In an effort to increase demand for their products, companies tend to publicize spectacular examples of the results that consumers can expect to receive.  For example, advertisements regularly show consumers who have lost 100 pounds or individuals who have regrown their hair in an effort to persuade consumers to purchase the products.  For years such advertisements were legal as long as a disclaimer was included stating that the “results are not typical”; however, the Federal Trade Commission (FTC) recently proposed changes to its Guides Concerning the Use of Testimonials and Endorsements in Advertising (the Guides) that, if adopted, could significantly impact companies’ ability to use consumer testimonials to promote their products. 

The proposed amendments include two important changes.  First, advertisers would no longer be permitted to make a claim and then merely disclaim that claim with a statement that “results are not typical.” Second, advertisers and celebrities would be required to disclose that a celebrity has received compensation for a testimonial when it is unclear from the context of the statement that it is an endorsement for the product.     

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

The FTC is proposing to eliminate the “safe harbor” provision that allows advertisers to use consumer testimonials describing unusual or extreme results as long as they include a “results not typical” disclaimer.  Recent FTC research studies found that consumers actually believe that the results depicted in testimonials are representative of what other consumers can ordinarily expect even where such disclaimers are included.  These studies, together with the FTC’s recent law enforcement actions, raised concerns that the current rules are insufficient to protect consumers from misleading or deceptive advertisements. 

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.  Further, advertisers must be able to substantiate efficacy claims made in testimonials with competent and reliable scientific evidence.  For example, an advertisement promoting a baldness treatment that includes testimonials of satisfied consumers reporting amazing hair growth will be interpreted as representing that other consumers can expect similar results, and the advertiser must have scientific evidence that the product is in fact effective for hair growth.

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.  The FTC also clarifies that where a testimonial describes in detail the unique circumstances under which the endorser achieved the results claimed, the advertisement is unlikely to be considered deceptive.  Thus, an advertisement for a weight loss product in which a 250-pound woman claims to have lost 140 pounds eating only raw vegetables and exercising vigorously for six hours a day is unlikely to convey that all consumers should expect similar results.  However, the advertiser still must have substantiation that the product is effective for weight loss.

In response to the proposed changes, numerous groups and companies have submitted comments to the FTC.  Some companies have argued that “aspirational” testimonials touting unusually successful results have value because they are powerful marketing tools that serve to motivate consumers.  Others have claimed that the guidelines will impose a substantial burden on companies because determining what results are “typical” is not always possible and may be difficult and expensive.

More Rigorous Standards for Celebrity Endorsements

The proposed guidelines also have implications for celebrity endorsements.  The proposed changes clarify that it is irrelevant for liability purposes whether an endorser is reading from a script or speaking in his or her own words.  The proposed changes 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. 

The FTC also proposes to 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 new rules 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 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.

The final revisions to the Guides are expected to be issued later this year.  Arent Fox will continue to monitor these developments.  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