The Federal Trade Commission (FTC) recently completed its revisions of its Guides Concerning the Use of Testimonials and Endorsements in Advertising (the Guides).  The Guides are the FTC’s interpretation of the Federal Trade Commission Act, and are intended to serve as guidance for advertisers.

The most notable revisions involve the elimination of the “results not typical” safe harbor, new  disclosure requirements for bloggers and celebrities, and an explicit statement that endorsers can be held liable for statements that are made in an endorsement.

Elimination of the “Results Not Typical” Safe Harbor for Consumer Testimonials

The FTC has eliminated the “safe harbor” provision that allowed advertisers to use consumer testimonials describing unusual or extreme results as long as they included a “results not typical” disclaimer.  The FTC is now taking the position that testimonials describing consumer experiences with a product will be interpreted as representing the results consumers will typically achieve under actual conditions of use. 

If advertisers lack adequate substantiation for claims made in testimonials, then they will be required to disclose affirmatively the results consumers can generally expect to achieve from the product being promoted.  For instance, if an advertisement states that three homeowners have saved $100, $125, and $130 because they have used a particular heat pump, then the advertiser must include a disclaimer such as “the average homeowner saves $35” to indicate what the expected monthly savings is likely to be if the advertiser does not have substantiation that these individuals’ monthly savings are representative.  The FTC does acknowledge that a strongly worded disclaimer that the endorser’s results are atypical may be acceptable in some situations provided that the advertiser has empirical evidence that consumers are not misled when the disclaimer is included.

Disclosure of “Material Connections” by Bloggers

The FTC’s revisions will regulate both (i) bloggers who are paid compensation or given other incentives such as complimentary products in exchange for posting a review or comments about a product, and (ii) bloggers who have other material connections with the manufacturer of a product.

Bloggers must now disclose that they received payment or other compensation in exchange for the review or that they received the product free of charge.  For example, a college student who earned a reputation as an “expert” based on his online reviews of game hardware and software must disclose the retail price of the item and that it was provided at no cost in his review.  Additionally, the FTC advises that an individual who writes and posts favorable reviews of her employer’s MP3 players on online message boards must also disclose her relationship with the product’s manufacturer because her employment affects her credibility.

More Rigorous Standards for Celebrity Endorsements

The FTC revisions also strengthen the disclosure requirements for celebrity endorsements.  If a celebrity appears in a television or print advertisement promoting a product, no disclosure that the celebrity was paid is necessary because consumers expect that a celebrity would be compensated for such an appearance.  However, the revisions clarify that there are some situations in which consumers would not have this expectation but where a celebrity’s financial interest would be relevant.  For example, the FTC now would require a celebrity appearing on a talk show to disclose that she is a paid spokesperson for a product, even though she does not appear in commercials for the product if the celebrity substantively discusses the product during the interview.  In contrast, if the celebrity simply appeared on the show wearing clothes bearing a company’s logo without discussing them, then no disclosure would be necessary.

Liability for Endorsers

The revisions to the Guides also emphasize that endorsers, as well as advertisers, can be subject to liability if the FTC finds an advertisement false or misleading.  For example, if a celebrity makes a statement while pitching a product in an advertisement she knows misrepresents the product’s effectiveness, she could be liable in an FTC enforcement action. 

Today’s evolving regulatory policies make it prudent to seek legal counsel before engaging in marketing that involves the use of testimonials or endorsements.

For further information, please contact:

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Matthew R. Mills
mills.matthew@arentfox.com
202.715.8582