FTC Revises Guides on Endorsements and Testimonials

This week, the U.S. Federal Trade Commission announced its approval of revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising. The revisions affect testimonial advertisements (including those by consumers and those advertising atypical results), blogger reviews or endorsements, and celebrity endorsements, updating the Guides since their last revision in 1980.

Of particular note: the discussion of consumer-generated media, and how to distinguish between communications that are “endorsements” and those that are not. The FTC focused on determination on a case-by-case basis of whether the relationship between the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and is therefore an “advertising message,” and any material connections between the advertiser and speaker must be disclosed. Considerations are non-exhaustive but may include whether the speaker is compensated by the advertiser or its agent, whether the produce or service was provided for free by the advertiser, terms of agreement or length of relationship with the advertiser, and other factors regarding the receipt of products or services, and their value. The FTC notes that an advertiser’s lack of control over the speaker’s statements does not automatically disqualify that statement from being deemed an “endorsement.” The FTC noted the concern of credibility and reliability of social media as a source of information, versus the lack of evidence that the Guides would adversely affect the vibrancy of social media. The change concerns bloggers and online reviewers concerned with the lack of clarity over what may be a conflict of interest requiring disclosure, and the level disclosure that must be made. The Associated Press quoted Rich Cleland, assistant director of the FTC’s advertising practices division, stating that disclosure must be ”clear and conspicuous,” no matter what form it will take.

Also of note: the discussion about celebrity endorsers and their liability for making misrepresentations in the course of their endorsements. The FTC notes that the determination of whether a speaker’s statement is an endorsement depends upon whether consumers would believe that it represents the endorser’s own view or personal belief. The FTC further notes that whether the endorser has a contractual obligation to read the script given is irrelevant. Since he or she has chosen to earn money by providing an endorsement, he or she has a responsiblity to ensure in advance that he or she does not say something that does not reflect their personal views.

The text of the Federal Register Notice can be found here.

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