Nearly thirty years after the Federal Trade Commission (“FTC”) last updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising, the FTC announced on October 5, 2009, that it has approved final revisions to the Guides, which address endorsements by consumers, experts, organizations and celebrities, as well as the disclosure of the relationships between advertisers and endorsers. The revised Guides, which are effective December 1, 2009, incorporate several important changes that will directly affect advertisers that utilize endorsements and testimonials in their advertising, including endorsements from bloggers and other social media users. The revisions reinforce the advertising standard that the consumer impression or takeaway is of paramount concern when evaluating an ad. Although the Guides are not enforceable law, they do reflect the FTC’s interpretation of the FTC Act.
No Safe Harbor for Non-typical Testimonials
The revised Guides eliminate the “safe harbor” afforded under the prior Guides to non-typical testimonials accompanied by disclaimers of typicality. Under the prior Guides, advertisers could use testimonials that relayed the unusual results of using a product (such as weight loss) as long as the advertiser included a disclaimer such as “results not typical.” Under the revised Guides, however, advertisers that feature testimonials are required to clearly disclose the results that consumers can typically expect. Specifically, “[i]f 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.” Thus, the FTC apparently views a “results not typical” disclaimer as insufficient to dispel the overall consumer impression that the unusual results achieved by the endorser are nevertheless the results most consumers could expect when using the product.
Disclosure of Material Connections – Bloggers Beware
The FTC has also taken an arguably stricter approach to enforcing the principle that “material connections,” such as payments or free products, between advertisers and endorsers be disclosed. Moreover, the revised Guides require advertisers to disclose any financial ties with research institutes that are cited in the advertiser’s advertising.
These disclosure requirements extend to “word-of-mouth” marketers such as bloggers and other consumers who actively use social media outlets such as Twitter and Facebook to discuss products and services. The FTC noted that the advent of consumer-generated media means that, in many instances, it is the endorser, rather than the advertiser, that disseminates the endorsement. Accordingly, the FTC has taken the position that, in those situation, it is the endorsers that are primarily responsible for disclosing material connections with the advertiser. This conclusion appears to be motivated by, again, the belief that consumer impression is that consumers do not generally know or understand that advertisers provide freebies to bloggers, and therefore, consumers would otherwise (without a specific disclosure) expect a blogger/endorser’s product review or evaluation to be free of any financial connection with the advertiser.
On a related note, the revised Guides suggest that an advertiser that participates in a blog advertising service that matches up advertisers with bloggers who will promote the products on their personal blogs may be held liable for any misleading or unsubstantiated representations made through the blogger’s endorsement. The blogger also is subject to potential liability for the misrepresentations and failure to disclose the payment.
Liability for Celebrity Endorsers
The revised Guides also address the potential liability of celebrity endorsers. Although not explicitly addressed in the prior Guides, the revised Guides state explicitly that endorsers as well as advertisers could be liable under the FTC Act for false or unsubstantiated claims made in an endorsement. The revised Guides also state that celebrities have a duty to disclose their relationships with advertisers when endorsing products or services in non-traditional advertising settings such as talk-shows and in social media outlets. Consumers generally understand that celebrities are paid to appear in traditional advertising, but may not expect, the FTC apparently believes, celebrities’ personal views when expressed in real life e.g. on a talk show, to be influenced by advertiser compensation or sponsorship.
The revised Guides have received much attention due to their expansion into the blogosphere and social media. However, given the changes regarding testimonial advertising and the disclosure requirements, all advertisers would be well advised to review and adhere to the revised Guides in their advertising and promotions.