The widespread use of social media platforms make them ideal for companies trying to reach a large audience. Pharmaceutical and consumer products industries frequently maintain their own social media accounts and partner with celebrities, physicians, patients, and “influencers”—i.e., individuals who have achieved online celebrity and whose posts reach a wide audience—to endorse their products through social media campaigns. Although U.S. regulatory agencies have already been closely monitoring the development of these advertising platforms, the Food & Drug Administration (FDA) and the Federal Trade Commission (FTC) have both recently announced efforts to modernize their understanding of the impact that endorsers have on consumers, signaling the likelihood of more aggressive enforcement in the near future.
The FDA has proposed two studies geared towards evaluating the impact of different types of endorsers (celebrity, physician, patient, and influencer) and payment disclosures on consumers. The agency has invited comments on:
- whether the proposed collection of information is necessary for the proper performance of FDA’s functions, including whether the information will have practical utility;
- the accuracy of FDA’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
- ways to enhance the quality, utility, and clarity of the information to be collected; and
- ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
The comment period ends on March 30, 2020.
The FTC is currently engaging in a systematic review of its regulations and guides, and is accepting comments on its existing “Guides Concerning the Use of Endorsements and Testimonials in Advertising” (the Guides). The Guides serve an advisory purpose, assisting businesses and others to conform their endorsement and advertising practices to the requirements of Section 5 of the FTC Act. The topics that the FTC is seeking comments on include the following key areas:
- modifications to the Guide that are necessary in response to technological, economical, or environmental changes;
- the effectiveness and necessity of disclosing material connections;
- consumers’, with an emphasis on young consumers’, understanding of disclosures of material connections;
- the practice of offering incentives to individuals who are not endorsers in exchange for positive reviews;
- the practice of soliciting feedback and funneling satisfied customers to review sites and dissatisfied consumers to further customer service resolution centers; and
- the use of affiliate links.
Commissioner Rohit Chopra released a statement on February 12, 2020 in which he encouraged “[codifying] elements of the existing endorsement guides into formal rules so that violators can be liable for civil penalties.” Businesses interested in having their input considered by the FTC should submit their responses to the FTC’s request for comments before the comment deadline of April 21, 2020.
The actions taken by these regulatory agencies reflect a growing interest in how a company uses endorsers to market consumer products and suggests that the regulatory landscape may soon evolve. Ballard Spahr will continue to monitor this space for further developments. In the meantime, FDA and FTC regulated companies should consider submitting comments to the appropriate regulatory authority and revisting their advertising practices with regard to endorsements.
Gregory Szewczyk
Philip Yannella
Ballard Spahr LLP
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