Monday, October 05, 2009

FTC Releases Revised Guides for Endorsements, Testimonials in Advertising

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

Can an advertiser be held liable for a blogger’s misleading statements about the advertiser’s products? What about the blogger?

Maybe, says the Federal Trade Commission, in releasing today its final Guides Concerning the Use of Endorsements and Testimonials in Advertising.

The revised guides will take effect on December 1, 2009. The proposed revisions were announced last November. (See Trade Regulation Talk story of November 21, 2008.)

Most of the revisions were adopted as announced at that time, with minor modifications.

The existing guides (16 C.F.R. Part 255) were published in 1980. The guides are advisory in nature and are designed to help advertisers avoid using deceptive testimonials or endorsements in marketing their products.

The revised guidelines address the role of blogs and other new consumer-generated media to market products and make other changes to bring the guidelines up to date.

Blog Endorsements

In discussing the role of blog endorsements in advertising, the FTC provides an example of a situation in which an advertiser would incur liability for a blogger’s misleading statements. Liability arises when an endorser-sponsor relationship is established.

According to the guides, an advertiser is subject to liability under Sec. 5 of the FTC Act for a blogger’s endorsement where:

 The advertiser initiates the process that leads to the endorsement (by utilizing a blog advertising service to locate a blogger who will promote the advertiser’s products on a personal blog or by providing products to a well-known blogger, for example);

 The advertiser requests that the blogger try a product and write a review of the product on the blog; and

 The blogger recommends the product using misleading or unsubstantiated claims (and not just the blogger’s opinion about subjective product characteristics).
The blogger would also be liable under the FTC Act if the blogger failed to adequately disclose any payment for services.

Non-typical Consumer Testimonials

The FTC has also decided to go forward with its proposed elimination of a safe harbor for non-typical consumer testimonials accompanied by disclaimers of typicality. The guides dating from 1980 allow advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical.” Starting December 1, advertisers will be expected to disclose “the generally expected performance in the depicted circumstances” under the revised guides.

The FTC’s proposal faced much resistance from the weight-loss products industry. Many advertisers in that industry had argued that they would not be able to determine what the generally expected performance would be in the depicted circumstances, and thus would not be able to use aspirational testimonials. (See Trade Regulation Talk story of July 22, 2009.)

According to the FTC, the effect of the revision is to treat ads that use testimonials the same as all other ads. Sect. 5 of the FTC Act requires advertisers to have substantiation for the messages that consumers reasonably take from their ads. The agency believes that an advertiser should not be exempt from those basic obligations simply because it used a consumer testimonial to communicate its claims.

The FTC’s notice of the adoption of the revised guides appears here on the FTC website.

The Guides Concerning the Use of Endorsements and Testimonials in Advertising, effective through November 30, 2009, appear at CCH Trade Regulation Reporter ¶39,038.

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