Consumer Law
October 6, 2009
FTC UPDATES ADVERTISING ENDORSEMENT GUIDANCE;
NEW RULES ADDRESS SPONSORED BLOGGING, VIRAL MARKETING,
“RESULTS NOT TYPICAL” CLAIMS, AND CELEBRITY ENDORSEMENTS
On October 5, 2009, the Federal Trade Commission (FTC) released final
revisions to its guidance concerning endorsements and testimonials in
advertising. See Guides Concerning the Use of Endorsements and
Testimonials in Advertising (the “Guides”) available at
http://ftc.gov/os/2009/10/091005endorsementguidesfnnotice.pdf.
These revisions initially were proposed in November 2008 and describe the
steps the FTC expects advertisers to take when using promotional materials
that include endorsements or testimonials, including those provided through
sponsored blogging and by celebrities. The FTC’s Associate Director for
Advertising Practices, Mary Engle, discussed these revisions at the National
Advertising Division (NAD) Annual Conference held this week.
Among the significant changes in the FTC’s decision is the expansion of the
scope of the FTC’s definition of an “endorsement.” Under the revised Guides, a
person makes an “endorsement” if a reasonable consumer would understand
that party’s statement to be a reflection of his or her personal belief, “even if
the views expressed by that party are identical to those of the sponsoring
advertisement.” This revision is significant because the old guidelines applied
more narrowly — only to statements that were not identical to the views of the
advertiser.
The FTC also modified its policies on various types of endorsements. These
changes included:
„
Web-Based Endorsements (Including Sponsored Blogging and Viral
Marketing). Because the existing Guides had not been updated since
1980, the FTC expanded their scope to address sponsored blogging and
Internet viral marketing. Among other changes, the FTC indicated that
advertisers should require bloggers with whom they have relationships to
disclose if those bloggers receive payments or free products from the
advertiser. The FTC clarified that an advertiser’s lack of control over a
blogger’s statements does not necessarily mean that the blogger is not
“endorsing” the advertiser’s product, but that if there truly is no
relationship between the advertiser and the blogger the endorsement
guidance does not apply. The FTC also indicated that, although it would
consider specific situations on a case-by-case basis, an advertiser could be
responsible if a blogger with whom it has a relationship makes false or
misleading claims about its product; this could be true even where the
advertiser does not have control over the blogger’s precise statements.
In her comments at the NAD conference, Ms. Engle stressed that
advertisers should adopt guidelines that instruct bloggers with whom they
work to disclose their receipt of free products or other forms of
compensation. This recommendation also is reflected in the commentary that
accompanied the revised Guides.
„
“Results Not Typical” Disclosure. The FTC removed the safe harbor for typicality
claims that, under the existing Guides, allowed advertisers to include a disclaimer such
as “results not typical” when presenting customer testimonials about products or
services. The revised Guides state that a customer testimonial “will likely be
interpreted” as representative of what consumers “will generally achieve.” Thus, if the
advertiser does not have substantiation for what consumers generally will achieve, the
advertiser must “clearly and conspicuously disclose the generally expected
performance in the depicted circumstances.” In other words, including “results not
typical” language will no longer be sufficient.
In its commentary, the FTC stated that the critical consideration for assessing
compliance is the “net impression that consumers take away from the ad as a whole”
and that the Guides call for disclosure “only if the ad is misleading . . . without a
disclosure.” According to the FTC, “if the advertisement, taken as a whole, does not
convey an unsubstantiated, and thus misleading, message of typicality, no disclosure is
necessary.” Ms. Engle echoed this sentiment in her comments about the Guides,
stating that advertisers should consider the overall message in their advertisements
and not focus on disclaimers to modify the main body of an advertisement.
The commentary to the new Guides also states that “[a]dvertisers are not required to
identify a ‘typical consumer’ of their product” and then determine the achievable
results. Instead, the FTC stated that advertisers have “reasonable leeway” when
making the required disclosure. For example, the FTC stated that an advertiser could
limit the scope of its disclosure by limiting the circumstances depicted in the
advertisement (e.g., if the testimonials at issue clearly are identified as given by
weight loss clinic patients, the disclosure could be based on performance data from
that group). However, the FTC also recognized that advertisers may not have even
this limited data and, if not, should avoid relying on typicality claims.
In addition, the FTC made clear that where consumer endorsements do not suggest
typicality — such as, for example, when consumers are shown giving their views about
a movie they have just seen — there is no need to ensure that the specific views
shown in the ad reflect the views of a “typical” viewer of the film.
„
Celebrity Endorsements. The FTC’s decision provided substantially expanded
guidance on endorsements by celebrities. Specifically, the FTC clarified that both
advertisers and celebrity endorsers can be held liable for violations by the endorsers
and that it would be deceptive for a celebrity to even mention a product on a talk show
without disclosing that he or she has a relationship with the product’s manufacturer. A
celebrity’s statement also may be considered an endorsement even if he or she merely
reads a script: The FTC noted, for example, that if a celebrity reads a script indicating
that an exercise machine is “the most effective [he or] she has ever tried,” the
statement could be deemed an “endorsement” because a consumer would understand
that statement to reflect the celebrity’s own views.
Although the Guides do not bind advertisers or the FTC, they provide important insight
into the FTC’s enforcement approach and, particularly, the kind of advertising that the FTC
is likely to find “deceptive” in violation of the Federal Trade Commission Act. Companies
therefore should evaluate whether changes to their existing advertising practices are
warranted in light of the FTC’s updated guidance.
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contact the following members of our Consumer Law and Food & Drug practice groups:
Scott Danzis
Yaron Dori
Erin Egan
Miriam Guggenheim
Jamillia Ferris
Rob Sherman
Lindsey Tonsager
202.662.5209
202.662.5444
202.662.5145
202.662.5235
202.662.5058
202.662.5115
202.662.5609
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