In a Federal Trade Commission notice published last week, the agency warned the advertising industry that penalties could be coming for the use of deceptive endorsements. The FTC not only released the notice, but it also sent a letter (a version of which is available here) to hundreds of businesses (a list is here) – advertisers, advertising agencies, and a few media companies – reminding them of the FTC’s concerns about deceptive endorsements in advertising. While the FTC makes clear that this list of recipients of the letter does indicate that any of them did anything wrong, it does make clear that the FTC takes this issue very seriously and wants to highlight the issue for the entire advertising ecosystem. The letter reminds businesses that violations can lead to fines of up to $43,792 per violation and other penalties.
What are the FTC concerns? The FTC said that prohibited practices “include, but are not limited to: falsely claiming an endorsement by a third party; misrepresenting whether an endorser is an actual, current, or recent user; using an endorsement to make deceptive performance claims; failing to disclose an unexpected material connection with an endorser; and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.” In other words, when an endorser says something about a product, the FTC is expecting that the endorser used the product and the statements that it makes about the product are accurate and reflect what consumers can expect from that product. This is not the first time that the FTC has raised these issues.
In fact, for well over a decade, the FTC has been warning companies not to use in the advertising celebrities or other endorsers saying good things about a product unless they used the product. And, when endorsing the product, the advertiser needs to make sure that the statements made by the endorser about the product are true and reflect results that a typical user can expect. Also, when someone receives anything of value for any testimonial about a product, even a tweet or social media post, the fact that consideration was received must be disclosed – very similar to the FCC’s sponsorship identification and payola policies (see our article here on these concerns for podcasters). We wrote about these FTC guidelines on endorsements during one big push in 2009, when the FTC was warning online influencers about these rules. We have also published other articles (e.g., here and here) that remind advertisers about these requirements. The FTC itself has published many resources for businesses to help them comply with the requirements of their policies – see their resources here.
While FTC enforcement typically targets the advertisers, broadcasters should be aware of these guidelines and not mislead their clients into campaigns that could prove problematic. The FTC has provided detailed guidance of what it expects from advertisers. Review this guidance and engage with counsel to avoid issues that can arise in misleading endorsements and other advertising.