In a retail landscape dominated by the power of social media and influencer marketing, the Federal TradeCommission has ushered in transparency and accountability for retailers, by recently releasing long-anticipated updates to the Guides Concerning the Use of Testimonials and Endorsements in Advertising.The guides cover everything from social post disclosures, to use of influencers, to customer reviews and ratings, to affiliate marketing practices and beyond. It also includes an expansion of what defines abrand as endorsed and, therefore, covered by regulation – which could mean something as simple as a social tag.The guides are the FTC’s interpretation of Section 5 of the US FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce” in the context of testimonials and endorsements. Lastupdated in 2009, they prescribe various dos, don’ts and hypothetical scenarios for compliance with the truth-in-advertising laws.The FTC asserts that the rise in social media influencers has led to widespread deceptive advertising practices, and this latest update of the guides tackles the issue head on.Some key takeaways include: Clear disclosures are requiredThe guides strongly emphasize the importance of transparency when it comes to brand-endorser relationships. Brands must ensure that any material connections – including payment, other compensation or even gifting, an age-old practice in fashion – between themselves and endorsers, are clearly disclosed in a way that is easily noticeable and understandable to consumers. Endorsers can include celebrities, influencers, media, etc.For instance, influencers should write “Sponsored by XYZ” at the top of a social post spotlighting a brand’s handbag, not buried under a long section of copy or in a comment that just says “thanks XYZ!”.Brands may share liability with endorsers Brands and their partners, including PR, marketing, advertising, and reputation management teams, can be held responsible if an endorser misleads the public about a material connection to a brand, or a product’s effectiveness or their own experience with it. To prevent this, brands need to offer clear guidance to endorsers, and their own marketing and communications teams and partners, on how to avoid misleading consumers and ensure they disclose important information properly. This is necessary both in endorsement contracts and in development of content and campaigns. Avoid manipulation of customer reviews Customer reviews, a hallmark of the digital shopping experience, are also addressed in the guides. They state that in “procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, reporting,or editing consumer reviews of their products, advertisers should not take actions that have the effect of distorting or otherwise misrepresenting what consumers think of their products, regardless of whether the reviews are considered endorsements under the guides.”Some examples of deceptive practices included in the guides include retailers suppressing negative reviews; for example, if reviews have a star rating scale, suppressing any reviews below four stars, or highlighting or promoting certain reviews as “most helpful” if only the retailer, and not the customers themselves, have selected them as most helpful. Retailers must take care to ensure that reviews, if posted, are presented fairly and accurately.Monitoring and enforcing compliance is essentialThe FTC does take enforcement seriously. In 2021, the FTC put over 700 companies across all industries “on notice,” with a letter advising that violations of the then-existing endorsement guidelines could result in significant financial penalties. In 2022, the agency brought a highly publicized enforcement action against Kim Kardashian for failing to disclose her promotional relationship with EthereumMax digitaltokens. She paid a $1.26 million fine.With these new guides and an anticipated fresh wave of FTC enforcement, it’s crucial for brands to monitor and enforce internal compliance proactively, and thoroughly assess, educate, and oversee their influencer and endorsement partners to ensure their compliance as well.Regular audits and reviews of creative assets, endorsement practices and customer review policies can identify potential issues before they escalate. By showing that they take endorsement compliance seriously and creating a record of compliance efforts, brands may reduce the risk of FTC enforcement action. Beyond mere compliance: embrace authenticity The updated guides mark a turning point in the influencer age, demanding accountability, honesty and vigilance from retailers. They are more than just legal stipulations; they signify a call for brands to re-evaluate their approach to marketing and consumerengagement. Navigating this landscape demands not only compliance but also a strategic shift towards building meaningful connections. As retailers adapt to these regulations, they have a unique opportunity to transcend mere adherence and harness transparency as a tool for cultivating authenticity. Thisresonates profoundly with a customer base that is increasingly insistent upon genuine engagement.