Blogger: Are You in Danger of Getting FTC Fines?

On October 5, 2009, the Federal Trade Commission (FTC) announced that it has made its final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act. The last update was in 1980.

…the post of a blogger who receives cash or in-kind payment to review a product is considered to have made an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.

According to a press release from the FTC, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. This is in contrast to the 1980 version – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revisions no longer contain this safe harbor.

The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers.

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 to have made 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.

Celebrity endorsers also are addressed in the revised Guides. The revised Guides reflect Commission case law and clearly state that 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. It also states 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.

Now it’s not time to start rioting and suing under the First Amendment because they don’t have carte blanche in prosecuting offenders. These are administrative interpretations of the law intended to help advertisers comply with the FTC Act.

According to the press release, “They are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the Commission would have the burden of proving that the challenged conduct violates the FTC Act.”

To file a complaint, go to: https://www.ftccomplaintassistant.gov/

More information on this subject can be obtained from the FTC website.

Citation: 16 C.F.R. Part 255: Guides Concerning the Use of Endorsements and Testimonials in Advertising: Notice Announcing Adoption of Revised Guides

Citation: FTC Press Release

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