Sponsorship disclosure is a legal requirement in radio, television, and more recently, social media, requiring stations and promoters to identify the sources of sponsored materials.
The Code of Federal Regulations defines sponsored material as any transmission for which a station received or will receive “money, service, or other valuable consideration.” Political material and political sponsors are included in this definition, and political broadcasts or segments on controversial matters qualify even when there was no exchange of money or other “valuable consideration”. This exception prevents groups from attempting to mask their sponsorship or promotion of candidates to increase credibility with viewers. In the case of campaign advertising, the material must identify both the source of the ad’s funding and whether it was authorized by a particular candidate.
To facilitate compliance, 47 U.S. Code § 317 requires all employees involved in the production and distribution of sponsored media to disclose information about their role to the broadcaster. The broadcaster must exercise “reasonable diligence” in obtaining sponsorship information from these employees.
The Federal Communications Commission (FCC) is responsible for enforcing these laws. According to the FCC, failure to disclose sponsorship is referred to as payola, and is punishable by fines or imprisonment (up to $10,000 and/or up to a year in prison).
For social media, the Federal Trade Commission (FTC) requires sponsorship disclosure when there is a “material connection” between the person posting and a brand. According to this FTC Guidance for Social Media Influencers, "material connection to the brand includes a personal, family, or employment relationship or a financial relationship – such as the brand paying you or giving you free or discounted services."
Examples of sponsorship disclosure in social media can be seen in the use of hashtags like #ad or #brandpartner for sponsored posts. This gives followers the knowledge of whether an endorsement comes from a promoter’s personal preference or is paid for by an outside source. While these may not be mutually exclusive (plenty of promoters choose to endorse products they use and like), sponsorship disclosure gives followers the power to decide for themselves the sincerity and value of an endorsement.
See:
- 47 U.S. Code § 317 - Announcement of Payment for Broadcast
- 16 CFR § 255.5 - Disclosure of Material Connections
- 47 CFR § 73.1212 - Sponsorship Identification; List Retention; Related Requirements
[Last updated in June of 2024 by the Wex Definitions Team]