Repost from LAW À LA MODE, Issue 13 – April 2014

By Ann K. Ford and James “Bink” Stewart (Washington D.C.) 

The rise in popularity of social networking websites and blogs has extended the reach of a single consumer’s opinion about a brand or its products or services. In fact, prior to purchasing goods or services, consumers frequently review what other consumers have said about the brand or its products or services online. Given the power of consumer testimonials, savvy brands have explored various means of incentivizing positive consumer conversation about their brand online or explored ways to produce content which mimics positive consumer conversation.

In the United States, endorsements are broadly construed to encompass any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings or experiences of a party other than the sponsoring brand, even if the views expressed are identical to those of the sponsoring brand. Persons endorsing the brand must have been bona fide users of the product or service at the time the endorsement was made. Moreover, the law requires transparency and disclosure – namely, that endorsements reflect the honest opinion and experience of the endorser and that endorsers (or bloggers) disclose any material connection with the brand they are writing about (e.g. free product in exchange for a review). For example, it would not be permissible to hire a ghostwriter to author false positive reviews or endorsements to create a favorable impression of the brand.

Both brands and their online reviewers are responsible for ensuring that the reviews produced do not contain false, misleading, or unsubstantiated claims. The key for brands who seek to incentivize consumer conversation or blog coverage through payment or privileges is to educate reviewers about the disclosure requirements. Furthermore, brands must clearly inform reviewers of the key qualities of products or services without dictating the tone or content of the reviews.

Brands should monitor coverage secured through these initiatives to confirm that they do not contain false, misleading or unsubstantiated claims and endorsements. Through this process, a brand’s legal department should closely collaborate with the marketing team to provide education on these types of claims.

Transparency and disclosures are essential in a brand’s efforts to induce online consumer conversation. A brand could be subject to liability and considerable consumer backlash online resulting in significant brand damage for engaging in any behavior which appears to mislead consumers about a brand’s products or services (e.g. paying for false positive reviews). Accordingly, while online commerce is popular and booming, brands should be careful not to dampen consumer confidence through misleading or deceptive promotion. The golden rule is always truth and honesty.