Who Has to Disclose When They Post About My Launch?
Launch week. My employees are posting. Three creators I sent free product to are posting. My advisor tweeted something generous, and my seed investor wrote a whole thread.
I have no idea which of those people are legally required to disclose their connection to me, or whether that is even my problem to manage.
What Is a Material Connection?
The FTC’s Guides Concerning Use of Endorsements and Testimonials in Advertising sit at 16 C.F.R. Part 255, with Section 255.5 addressing disclosure of Material Connections.
The organizing principle is that where a connection exists between an endorser and the company that the audience would not reasonably expect, it should be disclosed clearly and conspicuously. The definition is broader than payment. It reaches free or discounted product, employment, family relationships, and an equity stake.
On that test, an employee posting enthusiastically about their employer’s product has a material connection. So does an investor.
Can the Company Be Liable for What the Creator Did?
This is the part founders find surprising. Part 255 states that an advertiser may be liable for a deceptive endorsement even when the endorser is not liable.
The Guides say advertisers should provide guidance to their endorsers on the need to ensure statements are not misleading and to disclose unexpected material connections, monitor their endorsers’ compliance, and take action sufficient to remedy non-compliance.
That makes deliberate non-involvement the wrong strategy. “The creator did not disclose and that was their choice” is a weaker position than it sounds.
What Makes a Disclosure Adequate?
It generally needs to be hard to miss: placed where the audience encounters it before or as they encounter the endorsement, in plain language, in a form that survives the platform. A disclosure below a “more” fold, buried in a hashtag block, or present only in a video description rather than the video itself is frequently treated as inadequate.
Beyond disclosure, endorsements should reflect the endorser’s honest opinions and actual experience. A testimonial about a product the person never used is a problem regardless of what was disclosed.
Part 255 also addresses expert endorsements, endorsements by organizations, and endorsements directed to children, each of which carries its own considerations if your campaign involves them.
Common Mistakes Founders Make
- Assuming free product does not count. Gifted product is a material connection. No payment, no contract, and no request to post does not remove the obligation.
- Forgetting employees and investors. Both have connections a general audience will not assume, and both are usually organized from inside the company.
- Providing no guidance and no monitoring. The Guides contemplate that advertisers do both. A short written disclosure policy given to every endorser is cheap and materially better than silence.
Before Launch Week, Check These Seven Things
- Do we send free or discounted product to anyone who might post, and do we tell them in writing to disclose?
- Do we have a written social media policy for employees addressing disclosure, and has the team read it?
- Have investors or advisors posted about us, and did those posts disclose the relationship?
- Do our creator contracts require disclosure in a specified form?
- Does anyone monitor what endorsers post, and is there a record of it?
- Do testimonials on our website come from people with a connection to us, and is it disclosed there?
- If a regulator asked for our endorsement policy tomorrow, do we have a document to send?
The Bottom Line
For a company preparing a launch, this is among the cheapest risks to close. A one-page disclosure policy, included in every seeding email and creator contract and circulated internally before launch day, addresses the large majority of it.
Planning launch marketing across creators, employees, and investors?
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