In July, at a hearing of the Senate Commerce Committee’s consumer protection subcommittee, controversy burst forth over the Federal Trade Commission’s (FTC) proposed changes to its advertising guidelines, particularly with respect to consumer endorsements representing a non-typical experience and whether a bare disclaimer of “results not typical” would continue to be permissible.
Current FTC endorsement guidelines provide that a consumer endorsement will be interpreted as representing that the endorser’s experience is representative of what consumer’s “will generally achieve with the advertised product,” for which the advertiser must have adequate substantiation, or “clearly and conspicuously disclose the limited applicability of the endorser’s experience to what consumers may generally expect to achieve.”
An Inadvertent “Open-Ended Invitation”
The FTC’s pending proposal to significantly curtail, if not eliminate, the use of “results not typical” disclaimers has provoked the controversy. At the Senate hearing, David Vladeck, director of the FTC’s Bureau of Consumer Protection, testified that the FTC’s current guidelines inadvertently extended an “open-ended invitation” to advertisers to make inflated claims through consumer testimonials that should have been prohibited. He added that FTC research has shown that the bare “results not typical” disclaimer has not been effective in eliminating consumer deception.
Among other things, the proposed revisions to the FTC endorsement guides specify in the amendment, as in the current guides, that an ad containing an endorsement relating the experience of one or more consumers will likely be interpreted as representing that the endorser’s experience is representative of what consumers will generally achieve with the advertised product. The big change in the guides is the following:
“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.”
Alternatively, if the advertiser does not have adequate substantiation for the “generally expected performance,” the Commission, after acknowledging that it cannot rule out “the possibility” that a strong disclaimer of typicality could be effective in the context of a particular advertisement, went on to note that an advertiser possessing “reliable empirical testing” demonstrating that the net impression of its advertisement with such a disclaimer is non-deceptive will avoid an enforcement action.
In sum, the “limited applicability disclaimer” has been drastically curtailed, if not eliminated.
Consumer Endorsements: A Thing of the Past?
Industry witnesses at the July 22 hearing were adamant that the “generally expected performance” of a product would require quantification of average results, which they maintained would be nearly impossible for numerous products, such as exercise and weight loss products, health and beauty aids, and the like, due to differences between users’ age, genetics, etc. Equally problematic, it would appear, is the FTC’s suggestion that “reliable empirical testing” with the attendant difficulties of appropriate sample size, proper controls, non-leading questions, statistically significant results, etc., could avoid an FTC enforcement action.
If, as expected, the FTC’s proposed changes are adopted and scrupulously enforced, it is difficult not to conclude that consumer endorsements are a dying breed, if not a thing of the past.