The FTC and Local Food

December 1st may have been a big day for the local food movement, but it passed without much notice. What happened that day, you ask? That is the day that a new set of guidelines from the Federal Trade Commission [Guides Concerning the Use of Endorsements and Testimonials in Advertising (16 CFR 255)] went into effect. Specifically, these expand “Truth in Advertising” laws and create a much higher standard for endorsements. These stricter standards apply both to the “generally expected performance” of the product and any “material connections” between the parties involved. Also the new rules make clear that they apply to all forms of social media, not just traditional advertising. 

How it impacts the local and sustainable food movement:

This is a highly interconnected movement. In this context, how can “material connections” be defined? Applicability is clear in cases where money is involved. But what about endorsements on a personal blog, or a plug on Facebook? On both the for-profit and non-profit sides of the local food movement, people recognize the value of social media to spread the word and cross-promote friends and business partners. Since the users of social media recognize it as having advertising or marketing value, in due course it is probable that the FTC or a plaintiff’s lawyer will as well.

Who gets to speak? In the traditional top-down world that the FTC is used to regulating, the authority to speak on behalf of the organization is typically pretty clear. The new rules expressly hold employers liable for the endorsements of their employees, even if the employee makes the statements on her own blog or Facebook page. Do interns or volunteers within your organization provide “endorsements” to other businesses or advocacy groups?

The other potential vulnerability is in the poorly defined language that is common within discussions of sustainable foods. Take the word “sustainable” itself. While the word is clearly defined in many venues, it is not always clear that it can be applied to a particular product or practice without a large dose of opinion. Likewise, the words “healthy” or “local” are open to interpretation. “Organic” is clearly defined and has clear applicability. But even here there is danger, since benefits beyond organic status are often implied if not explicitly stated. Can these statements live up to a higher burden of proof?

Finally, the new guidelines mandate that the “advertiser” create policies and training for employees, and have a structure in place to monitor compliance. As a practical matter, this is likely to be another case where a small producer may find compliance more difficult than their larger, more traditionally structured competitors. 

Now don’t get me wrong… I believe in accountability and transparency as much as the next guy. But I am concerned that the eventual implementation and enforcement of these rules may have a particularly severe impact in a movement defined by a network of non-traditional business relationships, multiple communication paths via social media, and product claims that may be difficult to quantify. My hope is that we can create and adopt practices which the FTC will accept and others can model, before an unreasonable interpretation is imposed upon us.

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One thought on “The FTC and Local Food

  1. Chris, I think you are exactly right in your approach as laid out in the last paragraph. Given the problems of definition you observe in the regs, common sense suggests developing “reasonable interpetations” now, operating within those interpetations and communicating your POV freely. The longer an agreed interpetation stays out there without regulatory/legal pushback, the more likely it is to survive any challenge that appears.

    By the same token, I think the movement also needs to learn how the top-down, big kahunas are interpeting the same set of rules. They may also already be afoul some of them in regards to expected performance and material connections — especially when it comes to claims of sustainablity (e.g., the “organic” grapes harvested in Chile and then air frieghted by Delmonte to your local supermarket and marketed as “sustainably” grown…)

    At least that is my 2 cents as a non-lawyer, non-expert!

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