The Federal Trade Commission (FTC) recently announced revisions to its "Guides Concerning The Use of Endorsements and Testimonials." The new Guides cover more situations than before and impose stricter standards in many situations. They take effect December 1, 2009. Below are key highlights advertisers need to know.
Disclosure of "Typical" Results. The FTC has eliminated a safe harbor that previously permitted advertisers to describe unusual results in a testimonial with a disclaimer "results not typical" or "individual results may vary." Now, when advertisements feature a testimonial, the advertiser must be able to substantiate that the endorser's experience is typical; otherwise, the advertisement must clearly and conspicuously disclose the generally expected results a consumer can expect in the depicted circumstances. The advertiser must also possess and rely on adequate substantiation for that representation.
Disclosure of "Material Connections." The revised Guides add new examples of situations that may be deemed "endorsements," as well as a broadened definition of "material connections" between advertisers and endorsers that must be disclosed to the public. The FTC is especially concerned with online "word of mouth" marketers, such as bloggers. Even the mere furnishing of a free sample of the product to a blogger to test and review can now trigger a duty to disclose a "material connection."
Increased Scrutiny of Celebrity Statements. The revised Guides underscore and broaden the idea that both an advertiser and an endorser can be liable for false or unsubstantiated claims made in an endorsement, as well as for any failure to disclose material connections between the advertiser and the endorser. Examples included in the new Guides include situations beyond traditional "advertising," such as where a paid celebrity spokesperson discusses a sponsor's product in an interview on a television talk show, even if the celebrities statements are not scripted by the advertiser.
Conclusion. The new FTC Guides reflect increasing regulatory concerns about endorsements and testimonials in advertising, especially on the Internet. It is now more important than ever for advertisers to review such claims carefully and seek legal guidance for all "testimonial" ads, including "viral" or word-of-mouth campaigns and celebrity endorsements.