FTC Publishes Final Guides Governing Endorsements, Testimonials

I’ve been too sick to read through them, but here is the summary with a link to the page where you can read the full text:

10/5/2009 FTC Press Release:

Changes Affect Testimonial Advertisements, Bloggers, Celebrity Endorsements
The Federal Trade Commission today announced that it has approved final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act.

The notice incorporates several changes to the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, which address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers. The Guides were last updated in 1980.

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

Celebrity endorsers also are addressed in the revised Guides. While the 1980 Guides did not explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the revised Guides reflect Commission case law and 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 the advertiser and endorsers. The revised Guides also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media.

The Guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.

The Commission vote approving issuance of the Federal Register notice detailing the changes was 4-0. The notice will be published in the Federal Register shortly, and is available now on the FTC’s Web site as a link to this press release. Copies also are available from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,700 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Betsy Lordan
Office of Public Affairs
202-326-3707
STAFF CONTACT:
Richard Cleland
Bureau of Consumer Protection
202-326-3088
(FTC File No. P034520)
(endorsement testimonial guide.wpd)

The original release with full text in PDF format can be found here.

It’s somewhat interesting to me to break down the analysis and reaction to the release by different groups (although obviously even these can be broken down much further):

Legal sites discussing the FTC release:

• Law.com Legal Blog Watch: The FTC Blog Rules: Overbroad or Overblown?
• Eric Goldman’s Technology and Marketing Law Blog – Do the FTC’s New Endorsement/Testimonial Rules Violate 47 USC 230?
• David Johnson’s Digital Media Law Blog: Bloggers and Advertisers Beware: FTC Rules on Sponsored Endorsements Create Major Risks for “Word of Mouth” Advertising
• Mike Young Internet Law and Business Blog: FTC New Rule: Bloggers Must Disclose Compensation

News Sites discussing the release:

• Wall Street Journal – UPDATE: FTC Toughens Endorsement Rules For Celebrities, Bloggers
• Associated Press: FTC: Bloggers, testimonials need better disclosure
• CNET News: Yes, new FTC guidelines extend to Facebook fan pages
• MSNBC – FTC: Bloggers must disclose freebies on reviews

 Consumer Advocacy sites discussing the release:

• Consumer Reports – Bloggers Who Shill Must Also Tell (note: I find it somewhat strange that Consumer Reports sees no irony in the fact that they are mixing judgements with data in this headline).

Sites more critical of the new regulations

• BuzzMachine – FTC Regulates Our Speech
• EdRants.com – Interview with the FTC’s Richard Cleland
• Slate – The FTC’s Mad Power Grab

Advertising and Marketing Organizations discussing the new FTC regulations

• Adage Discussion on the New Regulations
• Media Post – FTC Clamps Down On Ad Testimonials

Internet Marketers discussing the FTC release:

• Warrior Forum - Discussion on Final Endorsements and Testimonial Guidelines
• Alex Sysoef at HowToSpoter – FTC Attacks Affiliate Bloggers
• Frank Kern – FTC Declares Shenanigans On All Kinds of Stuff

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