FTC Consumer Protection Alert: New Advertising Guidelines Effective December 1, 2009: "Results May Vary"... and the FTC Wants You To Change Your Disclosure
12/2/2009
As we reported in our previous Alert on this issue, the Federal Trade Commission (FTC) has revised its Guides Concerning the Use of Endorsements and Testimonials in Advertising for the first time since 1980.1 These revisions affect the manner in which advertisers may use endorsements and testimonials to promote consumer products or services in advertisements. Most notably, for ads using testimonials featuring “non-typical” product or service results, the FTC will require clear disclosure of what consumers should generally expect. A “results may vary” disclaimer is no longer sufficient for compliance. The most significant effect is on the use of endorsements and marketing campaigns disseminated through social media—blogging, buzzing, Facebook, Twitter, and others. Failure to comply with these new guidelines may result in potential enforcement actions and other penalties.
The revised Guides also contain new language stating that endorsers, not just advertisers, face potential liability associated with their endorsement activities. An endorser may be liable for any false or unsubstantiated claim, or for failure to disclose material connections with the advertiser. This is of particular importance to celebrities or experts who make endorsements of products and services for advertisers. Moreover, the Guides include new language stating that a celebrity is responsible for disclosing relationships with advertisers when making endorsements through non-conventional advertisements such as public appearances—for example, on talk shows. The FTC also places responsibility on advertisers to advise the celebrity in advance about what he or she should (or should not) say about a product or service, and the need to disclose the relationship in the non-conventional advertisement setting.
All advertising campaigns should be developed and conducted with the new Guides in mind. In particular, advertisers, sponsors, and agencies should be familiar with the new applicability of the Guides to consumer products and services being reviewed in the blogosphere. The FTC for the first time applied the Guides’ interpretations on endorsements to new forms of “consumer generated media,” such as the use of blogs in “word of mouth marketing campaigns.” Messages disseminated to the public through blog reviews or other postings may constitute an endorsement of a product or service under the revised Guides, if the speaker (e.g., a blogger) is “sponsored” by the advertiser. The FTC will examine all endorsements and testimonials, and each use of new media, on a case-by-case basis. Factors to be considered by the Commission include:
- whether the speaker is compensated
- whether the product in question was provided for free
- the terms of any agreement
- the length of the relationship
- past receipt of products and the likelihood of future receipt
- the value of the products or services received.
For example, if a blogger were to receive a cash payment or a stream of merchandise from a marketing program to review a product, the blog posting would likely constitute an endorsement. When an endorsement is disseminated by the endorser through new media, the FTC will place primary responsibility upon the endorser for disclosing material connections with the advertiser.
Moreover, as a reminder, the FTC’s guidance clarifies that an advertiser may be held liable for misleading statements made by endorsers who employ new media. An advertiser is potentially liable if it initiated the process that lead to endorsements being made on a blog and an endorser-sponsor relationship has been established between the advertiser and the blogger. An advertiser and endorser are thus both liable for misleading or unsubstantiated representations made in the course of a blogger’s endorsement, or for the non-disclosure of material connections shared with the seller of the product or service.
If you need assistance with the Guides, or have questions relating to advertising or marketing activities, please contact one of the attorneys listed on this Client Alert, or your Mintz Levin attorney.
Endnotes
1 The Guides represent the Commission’s non-binding administrative interpretations regarding the application of Section 5 of the FTC Act (15 U.S.C. § 45) to the use of endorsements and testimonials in advertising. They are located at 16 C.F.R. Part 255.
If you have questions regarding any of these issues, please contact one of the attorneys listed below or any member of your Mintz Levin team.
Bruce D. Sokler
(202) 434-7303
BDSokler@mintz.com
Charles A. Samuels
(202) 434-7311
CASamuels@mintz.com
Harvey Saferstein
(310) 586-3203
HSaferstein@mintz.com
Michele Floyd
(650) 251-7723
MFloyd@mintz.com
Robert Duggan
(617) 348-1780
RDuggan@Mintz.com
Cynthia J. Larose
(617) 348-1732
CJLarose@mintz.com
Susan Neuberger Weller
(202) 585-3510
SNWeller@Mintz.com
Robert G. Kidwell
(202) 661-8752
RGKidwell@mintz.com
