How Alcohol Cos. Can Best Follow New Advertising Rules
Social media has become an ever-increasing channel of communication and a popular and effective tool for reaching consumers, with over 4 billion people using platforms like Facebook, TikTok, Twitter and Instagram.
Athletes, celebrities and influencers abound on these platforms. Like many other industries, the alcohol industry has jumped into the fray, spending countless dollars advertising through social media.
Because of the growth of social media advertising and the use of it by alcohol brands, the Alcohol and Tobacco Tax and Trade Bureau recently issued its Industry Circular 2022-2 to provide guidance on how the TTB’s rules on advertising apply to advertising via social media.
Any form of media — whether written, verbal or an image — “disseminated to induce sales of alcohol products” constitutes an advertisement subject to the Federal Alcohol Administration Act. The TTB administers the Federal Alcohol Administration Act provisions and has promulgated regulations to implement the act.
These regulations protect consumers by requiring certain information regarding the product advertised.
By way of example, the TTB requires all advertising for alcohol beverages to include the product class, type or designation that is required to appear on the product label.
When advertising a product line or company name or brand, advertisements must include contact information for the industry member responsible for the advertisement. Additional requirements apply based on the product class.
Distilled spirits must also include the alcohol content and percentage of neutral spirits that is required to appear on the product label. Specialty consumer advertising products, such as T-shirts, hats and bumper stickers, are only required to include either the brand name or the company name of the responsible advertiser.
Recognizing that industry members face unique compliance challenges with these regulations when advertising on social media, the TTB made clear that all social media accounts, pages and content that advertise an alcoholic beverage, brand or specific alcoholic product are subject to TTB regulations.
The TTB went on to reaffirm that mandatory information should appear where a viewer would most logically expect to find the information.
For example, the name and contact information of the person responsible for the ad can be included in the profile section — while class, type and alcohol content information can be included on the specific page promoting a specific product. This includes changes to mobile websites, crowdsourcing sites, augmented reality and social media influencers.
When reviewing an advertisement for compliance, the TTB views an entire page or site as a single advertisement, so mandatory statements only need to appear once on the page. The information should be conspicuous and readily apparent to the viewer.
This applies to both desktop and mobile versions of a website. Mobile apps are also subject to TTB advertising regulations.
When industry members use social media accounts, generally the entire account is considered a single advertisement. Any content the industry member posts, likes or reposts to their social media is part of the advertisement and subject to TTB regulations.
On some platforms, providing all the mandatory information may be difficult due to space restrictions, in these instances advertisers can provide a link to another webpage containing the mandatory information.
The link must be clearly marked and take the viewer directly to the mandatory company or product information — not a general website requiring additional navigation to locate the information.
But, when a social media profile or website contains mandatory information only in the profile section, any posted media such as photos, GIFs or videos that can be downloaded or shared on other pages or platforms must include the mandatory statements within the image or video.
Social media influencers often directly or indirectly endorse products on their social media accounts, and consumers increasingly rely on these product reviews and endorsements from accounts they have come to trust.
Content created and posted by influencers may be considered an advertisement subject to TTB advertising regulations if the industry member, either directly or indirectly, solicits the content, compensates the influencer or shares or posts the content.
Influencers can satisfy the advertising requirements by including a clearly marked link to another website containing the mandatory information.
It’s important to remember that in addition to the TTB requirements, the Federal Trade Commission also has specific requirements relating to social media influencers and endorsements.
When links to another website or QR codes are included on an advertisement, the content accessible via the link or QR code must comply with TTB regulations.
When links are posted on social media advertisements or are only accessible via the product’s label or advertisement that already contains all mandatory information, the linked website or pages are considered part of the original advertisement and there is no additional requirement to provide mandatory information.
But, when a link takes the viewer to other websites or pages for different alcohol beverage products or companies, the linked website or page is likely to be considered a separate advertisement that must contain all mandatory information and comply with the prohibited practices regulations.
There is an application for everything, and mobile apps used for advertising alcohol products or companies are subject to TTB regulations.
Apps that provide drink recipes, assist with locating places that serve or sell a product, or other information related to alcohol beverages, are considered an advertisement and must follow all applicable regulations.
Industry members have also used crowdfunding websites to raise capital or solicit donations. These websites are treated like any other.
If the website discusses either the industry, a company or product, the content — or even the entire page — may be considered an advertisement that is subject to TTB advertising regulations.
Augmented reality is treated like any other image that may be used for advertising. When using augmented reality technology to advertise their company, brand or specific product, industry members should ensure augmented reality images comply with TTB advertising regulations.
Ensuring compliance with applicable advertising requirements is important because representations made in advertisements can serve as a source of liability for industry members.
Enforcement of TTB Advertising Regulations
Although industry members are not required to obtain preapproval of advertising materials, the TTB will review an advertisement for compliance with the appropriate regulations. This service is offered free of charge.
The TTB will also monitor the marketplace to ensure compliance by reviewing ads for compliance with all rules and regulations. Advertisements are identified for review through a combination of referrals, complaints and internal selection.
The TTB uses random selection when reviewing advertisements but may also independently select industry members for advertising examination based on a variety of factors such as prior compliance history, advertising methods and market impact.
When improper advertising is identified, the TTB aims to educate and work with industry members to ensure advertising is corrected or removed to achieve compliance.
But, the TTB is empowered to take enforcement action including offers in compromise, suspension or revocation of a permit, or voluntary surrender of a basic permit. Failure to comply with alcohol advertisement regulations may also result in criminal liability.
What can industry members do to ensure their advertising complies with all applicable rules and regulations? As a start, industry members should consider the following.
Industry members should take extra care when putting any information related to alcohol products or companies on social media. If it looks like an advertisement and sounds like an advertisement — then it probably is an advertisement and should comply with applicable regulations.
Members should also take extra care when creating downloadable content to ensure that all mandatory information will remain with the image, GIF or video.
Lastly, industry member should take advantage of the TTB’s preclearance service to have advertising materials reviewed for compliance with all applicable regulations.
Social media has solidified its place as a main means to advertise and promote products. Digital marketing is constantly evolving, and new trends emerge frequently.
With the increased scrutiny given to social media platforms by the TTB, it is critical that all industry members and those with a social media presence review their advertising practices to confirm that they are in compliance with applicable federal, and state, advertising rules and regulations.
This article originally appeared on Law360 on March 8.
The views and opinions expressed in the article represent the view of the authors and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is it intended to be a substitute for professional legal advice.
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