CMPLY Updated Regulatory Overview June 2014
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This document summarizes regulatory activity from various government agencies regarding social media use. It outlines guidance from the FTC on disclosures, endorsements and native advertising. It also discusses FINRA and SEC rules on record keeping, suitability and disclosures for financial services firms. Additional sections cover the FFIEC, FDA and other agencies' focus on establishing policies, disclosures, monitoring and responsiveness on social media.
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First FTC Investigation – Ann Taylor
Ann Taylor LOFT Preview Campaign:
“…Bloggers who attend will receive a special gift,
and those who post coverage from the event will
be entered in a mystery gift card drawing…”
“…goes against the rules of ethical journalism…”
“…stench of pay-to-play in the wake of FTC disclosure
guidelines.”
“…the [Ann Taylor] case serves to let marketers know that
the FTC is keeping a close eye on their interactions with
bloggers.”](https://image.slidesharecdn.com/cmplyupdatedregulatoryoverviewjune2014-140625151933-phpapp01/85/CMPLY-Updated-Regulatory-Overview-June-2014-29-320.jpg)
CMPLY Updated Regulatory Overview June 2014
- 2. 2 REGULATOR ACTIVITY - WOM & SOCIAL • FTC Testimonial and Endorsement Guidelines (2009) • FTC .Com Disclosure Update (March 2013) • FINRA Regulatory Notice 10-06 (Jan 2010) • FINRA Regulatory Notice 11-39 (Aug 2011) • FFIEC Final Guidance (Dec 2013) • SEC Guidance Update (March 2013) • SEC Netflix Report (April 2013) • SEC JOBS Act related updates (Summer 2013) • SEC CDI – Hyperlinked disclosure (April 2014) • FDA draft SM guidance (June 2014) • NLRB (ongoing)
- 3. 3 COMMON REGULATOR THEMES • Social media is subject to the same rules that apply to traditional media • Establish documented policies and procedures • Train representatives and agencies - aware of responsibilities • Disclose/disclaim to avoid entanglement & adoption
- 4. 4 FTC: Testimonials & Endorsements • All material connections must be disclosed with documented process • Inform & Disclose • Disclosures must be clear & conspicuous • Advertisers and agencies are liable • Ensure policies are clearly communicated to agencies and influencers • Create a process that ensures a culture of compliance • Document & Monitor • Must be aware of what your influencers are saying • Process & procedures must be documented • Follow Up & Takedown • 100% coverage not expected; proactivity and responsiveness is
- 5. 5 FTC: .Com Disclosures • Disclosure methods must be appropriate for all viewing environments • Be wary of technical limitations • When practical, incorporate disclosures in claim itself • If linking to separate disclosure, link must be clear & conspicuous • If platform limitations prevent effective disclosure, don’t use that platform • Consider the “net impression” to the consumer • Understandable to the intended audience? • Prominent? (Consider proximity, appearance and context) • Unavoidable to consumers? • Repeated in order to ensure that it is effectively communicated? • Free from distracting elements? • Proper volume, style and duration to ensure comprehension? (Audio & video) • Many current ad-hoc disclosure methods are not acceptable • #Spon, generic link shorteners and obfuscated links all called out as insufficient
- 6. 6 FTC: Native Advertising Workshop Workshop Takeaways • No agreed definition of native advertising • Publishers are embracing a new method of connecting with audiences • No best practices for disclosure or delineation of editorial vs. advertorial • FTC held a workshop in December 2013 and will be a focus of 2014 Areas of Concern • Disclosure • Promotion and syndication • Editorial controls and advertiser influence • Blurred lines raise concerns of regulators
- 7. 7 FINRA: Notice 10-06 • Keep records of all communications • Suitability rules apply • Establish policies and procedures regarding specific recommendations • Consider prohibiting recommendations or using pre-approved templates only • Static content requires pre-approval; interactive content does not • Static = advertisement (examples: profile, background, wall information, blogs) • Interactive = public appearance (examples: Facebook status updates and tweets) • Adopt policies and procedures • Ensure proper supervision, training and background for representatives • Employ risk-based principles to review • Intermittent pre-approval or post-review (e.g. sampling or lexicon-based search) • 3rd party posts are exempt – unless there is entanglement/adoption
- 8. 8 FINRA: Notice 11-39 • Use of personal accounts/devices or autobiographical nature of message does not create an exemption • Content is the determining factor • Firms should have the ability to retain, retrieve and supervise regardless of source • Recordkeeping rules apply to both interactive and static posts • Difference in supervision requirements only • Automatic deletion does not create an exemption (and is therefore not usable) • 3rd party posts should be archived if they relate to the business • Representative “red flags” must be investigated • Representatives may answer 3rd party questions (within firm policies) • Not responsible for 3rd party content if no entanglement/adoption • Co-branding creates adoption
- 9. 9 FFIEC: Final Guidance Released • All current laws apply – there are no exceptions for social media • Truth in savings act, fair lending laws, truth in lending act, fair debt collection practices act, Section 5 of the FTC Act (deceptive practices), FDIC/NCUA requirements, CAN SPAM and more • Have a risk management program • Identify, measure, monitor and control risks in social media • Governance structure that culminates with the board or senior management • Should include official policies and procedures, diligence over 3rd party service providers, employee training, channel monitoring, audit and reporting processes • Be prepared to address social issues regardless of participation • Inbound negative comments and complaints from customers • Employees may put an institution at risk • FFIEC will encourage adoption by state regulators
- 10. 10 SEC: Guidance & Netflix Report • Guidance explained which social messages need to be filed in advance • Marketing messages, discussion of fund performance should be filed • Incidental mentions, introductory statements referring to linked data and factual statements that don’t discuss performance investment merits should not • Netflix report sets the rules for use of social media as official channels • Provide public with advance notice through existing channels • Use channels investing public can freely access • Apply the same level of scrutiny as in other channels • Establish controls and procedures to monitor communications • Inform representatives of their responsibilities in social media (and that they cannot be avoided by purporting to speak in their “individual” capacities) • Make certain to follow the guidelines laid out in 2008 for dissemination of company information in electronic channels
- 11. 11 SEC: 2008 Reg FD for Digital • Keep account(s) current, active and accurate • Provide full information in context or via link in close proximity • Beware of entanglement and adoption • When linking to 3rd party content, provide context or disclaim/disclose any connection to the source • Avoid linking to false or misleading information • Disclaimers do not protect from fraud • Certify that CEO and CFO are responsible for maintaining controls and procedures and are aware of disseminated information
- 12. 12 SEC: JOBS Act Updates • Prohibition against general solicitation for Reg D offerings eliminated • Securities may be offered to non-institutional buyers • All purchasers must be accredited investors • Must take reasonable steps to verify status • Nature of purchaser, amount and type of information about purchaser the issuer collects and nature/terms of offering are all valid factors • (Draft) Written materials must include legends and other disclosures • Applies to both general solicitation communications and sales materials • (Draft) General solicitation materials must be filed with SEC • No later than date of first use
- 13. 13 FDA Guidance • November 2009 – Social media guidance was promised • Deadlines were pushed back a number of times • Congress mandated that social media guidance be published by June 2014 • FDA has announced that they are on track to provide social media guidance • FDA 2014 guidance agenda published ‒ Initial guidance – January 2014 ‒ Additional advertising & social media guidance is on the agenda ‒ Publication dates TBD
- 14. 14 FDA 2014 Guidance Agenda • Considerations for Regulatory Submissions of Promotional Labeling and Advertising Materials including Submissions in Electronic Format (January 2014) • Internet/Social Media Platforms with Character Space Limitations: Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices (June 2014) • Internet/Social Media Platforms: Correcting Independent-Third Party Misinformation About Prescription Drugs and Medical Devices (June 2014) • Internet/Social Media Advertising and Promotional Labeling of Prescription Drugs and MedicalDevices – Use of Links (June 2014) • Brief Summary and Adequate Information for Use: Disclosing Risk Information in Consumer- Directed Print Advertisements and Promotional Labeling for Prescription Drugs (TBD – 2014)
- 15. 15 FDA Guidance Beginning • Considerations for Regulatory Submissions of Promotional Labeling and Advertising Materials including Submissions in Electronic Format (Draft) ‒ Covers submission guidelines for interactive promotional material ‒ Must submit all promotional labeling and advertising at the time of initial dissemination/publication • Two types of labeling ‒ FDA required labeling ‒ Promotional labeling • Submit specimens upon initial dissemination (Form FDA 2253/FDA 2301) • Responsible for product promotional communications on sites that are owned, controlled, influenced, or operated by, or on behalf of the firm • Under certain circumstances (any control or influence) responsible for third-party sites ‒ Employees, agents, bloggers
- 16. 16 FDA Guidance - What to Expect • Brief Summary and Adequate Information for Use: Disclosing Risk Information in Consumer- Directed Print Advertisements and Promotional Labeling for Prescription Drugs (TBD – 2014) ‒ Updates to existing advertising requirements • Internet/Social Media Platforms with Character Space Limitations: Presenting Risk and Benefit Information for Prescription Drugs and Medical Devices (TBD – 2014) ‒ Addressing disclosure of risk and benefit information in Twitter, Facebook and more ‒ Links, images, videos and titles ‒ Sharing, retweeting, liking, cross-platform syndication ‒ Defining agents, representatives and managing non-restricted sites w/ active presence ‒ Restrictions of access for private Facebook pages and posts
- 17. 17 FDA Guidance - What to Expect • Internet/Social Media Platforms: Correcting Independent-Third Party Misinformation About Prescription Drugs and Medical Devices (TBD – 2014) ‒ Managing non-restricted sites and active presences across social & digital channels ‒ Sharing, retweeting, liking or commenting on misinformation ‒ Addressing agents and representatives • Internet/Social Media Advertising and Promotional Labeling of Prescription Drugs and MedicalDevices – Use of Links (TBD – 2014) ‒ Designing documented & unavoidable disclosure process in digital and social media channels ‒ Addressing disclosure of prescription drug information in Twitter, Facebook and more ‒ Links, images, videos and titles ‒ Sharing, retweeting, liking, cross-platform syndication
- 18. Social Media Risk Considerations
- 19. 19 SOCIAL PROMOTIONS - Contests & Promotions • Marketers have more responsibility & risk with increased need for structured and auditable processes. • FB changed their promotional guidelines providing key benefits to marketers but increases execution risk • Pinterest changed their promotional guidelines to restrict the use of their platform for certain types of promotions • Growing concerns from state AGs & class action bar • FTC Cole Haan Pinterest indicates that contest entry can be endorsement
- 20. 20 BE CLEAR - Need to Present the Rules
- 21. 21 DISCLOSURE URLS General • clickhe.re • details-he.re • Info-he.re • Learn-mo.re • More-he.re • disclaime.rs • disclosur.es • leg.al Individual • affiliate-po.st • employee-po.st • investor-po.st • my-disclosur.es • paid-po.st • sponsored-po.st Contests, Promotions Sweepstakes • click-here-for- rul.es • contest-rul.es • for-rules-click- he.re • full-contest-rul.es • official-rul.es • prize-rul.es • prize-ter.ms • promotional-rul.es • rul.es • sweeps-rul.es • sweepstakes- rul.es Terms & Conditions • conditions-app.ly • important- pricing.info • lease-offer-ter.ms • limitations-app.ly • offer-ter.ms • restrictions-app.ly • service-ter.ms • ter.ms • terms-app.ly • terms-of-u.se Warnings & Notices • warnin.gs • health-warnin.gs • legal-notic.es • privacy-notic.es • safety-warnin.gs Other Languages Available • Dutch • French • German • Italian • Portuguese • Spanish
- 22. 22 Make Rules & Terms Accessible
- 23. 23 Make Rules & Terms Accessible
- 24. 24 Facebook Timeline Promotions • Random draw sweepstakes and contests leverage like and comment functionality • Considerations - Lack of time/date stamp for like based entries - Winner validation and notification - Clear presentation of rules - Reporting and strategic data capture
- 25. 25 Native Advertising / Sponsored Content “Native advertising will be a huge and continuing theme in our work” "There could be enforcement based on existing law and existing enforcement” FTC Consumer Protection Bureau Director, Jessica Rich Key Concerns: • Transparency • Consumer trust • Editorial vs. Advertorial • Standardization of terminology and best practices • Defining native advertising • Sharing & syndication of native advertising content • Self-regulation or imposed regulation
- 26. 26 Advocate/Influencer Disclosure • Communicating disclosure policies to program participants • Identifying the best approach across your advocate eco-system - Celebrities - Tier 1 Influencers - Brand ambassadors - Contest participants - Employees • Reasonable monitoring and follow up practices
- 27. 27 Other Considerations UGC/IP/Trademark • Required content releases - UGC acquired via social promotion - UGC identified in the ‘wild’ • Sources and implementation • Documentation Brand & Agency Management: • Standardized process and policies • Agency & brand policy compliance & oversight • Sponsored content disclosure & republishing
- 29. 29 First FTC Investigation – Ann Taylor Ann Taylor LOFT Preview Campaign: “…Bloggers who attend will receive a special gift, and those who post coverage from the event will be entered in a mystery gift card drawing…” “…goes against the rules of ethical journalism…” “…stench of pay-to-play in the wake of FTC disclosure guidelines.” “…the [Ann Taylor] case serves to let marketers know that the FTC is keeping a close eye on their interactions with bloggers.”
- 30. 30 FTC - Ann Taylor LOFT Facts: Ann Taylor LOFT invited selected bloggers to a preview event, provided gift cards and promised to activate the gift cards if an article/review was posted within 24 hours. Some bloggers failed to disclose they had received free gifts from LOFT. Issue: Whether Ann Taylor engaged in deceptive practices where it provided gifts to bloggers who the company expected would blog about the LOFT division. Resolution: FTC closes investigation, and determines not to recommend action, because “LOFT adopted a written policy . . . stating that LOFT will not issue any gift to any blogger without first telling the blogger that the blogger must disclose the gift in his or her blog.”
- 31. 31 First FTC Enforcement – Reverb FTC says Reverb engaged in deceptive advertising for not disclosing that the reviews came from paid employees working on behalf of the developers. App Store reviews written by agency with no disclosure FTC sanctions agency and agency owner personally for engaging in deceptive advertising
- 32. 32 FTC – Reverb Enforcement Facts: PR Firm uses employees to post reviews as ordinary consumers. Issue: Reviews were not independent; and reviews failed to disclose material connection between reviewer and employer. Therefore, endorsements were false, misleading, and deceptive. Resolution: • Consent Decree with injunctive relief. • Reporting and compliance provisions for both the agency and owner • Order lives for 20 years.
- 33. 33 FTC Financial Settlement - Legacy FTC investigation - $250,000 • Program lacked disclosure and monitoring • Positive endorsements with links to product • Did not adequately disclose connections • Misrepresented reviewer compensation • Would not be reasonably expected by consumers • Responsible for representations of affiliates
- 34. 34 FTC – Legacy Learning Settlement Facts: Legacy Learning Systems engaged a network of affiliates to promote and market products, including a DVD set to teach guitar lessons. Issue: Affiliates failed to disclose material connections and commission payments. Claims, endorsements and statements were not being monitored. Resolution: • $250,000 penalty on $5mm of sales • Requirement for reasonable monitoring & process • Reporting and compliance provisions in place for 20 years • Responsible for claims, endorsements & disclosure by affiliates
- 35. 35 FTC – Hyundai Closing Letter Facts: During Super Bowl XLV, Hyundai hired a PR firm to build buzz around their Super Bowl commercial. Bloggers were asked to write about the commercial and were given a gift certificate. Issue: No disclosure that the bloggers received something in exchange for participation in the promotion. Resolution: The FTC issued a closing letter and a blog post with more info Social media policies of advertiser and agency were both violated by rogue employee 3 M’s Mnemonic • Mandate a disclosure policy that complies with the law • Make sure people who work for you or with you know what the rules are • Monitor what they’re doing on your behalf
- 36. 36 FTC – HP/Porter Novelli Closing Letter Facts: Hewlett Packard engaged a network of advocates through PR firm Porter Novelli to promote and market products, for a program entitled Inkology. Issue: Advocates failed to disclose material connections despite both HP and Porter Novelli having specific policies requiring the disclosure of such connections Resolution: • Closing letter issued • Disclosures must be reasonable • Facts matter – size of program a consideration • Policies protect
- 37. 37 FTC – ADT Closing Letters Facts: ADT engaged “Safety Mom” blogger/influencer to appear on traditional and social media to discuss ADT Pulse product. Issue: Safety Mom failed to disclose material connections in media appearances and posts discussing and promoting the ADT Pulse product. Resolution: • Closing letters issued to ADT, PR agency, talent agency and talent personally. • ADT prohibited from misrepresenting that any discussion or demonstration of a product or service is an independent review provided by an impartial expert . • Misrepresented reviews had to be removed.
- 38. 38 FTC – Cole Haan/Pinterest Facts: Cole Haan created a contest on Pinterest encouraging users to submit photos with a theme of Wandering Sole and include #Wandering Sole to enter to win $1,000. Issue: Entry Pins were incentivized with a prize and therefore endorsements requiring material connection disclosures. Resolution: • Closing letter issued • Contest entries can be considered endorsements requiring disclosure • Disclosures must be included clearly and conspicuously in messages • TBD – Would a #Giveaway, #Contest, #Sweeps suffice? • TBD – Does this apply to other social platforms?
- 39. 39 OFT – Handpicked Media Facts: Handpicked Media engaged advocates to promote brand marketing initiatives in social media channels Issue: Lack of disclosure in blog posts, Facebook Status Updates and Tweets Resolution: • Office of Fair Trading (OFT) settled with Handpicked Media, terms not disclosed. • ASA to promulgate additional guidance to CAP Codes. • Disclosure required in all marketing messages, including short-form messages and celebrity endorsements.
- 40. 40 ASA - Mercedes Facts: Mercedes-Benz ran a contest online where the contestant with the most votes wins a van. Some contestants were soliciting votes in an effort to gain an advantage. One user noticed this activity, asked company for guidance and received no response. She went ahead and solicited votes as well after which company changed policies and disqualified all contestants who solicited votes. Issue: Rules for contest did not address manipulation. Delays in replying caused confusion. Change in rules during contest invalidated contest entries Resolution: • Settled by ASA, terms not disclosed.
- 41. 41 ASA – Snickers/MARS Facts: Snickers (MARS) ran a celebrity campaign consisting of a series of intentionally confusing Tweets with a reveal at the end Issue: Was disclosure required in early (teaser) Tweets and was the #SPON that was used sufficient as a disclosure Resolution: • ASA investigated and settled. • Disclosure is required. • The series was considered a consolidated unit, but the timeliness and proximity of messages was a concern.
- 42. 42 ASA - Nike
- 43. 43 ASA - Nike Facts: Nike had its #makeitcount campaign banned by the ASA for lack of disclosure. Issue: Tweets lacked disclosure. Brand assumed that everyone knew that sponsored athletes were compensated Resolution: • Branded Nike URL was not sufficient as a disclosure. • Cannot assume that “everyone knows” that sponsored athletes are paid. • Celebrity endorsements require disclosure (no exemption). • ASA investigated and settled. • Disclosure is required.
- 44. 44 ASA – Toni & Guy (Gemma Collins)
- 45. 45 ASA – Toni & Guy (Gemma Collins) Facts: Toni & Guy had its Twitter campaign banned by the ASA for lack of disclosure. Issue: Tweets lacked disclosure. Celebrity was given a free styling in exchange for promotion of the salon and a special offer. Resolution: • Celebrity endorsements require disclosures (no exemption). • ASA investigated and settled. • Disclosure is required.
- 46. 46 | |212.717.1414 Tom Chernaik, CEO contact@getcommandpost.com www.getcommandpost.com
- 47. Overview
- 48. 48 Social Strategy Redefined CommandPost is CMP.LY’s patented Monitoring, Measurement & Insight (MMI) tool for managed social communications. • Cross-platform visibility into social media performance • Actionable insights to evaluate & optimize engagement in real time • Demonstrate ROI – quantify, benchmark & track the value of assets/initiatives • Capture strategic value of real-time marketing over time Insights layer that works in conjunction with existing tools & processes!
- 49. 49 Core Benefits 1. Earned Media Value Measurement - Know your (social media) value 2. Owned Media Effectiveness - Redefine your social media strategies 3. Social Advocacy Value - Drive advocacy for your brand 4. Audience Segmentation & Optimization - Understand your audience 5. Deeper Insights With Direct Attribution - Make informed decisions
- 50. 50 Applications Branded Channels Gain Deeper Insights into Owned Media Advocates Own Your Earned Media Disclosure Solutions Get Disclosure Right
- 51. 51 Insights Layer for In-Depth Platform, Post & Campaign Analysis Identify Advocates | Segment Audiences | Optimize Content • Evaluate & optimize your content strategies • Measure, benchmark & track engagement • Maximize the value/ROI of your audience, platforms, content & campaigns • Know your audience • Identify potential advocates • Monitor & manage community health BRANDED CHANNELS
- 52. 52 ADVOCATES Manage, Measure & Optimize Third-Party Programs at Scale Advocates & Influencers | Employees | Thought Leaders • Track real-time program activity across social platforms • Manage advocates & programs efficiently • Measure third-party performance & impact • Evaluate best performing content & platforms • Optimize & analyze tactics & strategies • Document & review program activity • Built-in compliance tools
- 53. 53 DISCLOSURE SOLUTIONS Include Simple, Documented Disclosure in Communications Regulatory Needs | Policy Compliance | Best Practices • Make disclosure “clear & conspicuous” • Use plain language • Address syndication & character limits • Disclose directly in the body of a social post • Have a standardized & documented process • Works across all platforms – mobile optimized • Implement best practices
- 54. 54 | |212.717.1414 Tom Chernaik, CEO contact@getcommandpost.com www.getcommandpost.com
Editor's Notes
- #49: Provides value on both a daily basis and in long-term planning and budgeting Delivers real value through day to day monitoring and measurement as well as a built in methodology to capture and build strategic, long-term value around your social marketing efforts