Three Pointers for College Athletes and Businesses to Keep NCAA Marketing Legal

Fans of the Jayhawks and the Tar Heels are both hoping for a blowout victory in tonight's championship game. Most of the rest of us hope for a buzzer beater. Now that college athletes can profit from their name, image and likeness, anyone who hits a buzzer beater tonight will have ample opportunities to capitalize on the shot. But both athletes and businesses need to comply with Federal Trade Commission rules to make any NIL partnership a winning one.

The three most important FTC compliance tips are:

• The advertisement must be truthful and not misleading.

The FTC not only prosecutes literal false advertising, but also may pursue remedies against misleading advertising. For instance, an ad may not contain actual pictures of a product taken from an angle that misrepresents the size of the product in a material way.

• Athletes must actually use the product or service if they endorse it.

The FTC considers it false advertising for endorsers to claim to use a product or service unless they are bona fide users. That is, an endorser must use the product or service in a way a consumer would expect it to be used from the ad.

• There must be transparency around the athlete being compensated.

The FTC considers ads that are disguised as organic social media posts to be misleading. Most social media platforms offer advertising tools to appropriately disclose the relationship between the brand and the athlete.

In October 2021, the FTC emphasized its aim to aggressively enforce rules on endorsements and testimonials. Those enforcement actions can lead to civil penalties of over $40,000 per infraction. These civil penalties can be assessed against both the advertiser and the athlete.

The NCAA Final Four tournament is one of the most exciting sporting events of the year. It creates great opportunities for athletes and businesses to take advantage of new NIL laws and rules. To make the most of these opportunities, it is important to be careful to stay within legal bounds. 

If you have questions about NILs and FTC compliance, contact Andrew Coffman, Lindsay Calhoun or the rest of the Phelps Intellectual Property Team.