On October 5, the FTC adopted and published revisions to their Guides covering Endorsements and Testimonials in advertising. You must be in compliance with these guild lines by December 1, 2009.
The following is a summary of changes. This is only a summary identifying issues to be reviewed; it is not a full compliance recommendation. I recommend that you have any sites containing consumer endorsements or testimonials reviewed again by counsel in light of these changes. If you have any questions, please contact our office at your earliest convenience.
Testimonials from Consumers are Now Considered Endorsements if the Consumer is Paid or Receives Free Products.
First, the Commission has now clarified what constitutes a testimonial by a consumer and what constitutes an endorsement. Testimonials are fine and do not need any disclosures. Endorsements, however, must be disclosed to the consumer.
For example, a consumer who purchases a product and writes about their experience without any consideration from the advertiser is giving a testimonial. However, if the consumer received the product for free and writes about their experience, they are now considered to have endorsed the product and a disclosure must be placed in the ad notifying the consumer that the product was received for free or anything else that was received by consumer from the advertiser for providing the testimonial.
Implied and Overt Claims made by Consumers Must Be Substantiated by the Advertiser.
If the advertiser is going to use a consumer testimonial regarding the effects of its product or services, then the advertiser must “possess and rely upon adequate substantiation, including, when appropriate, competent and reliable scientific evidence, to support any claims made” by the consumer. So even if an advertiser makes no direct “claims” about the effect of a product or service, if such claims can be implied through the consumer testimonials, the FTC will look for the same substantiation as if the claims were directly made in non-testimonial advertising copy. More importantly, “consumer endorsements themselves are not competent and reliable scientific evidence.”
For example, if a consumer provides a testimonial for “Nasty Tea” and states in their testimonial that they lost 100 pounds in six months by drinking Nasty Tea, eating only raw vegetables and exercising 3-6 hours a day, they have not provided an endorsement and no disclosure is required. The FTC’s position is that the consumer is only providing a testimonial of their experience. If, however, the consumer provides a testimonial that they lost 100 pounds by drinking Nasty Tea, the consumer has made an endorsement and the advertiser must substantiate the claim (e.g. that Nasty Tea is an effective weight loss product).
The important thing to remember is that if the consumer testimonial or even photos of the consumer convey to the general public that their experience is representative of what consumers will generally achieve using the product or service, it is an endorsement and substantiation of the claim must be in the possession of the advertiser.
“Results Not Typical” Can No Longer Be Used as a Safe Harbor.
Many advertisers use testimonials from consumers with above average experiences or results. As a disclaimer, they use some variation of “results not typical.” This language will no longer be considered adequate disclosure. Instead, an advertiser must clearly disclose what an average consumer is likely to experience. This disclosure must appear at or near the claim that is being made in a similar font size and color.
Flogs / Fake Consumers / Fake News Articles, Etc.
Any ads which present endorsements by what appear to be, “actual consumers” must use “actual consumers” or “clearly and conspicuously disclose” that the “consumers” are not actually consumers of the product. This part of the Guide appears to address the current wave of flogs (fake blogs), fake news articles, fake reviews, comments and other forms of advertising that attempt to paint the impression that they utilize actual consumers, bloggers, commenters, etc. The FTC has now made “conspicuous disclosure” the standard.
Whenever an advertisement represents, directly or by implication, that the person giving the endorsement is an expert with respect to the product, then that persons qualifications must in fact give him expertise and the expert must have conducted his own evaluation, testing or comparative analysis to make the claims he provides in the endorsement.
For example, an ad which depicts a medical doctor stating that the product will lower consumers cholesterol by 50 points, must actually be a medical doctor with education and training in heart disease and cholesterol. In addition, that doctor must have undertaken the studies, or reviewed scientifically acceptable studies to support his opinion. Simply reviewing letters from satisfied customers or rodent studies is not sufficient and the ad would be found to be deceptive.
Endorsements by organizations must be presented only if the opinion reflects the collective judgment of the organization. For example, a mattress seller advertises that its product is endorsed by a chiropractic association. That endorsement must be supported by an evaluation by the members of the organization and through some type of formal vote of the organization.
Material Connections Between Advertisers and Endorsers.
When there is a financial or material connection between the person giving the endorsement and the seller of the product that might materially affect the weight or credibility of the endorsement, such connection must be fully disclosed. This includes payments to the endorser, free products given to the endorser, or any ownership interest the endorser has in the company selling the products. The Guides demonstrate the FTC’s expectation that any material connections between an endorser and an advertiser that are not obvious, must be disclosed.
Specifically addressing bloggers (something that didn’t exist when the Guides were last revised), the Guides state that the post of a blogger who receives cash, or other types of payments to review a product or service will be considered an “endorsement.” Bloggers who make an endorsement must disclose any material connections they share with the advertiser of the product or service.
It’s important to note that this also applies to posters and commenters on message boards, social media, and anywhere that individuals may be recommending products and services. If you anonymously post on a message boards promoting a product or service, and you get paid to do it, or you own the company that makes the product or provides the service, the FTC expects you to conspicuously disclose those connections. The clear message coming from the Commission is that if there is a material connection between an endorser and the advertiser, it must be conspicuously disclosed.
Findings of “Research Organizations.”
Another type of endorsement or testimonial involves the payment of a fee by an advertiser to have research done by an outside organization. Once complete, the research is then used to promote the advertiser’s product or service. The FTC’s position is that consumers have the right to know if research supporting an advertiser’s products or services was paid for by the advertiser, and that disclosure will affect how a consumer weights the research. If advertisers pay for “research” done by outside organizations, and then use that research to promote their product or service, the fact that they paid for the research must be disclosed.
The revised Guides clearly state that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between them. Celebrities have a duty to disclose relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media. Advertisers should contractually define what endorsers may and may not say about their product or service, and should specify what disclosures must be made by endorser when talking about the product or service.
Link to Revised Guides.
The revised Guides contain many examples that will help you to understand the new rules. We recommend that you read and familiarize yourselves with the new Guides.
You can find the full text of the revisions here: http://ftc.gov/os/2009/10/091005endorsementguidesfnnotice.pdf
Please be sure to have your compliance team review the advertising programs you are running to determine if they comply with the FTC’s new guidance. Again, the outline above is intended as a general overview of the new Guides. However, it is not intended to substitute for legal advice. If you have questions about whether your ads are in compliance with the FTC’s new guidance and whether your agreements contain appropriate language to protect you in the changing legal environment, please call our office to schedule an appointment. We’ll be happy to review your situation, and provide appropriate guidance.