Don’t believe everything you see on TV or read on the Internet – at least not from ADT Security Systems.
According to an administrative complaint filed by the Federal Trade Commission, the home security company paid three spokespeople – a child safety expert, a home security expert, and a technology expert – more than $300,000 to “demonstrate and review” the company’s ADT Pulse home security and monitoring system on various TV and radio talk shows and news programs.
One problem: ADT did not disclose that the speakers were paid by the company and received goods and services in kind – two of the individuals received a free ADT security system and no-charge monthly monitoring. The FTC said the experts appeared on more than 40 different programs and provided laudatory statements for online reviews and blogs.
ADT set up media interviews for the endorsers and provided suggested interview questions and background video to reporters and news anchors for the segment. When the endorsers appeared on a program, they were introduced as an expert on a specific topic such as home security, the FTC said, without mention of a connection to ADT. On some programs the endorsers also demonstrated other products, which the agency said added to the false impression they were providing an impartial perspective.
The proposed settlement set forth several requirements for ADT: the company cannot misrepresent that any discussion or demonstration is an independent review provided by an impartial expert and it must provide a clear and prominent disclosure when the endorser and the company have a material connection.
ADT must also remove the reviews and endorsements previously misrepresented as independent and impartial, provide each “endorser” with a clear statement of responsibility to disclose a material connection, and establish a system to monitor and review endorsers and their disclosures.
The settlement is open for public comment until April 7.
To read the complaint and proposed settlement agreement in In the Matter of ADT LLC, click here.
Why it matters: The action is part of the agency’s “ongoing crackdown” on misleading endorsements, the FTC said. “It’s hard for consumers to make good buying decisions when they think they’re getting independent expert advice as part of an impartial news segment and have no way of knowing they are actually watching a sales pitch,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “When a paid endorser appears in a news or talk show segment with the host of that program, the relationship with the advertiser must be clearly disclosed.” The case serves as an important reminder to advertisers that the FTC’s Endorsement Guides apply with equal force to traditional media such as television, not just social media.