is nor whether the company paid for the post. Based on a web search on this person’s name it’s unclear who this is, but one LinkedIn profile under the same name identifies a person who is an ‘affiliate marketer’ as opposed to an ‘athlete.’
Would FTC interested in a mischaracterization of this sort?
“I think FTC would take interest in that kind of thing,” Bond said. “But they have made it clear that disclosure of any connection to the company is the bigger issue.”
New modes of communication, new rules
Ivan Wasserman, a partner in the firm Amin Talati Wasserman, said the speed and breadth of Internet communication has induced new rules to the game of paid promotions. In the early days of TV advertising, when John Cameron Swazey told viewers that Timex watches “take a licking and keep on ticking,” it was self evident he was functioning as a spokesman and was not speaking from personal experience. Now, when so much of the communication on various social media sites is couched as personal and immediate in nature and by implication comes directly from the people whose names are on the messages, those relationships need to be spelled out in obvious terms.
“Just like every sport and every game has a set of rules, the game of using influencers and endorsers to help sell product has strict rules and, as Kenny Rogers said, if you’re gonna play the game you gotta to learn to play it right,” Wasserman said.
“In particular, there are very important rules on when and how influencers have to disclose to consumers that they have a connection to the company. Unlike in the old days of television and magazine ads, it may not be at all apparent that someone is being compensated by a company to promote products on social media, in podcasts, and elsewhere,” he added.
Say what can be supported, and omit the rest
Wasserman went on to say that what the endorsers say ought to be true and backed by evidence. Even if an endorser might genuinely believe what they say about a product, if it’s a claim that the manufacturer wouldn’t make itself for lack evidence, that claim shouldn’t be made public. (Theoretical example: “And — my hair started to grow back!!!”)
Wasserman said if a company wasn’t on the list FTC sent out last week, it shouldn’t assume it’s in the clear.
“Just because a company was not one of the 700 that received a notice in no way signifies that it is safe from FTC scrutiny. In fact, the opposite may be true as we can expect those companies that received letters to be more compliant than ever,” Wasserman said.
Documenting the process of hiring an endorser
Making sure endorsers are well coached to begin with, and documenting that process, can help companies avoid FTC complications even if an endorser might stray out of bounds, Wasserman said.
“It is very important for every company that uses influencers to ensure they have provided written documentation on what the influencer can say about the products, and when and how to disclose connections. If the influencer nevertheless goes rouge but the company is able to demonstrate to FTC that it had trained the influencer, monitored posts, and took action when appropriate, it should help keep the company out of the penalty box,” he concluded.
Sports Nutrition webinar
Wasserman will be among a star-studded panel for a sports nutrition online event scheduled for this Thursday, Oct. 21, at 11:30 AM Central time. Wasserman will join business strategy consultant Joshua Schall, Ghost Nutrition CEO Daniel Lourenco and research consultant Ralf Jaeger, PhD on the panel. For more information and to register, visit the event homepage.
