Wednesday, July 22, 2009

Advertisers' Use of Consumer Testimonials Debated Before Senate Subcommittee

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

A Senate subcommittee heard testimony today on a proposal by the Federal Trade Commission (FTC) to remove a safe harbor that has allowed advertisers to use consumer testimonials to tout weight loss and other products, even when the experience of the consumer is not typical. FTC Bureau of Consumer Protection Director David Vladeck delivered the Commission’s testimony before the Senate Commerce, Science, and Transportation Committee’s Subcommittee on Consumer Protection, Product Safety, and Insurance.

Last November, the Commission proposed revising its guides for endorsement and testimonial advertising practices to remove the “safe harbor” for disclaimers of typicality. It published the notice of proposed changes and request for comments on November 28.

Targeted by the revisions are testimonials, often used to promote weight-loss products, which usually include a disclaimer, such as: “Your results may vary.”

Vladeck said that these disclaimers do “not adequately inform consumers that the reported weight losses were, at best, outliers or extreme cases.”

As revised, the guides would call on advertisers using non-typical testimonials to make clear and conspicuous disclosures of generally expected results. The disclosures would level the playing field, according to Vladeck. Advertisers could not use testimonials with a disclaimer to avoid substantiation of their claims.

Industry Reaction

Industry representatives spoke out against the proposed changes to the guides, which have been in effect since 1980.

Jon Congdon--the president and co-founder of Product Partners LLC, a leading provider of health and wellness solutions sold under the brand name Beachbody—expressed “fear that the Commission’s proposal will have significant unintended and negative consequences for marketers and consumers.”

Congdon suggested that the Commission follow the “so-called 'net impression' rule in which they look at any advertisement, determine what it means to reasonable consumers, and then require substantiation of the claims that arise naturally from a commonplace interpretation of the advertisement.” This would allow the Commission to go after a marketer that uses a testimonial, even with a disclaimer, that gives a misleading impression of what the product or service is capable of doing, according to Congdon.

Greg Renker, a co-founder of Guthy-Renker--one of the world’s largest direct response television companies—supports clear disclosures under the existing guides. According to Renker it may be “difficult or impossible to say what the 'average' experience of a consumer” might be to satisfy the proposed guide.

Consumer Organization Support

Sally Greenberg, Executive Director of the National Consumers League (NCL), said that her consumer organization “fully supports the FTC’s review of and proposed changes to the Guides.” The NCL also supports the FTC’s efforts to require bloggers to disclose their relationship with companies that pay them to endorse a product or service.

The Guides Concerning the Use of Endorsements and Testimonials in Advertising appear at CCH Trade Regulation Reporter ¶39,038.

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