The FTC’s rules come down to one idea: people deserve to know when someone praising a product has a reason to praise it. If a creator, employee or customer gets something of value from a business and posts about it, the connection has to be disclosed clearly, where people will actually see it. Separately, since October 21, 2024, federal rules ban fake reviews, buying reviews tied to a particular sentiment, undisclosed insider reviews, review suppression and fake followers. What follows is a practical summary for Detroit businesses and creators, not legal advice. For a specific situation, talk to a lawyer.
The two sets of rules that matter
There are two main federal documents, and they do different jobs.
The Endorsement Guides (16 CFR Part 255) explain how the FTC Act’s ban on deceptive advertising applies to endorsements, testimonials and reviews. The FTC revised them on June 29, 2023, expanding the definition of endorsement to include fake reviews, virtual influencers and tags in social media posts, and adding a definition of “clearly and conspicuously” that warns a platform’s built-in disclosure tool might not be adequate. Guides are not a rule by themselves, but they describe what the FTC considers deceptive.
The Consumer Reviews and Testimonials Rule (16 CFR Part 465) is an actual rule with penalties. The FTC announced it on August 14, 2024, and it took effect on October 21, 2024. Because it is a rule, courts can impose civil penalties for knowing violations. In its December 22, 2025 announcement of warning letters, the FTC put the maximum at $53,088 per violation. The amount is adjusted for inflation periodically, so check the current figure if it matters to you.
When a post needs a disclosure
The trigger is a “material connection,” which the FTC’s Disclosures 101 for Social Media Influencers describes as any financial, employment, personal or family relationship with a brand. In practice that covers:
- Payment of any amount, including per-post fees and commissions
- Free or discounted products or services, including comped meals, stays and tickets
- Affiliate links and promo codes that earn the creator money
- Employment, ownership or a family tie to the business
- Anything else of value given in exchange for a mention
Disclosures 101 is explicit that you should not assume followers already know about a relationship, and that you should disclose even when a brand sent something without requiring a post. The FTC’s Endorsement Guides FAQ draws the line at ordinary free samples: getting a free sample a store hands out to all its customers is not a material connection.
How to disclose: wording and placement
Use plain words
The FTC suggests simple terms like “advertisement,” “ad,” “sponsored,” “#ad” and “#sponsored.” It also accepts plain statements such as “Thanks XYZ for the free product.” Vague tags like “#sp,” “#spon,” “#collab,” “#client” or “#ambassador” are not clear enough on their own. The disclosure should be in the same language as the post, so a Spanish-language Reel needs a Spanish-language disclosure.
Put it where people will see it
Placement is where most posts fail. The FTC’s guidance says a disclosure should:
- Appear with the endorsement itself, not only on a profile page or in a bio
- Be visible without tapping “more,” which usually means the first line or two of a caption
- Not be buried in a block of hashtags at the end
- Be superimposed on the image or video when the post is mostly visual, with enough time on screen to read
- Be both shown and spoken when the video has audio, because the FAQ says a claim made visually and audibly should be disclosed both ways
- Be repeated during a livestream, since viewers join at different times
A disclosure placed in the comments does not count. The FAQ calls it “easily avoidable.”
Platform labels help but aren’t a guarantee
Instagram’s “Paid partnership” label and similar tools on TikTok and Facebook are useful, and brands often require them. But the FTC’s FAQ says the fact that a platform offers the feature “is no guarantee that it’s an effective way” to disclose, and that ultimate responsibility “rests with the influencer and the brand, not the platform.” Use the label and a plain-words disclosure in the caption or on screen.
A simple standard. If a follower scrolling quickly would miss it, it isn't a disclosure. Put "Ad" or "Paid partnership with [Brand]" in the first line and on screen, and say it out loud in videos.
Common situations, answered
Gifted products and comped visits
A restaurant invites five local creators for a free tasting. Each one who posts about it needs to disclose, even if the restaurant said posting was optional. “Thanks [Restaurant] for having me, this meal was comped” in the caption’s first line, plus an on-screen note in the video, covers it. The business should tell creators this in the invitation, which brings us to the next point. (Creator tastings are a staple of restaurant marketing, so this comes up constantly.)
Brands are responsible for their creators
The FAQ states: “Your company is ultimately responsible for what others do on your behalf.” The FTC expects advertisers to run a reasonable program: tell creators what claims they can make and how to disclose, check their posts, and act when someone doesn’t comply. Putting disclosure requirements in the brief and the contract, then reviewing posts before or right after they go live, is the practical version of that. Our guide to hiring Detroit influencers covers briefs and contracts in more detail.
Employees posting about work
Staff can post about their workplace, and many businesses want them to. The FAQ says they should disclose the relationship in the post, and “listing your employer on your profile page isn’t enough.” A bartender sharing a new cocktail menu can simply add “I work here” in the caption. Reviews are stricter: the reviews rule specifically prohibits officers and managers from posting reviews without clearly disclosing their connection.
Asking customers for reviews
Asking every customer for an honest review is fine and smart. Under the Consumer Reviews and Testimonials Rule, you cannot offer anything in exchange for a review that is conditioned, openly or by implication, on the review being positive or negative. The FTC’s Q&A says you can offer an incentive for an honest review of either kind, but the incentive should be disclosed under the FTC Act. Review platforms often have stricter policies than the FTC, so check each site’s rules before offering anything.
Be careful with “review gating,” meaning only sending review requests to customers you expect to be happy. The Endorsement Guides FAQ says that approach “would be misleading if it substantially skews the favorability” of your reviews. Honest, steady reviews also matter beyond compliance, since AI tools increasingly summarize them, as we explain in our guide to how AI search picks local businesses.
Reposting customer content
When you share a customer’s post, story or review in your own marketing, it becomes your advertising. Our practical approach: ask permission, credit the customer, don’t edit it in a way that changes its meaning, and keep a disclosure attached if the customer received anything of value, such as a comped meal or a contest entry. Never feature reviews you know or should know are fake. Contests that ask for posts should make that clear in the post itself; the FAQ says a hashtag that includes “contest” or “sweepstakes,” such as #XYZ_Contest, should be enough.
What the reviews rule prohibits
The Consumer Reviews and Testimonials Rule bans six practices, according to the FTC’s announcement:
- Fake reviews and testimonials, including those attributed to people who don’t exist, people who never used the product, and AI-generated fakes, plus buying or spreading them when you knew or should have known they were fake.
- Buying reviews tied to sentiment, meaning compensation conditioned on a positive or negative review.
- Undisclosed insider reviews, meaning reviews by a company’s officers or managers without a clear disclosure, and spreading testimonials from insiders when the business knew or should have known about the undisclosed connection.
- Company-controlled “independent” review sites that claim to be neutral.
- Review suppression, such as unfounded legal threats or intimidation to stop negative reviews, or implying a page shows all reviews when negative ones were hidden.
- Fake social media indicators, meaning buying or selling fake followers or views to misrepresent influence, when the buyer knew or should have known they were fake.
Enforcement is active. On December 22, 2025, the FTC sent warning letters to 10 companies about possible violations of the rule, covering practices including fake reviews, sentiment-conditioned compensation, undisclosed insider reviews, review suppression and misuse of social media indicators. The FTC did not name the companies, and the letters were warnings, not findings of wrongdoing.
One detail for creator campaigns: the FTC’s Q&A treats posts by hired influencers as testimonials rather than consumer reviews under this rule. The disclosure standards of the Endorsement Guides still apply to them in full.
Do and don’t
| Do | Don’t |
|---|---|
| Put “Ad,” “#ad,” “Sponsored” or “Paid partnership with [Brand]” in the first line | Hide the disclosure after “more,” in the comments or in a hashtag pile |
| Show the disclosure on screen and say it in videos | Rely only on the platform’s Paid partnership label |
| Disclose gifted products, comped visits and affiliate links | Assume followers already know you were paid |
| Ask every customer for an honest review | Offer rewards only for five-star reviews |
| Have employees say they work for you when they post | Let managers post anonymous reviews of your business |
| Put disclosure rules in creator briefs and contracts | Assume the creator will handle disclosure alone |
| Reply to negative reviews professionally | Threaten reviewers or hide negative reviews while implying you show them all |
| Grow followers with real content and real partnerships | Buy followers, likes or views |
How we handle it
Our own sponsored placements carry a clear disclosure. In the creator campaigns we run for clients, the disclosure requirement goes into the brief and the contract, and we check posts for it. It is a small cost that protects the business, the creator and the audience’s trust. If you are planning a creator campaign and want it done properly, see how our influencer marketing work is structured or contact us.