Tuesday, October 06, 2009

FTC Changes the Rules on Endorsements

Yesterday the FTC announced new changes to its Guides Concerning the Use of Endorsements and Testimonials in Advertising.

Yeah, with a title like that, it has to be a government publication.

The Guides addresses "endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers."

If you aren't familiar with it, don't feel alone. The Guides haven't been updated in almost thirty years.

The Guides are responsible for a phrase you're probably familiar with in ads: "Your results may vary." That "safe harbor" phrase permitted advertisers to describe their product in glowing terms as long as they indicated that the consumer's experience might be different.

The new Guides pulls the plug on that dispensation. Henceforth advertisers "will be required to clearly disclose the results that consumers can generally expect."

The revised Guides also addresses celebrity endorsements outside of ads. We're all pretty clear when we see a celebrity like Dennis Haysbert flacking Allstate Insurance in an ad that he's being paid to be the company's official spokesman. But what if he flacks Allstate while he's a guest on Jay Leno's show?

Under the new Guides:
. . . 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 thing that caught my attention was that the new Guides also talks about endorsements by ordinary people like bloggers:
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.
I read the Federal Register Notice in which consideration was given to two types of bloggers, making a distinction between "blogs that are just personal communication spaces, and those that are essentially commercial communication spaces."

The question becomes "although an 'advertising message' is intended by the latter – making it subject to the Guides – no such message is intended by the former." In those cases, the FTC had to struggle with whether the Guides should apply to that first blogger. The decision was made that, if a blogger received any kind of compensation, including a free copy of the book to review (and certainly monetary compensation as a reviewer), s/he needed to disclose that fact.

The Register continued:
An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides.
According to Publishers Marketplace:
In other words, bloggers as well as "reviewers" posting to sites like Amazon and LibraryThing who are writing about a book after receiving a free reviewer's copy are expected to disclose that information. And publishers who "sponsor these endorsers (either by providing free products - directly or through a middleman - or otherwise) . . . should establish procedures . . . to monitor the conduct of those endorsers."
These new rules will go into effect on December 1, 2009.

Go here to read the FTC's notice on their website.

Go here to read the Federal Register Notice.

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