THE FTC RELEASES MUCH ANTICIPATED REVISED “GUIDES CONCERNING USE OF ENDORSEMENTS AND TESTIMONIALS IN ADVERTISING.”
By: James B. Astrachan
Synopsis: The Guides, effective December 1, 2009, will require advertisers to be greatly more transparent when it comes to their associations with the persons who are endorsing their products and services. In essence, the Guides require that an endorsement must reflect “the honest opinions, findings, beliefs or experience of the endorser, and must alert the consumer to any material connection between any endorser.” The FTC has attempted to define who is an endorser and to create a myriad of disclosure requirements where endorsements occur to prevent consumer deception. While many of these rules are common sense, some are more subtle, particularly those dealing with endorsement in new media.
General
The Federal Trade Commission (FTC) published its revised Guides Concerning Use of Endorsements and Testimonials in Advertising. The Guides offer guidance to advertisers on how to ensure that their endorsements are not false or misleading under the FTC Act. The Guides were first published in 1975 and later revised in 1980. Because the last revisions were published in 1980, prior to the development and emergence of the Internet, the current revisions are the first to address the dissemination of endorsements through new media such as blogs, street teams and social network websites. Some important changes include: (1) guidance on the use of endorsements and testimonials offered by bloggers; (2) the liability of advertisers for false and unsubstantiated statements made by their endorsers and for failing to disclose their material connections with the endorser; (3) the elimination of certain disclaimers as effective means to prevent consumer endorsements from being false or misleading; and (4) the liability of endorsers for their statements.
Honest Opinions
Endorsements must reflect “the honest opinions, findings, beliefs or experience of the endorser.” The endorsement may not convey an express or implied representation that would be deceptive if made by the advertiser. If a material connection exists between the endorser and the advertiser, the advertiser must carefully monitor the content of the message, an easy feat for traditional media where the advertiser writes the script, but far less easy in the cases of blogging, message boards, street teams and other forms of viral advertising where the endorser is let loose to create the buzz.
The Guides cover celebrity, consumer and expert endorsements. The expert is a person, or entity, “possessing, as a result of experience, study or training, knowledge of a particular subject which knowledge is superior to what ordinary individuals generally acquire.” An obvious example might be an endorsement of tires by a well known NASCAR race driver. A less obvious example, cited in the Guides, is a blogging college student who has “earned a reputation as a video game expert,” of whom his readers frequently ask questions.
Disclosure of Endorser-Advertiser Relationship
The Guides generally require that where there is a relationship between advertiser and endorser that is not inherently obvious, it must be disclosed. That relationship, however, must be one that an ordinary person would believe would materially affect the weight or credibility of the endorsement (as viewed from the FTC’s perspective). It is well known that celebrities are paid a fee to endorse products, and consumers factor that into their decision to buy. It is not necessary to make the disclosure where the connection is obvious. It may not be obvious to viewers that a sports celebrity touting a medical clinic by name on a talk show has been paid by the medical clinic to talk it up when she can.
An advertiser may use the endorsement of experts and celebrities only as long as they have good reason to believe that the endorser maintains its product-related views. If an advertiser wants to use the endorsement over an extended time it must secure the endorser’s views over reasonable intervals. What is reasonable might be affected by new products, alterations, performance changes and the like. Also, if the advertiser represents that the endorser uses the products, the endorser must have been a user at the time the endorsement was made. The advertiser can only use the endorsement as long as it has good reason to believe the endorser remains a bona fide user of the product.
Consumer Endorsement
Consumer performance endorsements will be interpreted as representing that the product is effective for the depicted purpose. The advertiser must possess at the time the ad ran, adequate substantiation to support the claims. If appropriate, the FTC will require that substantiation be of a scientific nature. Specifically, the Guides provide, “consumer endorsements themselves, are not competent and reliable scientific evidence.” Thus, where the claim is capable of scientific substantiation or testing it is not sufficient to rely on the endorsement of consumers, who may have good faith beliefs, to establish the claim. The burden falls on the advertiser, and its agency. Disclaimers, such as “results not typical,” or “testimonials based on experience of a few people – you are not likely to have similar results” are not adequate or effective. The Guides, however, do recognize that in some, undisclosed instances, a strong disclaimer could be effective even when the advertiser does not possess reliable, empirical testing.
Transparency
The Guides provide examples that are helpful in understanding the FTC’s concerns in this area, but clearly run afoul of the often intended purpose of social marketing – that most often there be no transparency.
• A tennis star underwent laser vision correction surgery. She speaks highly of the clinic by name on TV talk shows, does not appear on commercials but does have a contract that pays her to publicly speak about her surgery when she can. Without a clear and conspicuous disclosure, the Guides provide that “this endorsement is likely to be deceptive.”
• A physician endorses an anti-snoring product must disclose that he owns part of the company.
• An online message board discussing new music download technology is frequented by MP3 player enthusiasts, including an employee of a leading playback device who touts her employer’s product on the message board. Knowledge of the affiliation would likely affect credibility and must be disclosed.
• A street team talks to friends about a product. Points are awarded for each interaction that result in valuable prizes. This relationship must be disclosed.
• A college student video game blogger, who reviews for free a new video game system from the manufacturer must disclose this.
The purpose of these requirements is simple. Consumers must understand what relationship exists between advertiser and endorser that is likely to affect the endorser’s endorsement.
The Guides attempt to restate old, and create new, rules. What comes through loud and clear for these advertisers who use new social and viral methods to advertise their products is that the FTC has announced that advertisers and their agencies will bear responsibility for the contents of their endorsers’ messages to consumers. To avoid liability, advertisers must direct their endorsers, employees and ad agencies to comply with the Guides.
Employees must be prohibited from anonymously posting touts for their employer’s products, and the prohibition should be written and often communicated.
Advertisers should require by contract that their agencies are aware of, and will comply with, the Guides. Advertisers and agencies are obligated to insist that their endorsers also comply and this should be written. Procedures should also be established to monitor compliance. Where product is provided for review, for example, the reviews should be monitored for sufficient disclosure of connection.
A copy of the revised Guides can be obtained at the FTC’s website, http://www.ftc.gov/os/2009/10/091005revisedendorsementguides.pdf. The Law of Advertising will provide a full discussion on the new requirements under the revised Guides in its Release 93 edition.
No comments:
Post a Comment