When the Federal Trade Commission insists on full social media disclosure, it isn’t messing around. That’s the message that reverberated through the social media industry just a few months ago, when the FTC accused Sony and its PR firm of deceiving customers via a Twitter marketing campaign.

The problem began when Sony’s PR firm, Deutsch LA, asked employees to tweet about the “game-changing” technology behind the new Playstation Vita gaming console. The FTC requires anyone who advertises or endorses products on social media to disclose this fact. However, when employees tweeted from their personal accounts about the Playstation Vita, they didn’t disclose who they were working for.

The FTC ruled this lack of disclosure left Playstation customers with the impression that the tweets were genuine customer endorsements. In November 2014, the FTC reached a settlement that required Sony to offer $25 refunds to customers who purchased the Vita during a specified time period.

The Sony story is a cautionary tale for any business that asks or encourages employees to do work-related advocacy on social media. The FTC’s policy on mandatory disclosure applies to essentially any situation where money changes hands.

However, you needn’t be frightened by the FTC; the key is to understand these policies. Here are the things you need to know about disclosure on social media:

  1. Disclosure on social media works the same way as with traditional advertising: Anyone who advertises or endorses a product or service in a newspaper or on TV must disclose the nature of this relationship; social media is no different. The FTC says that if a significant minority of customers would otherwise be misled by the failure to disclose, a business is required to offer a disclosure. The key to staying on the safe side is to always be transparent in social media posts when promoting your own products and services. If you’re trying to sell anything, you should make it clear that it’s a promotional post.
  2. The disclosure must be clear and conspicuous: Your disclosure must be on the social media posting itself, not somewhere else such as a website or blog. It can just be a few words long, especially on a platform like Twitter; the FTC recommends simply preceding each post with the word “Ad:” or similar.
  3. The disclosure should reflect the “typical” result from using your product or service: Like with all advertising, you cannot sell a diet pill on social media by discussing only the rare success stories associated with its use. Rather, you must focus on describing the result that is typical from using that diet pill.
  4. Outdated endorsements should not be reposted: Be careful to avoid reposting an endorsement that is no longer applicable to the promotion of your product or service. For example, if a celebrity endorsed your diet pill two years ago and is no longer involved with marketing the pill, the FTC would likely consider it misleading to consumers for you to post about it.
  5. Social media marketing strategies should be cleared through your legal counsel: If you have a legal team that reviews your marketing and advertising, you need to extend this same level of scrutiny to your social media initiatives. In the long run, it might turn out to be the smartest investment you can make. A good way to ease your FTC-savvy social media manger’s FTC burden is to invest in a social media management platform. EveryoneSocial’s platform leads the industry and offers a great way to ensure everyone is on the same page with any employee advocacy efforts. The platform enables your social media manager to create tweets that are FTC compliant for employees to share with their personal networks.

Proper disclosures on social media are key to avoiding the wrath of the FTC. All you need to remember is that disclosure on social media works the same way it does in other forms of advertising, including that the disclosure should reflect the “typical” result and be timely, and that you can and should clear your disclosure strategy through legal counsel first.

Here’s some final food for thought: While the best businesses are, of course, smart about their disclosures on social media, these businesses also realize when they build a loyal following, their unpaid customer advocates can help with promotional campaigns – without the risk of running afoul of the FTC disclosure rules.

If you are interested in learning more about employee advocacy and how it deals with the FDC, download our Infographic here.