7.14 Legal Considerations – Public Relations

Public relations firms increasingly are investigated along with the corporations they represent in situations of litigation, disputes about investor relations, etc. In fact, after a number of highly publicized cases of major corporate financial malfeasance came to light, public relations departments and firms reviewed their own roles in unwittingly misleading the public about the financial health of organizations that were in deep trouble. In another example, athletic apparel giant Nike was taken to court by a workers’ safety advocate because it released press statements defending its reputation against charges of mistreating overseas workers. The news releases were said to represent false advertising. The case served as a wake-up call to public relations firms that send out press releases every day. (Egelko)

Social Networking app logos

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In a relatively new twist, a number of “guerilla marketing” firms tout their ability to generate “buzz” about products and services on web sites populated by teens. The firms were recruiting young people with promises of gifts and access to the newest gadgets. In exchange, the teens agreed to go online to popular social networking sites and sing the praises of the products they had received and encourage their peers to buy the merchandise, all without disclosing that they were actually working for a marketing firm.

These practices raised ethical questions about the truthfulness of messages that fail to disclose conflicts of interest (one of the negative obligations mentioned earlier). When confronted with ethical concerns, many of the marketing and promotion firms claimed that if someone asked, their operatives were instructed to say that they were working for the movie studio, the gadget company or the bubble gum producer. But how many audience members, especially younger ones, were likely to ask?

As we’ve said, the Federal Trade Commission has now ruled that “word-of-mouth” endorsers of products or services (such as those who post positive messages on social networking sites, etc.) must disclose that they are being compensated with money or free goods and services as part of their posts to these sites. Guidelines originally issued by the Food and Drug Administration regarding direct-to-consumer pharmaceutical advertising now include similar advice for any person or company making claims about medical, food or cosmetic products through social media.