For the first time since 2009, the FTC has updated the Q&A on its Endorsement Guides. The Endorsement Guides represent administrative interpretations of laws enforced by the FTC, specifically the applicability of Section 5 of the FTC Act to the use of endorsements and testimonials in advertising.
The Endorsement Guides set forth the general principles that the FTC will use in evaluating whether an endorsement or testimonial is deceptive. According to the FTC, the Endorsement Guides, “at their core, reflect the basic truth-in-advertising principle that endorsements must be honest and not misleading.” [Also see our related article, FTC's new guidelines could change how testimonials are used in social media.]
The Endorsement Guides were last updated in 2009 to respond to changes in the forms in which testimonials were being presented, including the use of social media to make product endorsements. In the revised Endorsement Guides, the FTC noted that the individuals using social media to review or tout endorsements, such as bloggers, could be subject to the Endorsement Guides, including requirements that the testimonial be truthful and not misleading, reflect the typical experience of a consumer and disclose any material connections to the advertiser of the product. The FTC also noted that advertisers are responsible for making sure that any individuals that they paid or otherwise compensated to post testimonials complied with the Endorsement Guides.
The 2015 Q&A, entitled “The FTC’s Endorsement Guides: What People Are Asking,” provides answers to general questions posed to the FTC about its Endorsement Guides. It reiterates that endorser disclosures are the advertiser’s responsibility, which means companies must provide appropriate training and monitoring to their endorsers. Per the Q&A, “If law enforcement becomes necessary, our focus usually will be on advertisers or their ad agencies and public relations firms.”
The following are the five main takeaways from the FTC’s revised Q&A on advertising endorsements and testimonials:
- The Endorsement Guides apply equally to all types of media and forms of endorsement, whether they have been around for decades, like magazines and television, or are in their infancy, like social media, including Facebook, Twitter, YouTube and blogs. Also, a testimonial is not limited to written online reviews or statements; posting a video or photo of product in social media can convey an individual’s approval of a product and constitute an endorsement.
- A disclosure is required any time consideration is given by an advertiser to an endorser, particularly when the endorser receives compensation or other incentive to provide a testimonial, whether in the form of money, discounts, or other items of value, it must be disclosed. Even the opportunity to win a prize in a sweepstakes or contest is deemed consideration that must be disclosed. For example, the FTC recommends that sweepstakes promoters that ask entrants to Tweet or post regarding their products to require entrants to use a hashtag that includes the words “sweepstakes” or “contest” in their entry.
- Disclosures must be clear and conspicuous. To meet this requirement, the disclosures should be
- Close to the claims to which they relate
- In a font that is easy to read
- In a shade that stands out against the background
- For video ads, on the screen long enough to be noticed, read, and understood
- For audio disclosures, read at a cadence that is easy for consumers to follow and in words consumers will understand.
- A disclosure is required when an employee provides an endorsement. Just as the Endorsement Guides require disclosure when an endorser receives compensation, a disclosure is also required when an employee provides an endorsement.
- A disclosure must be made if an endorsement or testimonial describes results that are not typical. Testimonials claiming specific results will often be interpreted to mean that the endorser’s results reflect that which others can expect. Thus, in situations where results that are described do not reflect the typical consumer experience, a disclosure must be made regarding what typical results will likely be. Also, the advertiser must have substantiation to support any claim of such typical results.
The FTC’s revisions to the Q&A accompanying its Endorsement Guides are a reminder to advertisers that the FTC remains vigilant in policing advertising claims. The FTC continues to focus on claim substantiation and adequate disclosures for testimonials and endorsements. Companies would be wise to carefully review any and all advertisements, including social media, to ensure that advertisements do not run afoul of Section 5 of the FTC Act.