The FTC is seeking comments until January 30, 2009, on proposed changes to its Guides Concerning the Use of Endorsements and Testimonials. The Guides, although advisory in nature, set forth the principles the FTC will follow in reviewing endorsements and testimonials and provide examples for advertisers.
Perhaps the most significant change proposed by the FTC relates to disclosures in consumer endorsements about atypical results. The current Guides allow advertisers to use truthful testimonials, even if the testimonial does not generally represent what consumers can expect when using the advertised product, if the advertiser (1) clearly and conspicuously discloses what the generally expected performance would be, or (2) discloses the limited applicability of the endorser's experience to what consumers may generally expect to achieve (called "disclaimers of atypicality").
According to the FTC, disclaimers of atypicality in consumer endorsements have provided a safe harbor to advertisers allowing them to avoid the general requirement that they be able to substantiate all material claims conveyed by their advertising. The FTC's proposed revision would eliminate this safe harbor and would require advertisers to substantiate and disclose the representative, rather than atypical, performance of the product or service.
The FTC's proposal is as follows:
§ 255.2 Consumer endorsements. (a) An advertisement employing endorsements by one or more consumers about the performance of an advertised product or service will be interpreted as representing that the product or service is effective for the purpose depicted in the advertisement. Therefore, the advertiser must possess and rely upon adequate substantiation, including, when appropriate, competent and reliable scientific evidence, to support such claims made through endorsements in the same manner the advertiser would be required to do if it had made the representation directly, i.e., without using endorsements. Consumer endorsements themselves are not competent and reliable scientific evidence. (b) An advertisement containing an endorsement relating the experience of one or more consumers on a central or key attribute of the product or service also will likely be interpreted as representing that the endorser's experience is representative of what consumers will generally achieve with the advertised product in actual, albeit variable, conditions of use. Therefore, an advertiser should possess and rely upon adequate substantiation for this representation. If the advertiser does not have substantiation that the endorser's experience is representative of what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.
The FTC did note, however, that not all testimonials will necessarily need disclosures about representative results. Testimonials for certain products - such as movies, games, or restaurants - are usually based on a consumer's subjective opinion while other testimonials make objective, quantifiable claims (such as pounds lost or money saved). Advertisements using inherently subjective testimonials are less likely to convey typicality messages and, thus, may not trigger the need for additional disclosures, unless there is a financial relationship between the endorser and the advertiser.
The FTC is proposing to make clear in the Guides that advertisers can be held liable for any false or unsubstantiated statements made by endorsers or for not disclosing any material connections between themselves and the endorsers. In addition, the proposed revisions would provide that endorsers, including expert endorsers and celebrities, may be held liable for their statements.
The FTC also addressed new media platforms such as blogs and word-of-mouth marketing, indicating that the agency is paying attention to these kinds of advertising campaigns. Regarding blogs, the FTC's proposed guidance states that if an advertiser requests that a blogger try a new product and write a review, the advertiser is subject to liability for false or unsubstantiated statements made though the blogger's endorsement. In addition, the blogger is subject to liability for representations made in the course of her endorsement, and the blogger is liable if she fails to disclose clearly and conspicuously that she is being paid for her services. The FTC suggested that the advertiser provide guidance and training for its bloggers concerning the need to ensure that statements bloggers make are truthful and substantiated. And the FTC suggests that the advertiser monitor bloggers who are being paid to promote its products and take steps necessary to halt the continued publication of deceptive representations when they are discovered.
Regarding word-of-mouth marketing, the FTC stated that if an advertiser provides free products or other incentives (such as points that can be redeemed for prizes) to individuals every time they mention the advertiser's products or services to their friends, these incentives should be clearly and conspicuously disclosed, and the advertiser should take steps to ensure that these disclosures are being provided.