WORKPLACE LAW -
Employee Testimonials
Question:
I was talking to some of my peers at an industry meeting a few weeks ago, and they were talking about new rules relating to employee testimonials. I find it hard to believe that there is a law that prohibits employees from praising their employers’ products or services, but I have been in business long enough to know that anything is possible. Is this something to be concerned about?
Answer:
Yes, add this to the list of employee conduct that may result in liability for the employer and the employee. Last year, the Federal Trade Commission (FTC) issued enforcement guidelines relating to the use of endorsements and testimonials in advertising. Although it may seem that these guidelines do not apply to the workplace, they do. Under the new guidelines, when an employee endorses your product or service, he or she is required to disclose the employment relationship. These guidelines state:
Advertisers are subject to liability for false or unsubstantiated statements made through endorsements, or for failing to disclose material connections between themselves and their endorsers. Endorsers also may be liable for statements made in the course of their endorsements.
One important point is that an “endorser” must disclose any “material connection” between the endorser and the company that sells the product or service being endorsed. An “endorsement” is any advertising message, including verbal statements, that consumers are likely to believe reflects the opinions, beliefs, or experiences of a party other than the sponsoring advertiser, and includes comments posted on a social media page, blog, Twitter, or a review on a website.
A “material connection” exists when the endorser’s relationship to the seller of the goods or service could bias the endorser’s opinion, beliefs, or experiences with the product or service. The FTC guidelines include as an example of a “material connection” a situation where an employee of a leading playback device manufacturer posts messages on an online message board promoting the manufacturer’s product. Because knowledge of the identity of the employer of the individual posting these messages likely would affect the weight or credibility of her endorsement, she has a material connection to her employer, and she must clearly and conspicuously disclose her employment relationship to members and readers of the message board.
Under the FTC enforcement guidelines, an employee is required to disclose his or her relationship with the employer any time the employee posts a positive review or comment about the employer’s products or services. The guidelines apply not only to employees, but also to any individual who receives compensation (whether monetary or in the form of free product or other gifts), from the subject of their positive comments.
Therefore, if one of your employees tweets that you sell “the best widgets on the Peninsula,” the employee has to disclose that he or she works for you. Failure to do so could result in liability for the employee and the employer even if the statement is true. Although individuals do not have the right to sue under the FTC, the FTC itself can conduct an investigation or file suit.
In August 2010, Reverb Communications was the first employer to receive an enforcement letter from the FTC relating to the conduct of its employees. The FTC alleged that Reverb Communications wanted to promote its clients’ gaming applications by having its employees post positive reviews on iTunes. Over a nine-month period, Reverb employees gave the games 4 and 5-star ratings, and posted comments like “amazing new game,” “one of the best,” and “really cool game.” The FTC determined that the reviews were misleading because they appeared to come from independent, ordinary consumers, but they were actually posted by Reverb employees who had a financial incentive to provide a positive endorsement.
As a practical matter, every business wants its employees to praise its products or services and take pride in the business for which they work. Employees may think they are doing a good deed for their employer when they sincerely promote the goods and services they provide by making positive comments on their Facebook page or a ratings website. Employees are free to make such comments, but they have to disclose that the company that makes the product or provides the service they are praising employs them. Employers should be proactive and adopt a social media policy, or endorsement policy, explaining that if employees post comments or make verbal comments praising or endorsing their employer’s products or services, they must disclose that the company that makes the product or provides the service employs them.
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