By Liza Barry-Kessler, managing partner, Privacy Counsel LLC

Nov. 18, 2009 – On Dec. 1, 2009, the Federal Trade Commission’s first revision since 1980 to its document, "Guides Concerning the Use of Endorsements and Testimonials in Advertising,” go into effect. These guides address the application of the FTC Act to the use of endorsements and testimonials in advertising.

Overview

The biggest change is in how the FTC considers testimonial advertisements, especially so-called "results not typical" ads. Considerably more media attention, however, has been paid to the explicit inclusion of bloggers and other "new media" speakers who are governed by new endorsement-relationship disclosure requirements.

This article briefly describes the guidance governing testimonial advertising, the requirements for bloggers and for companies advertising with bloggers, and concludes with a list of additional resources.

Testimonial advertisements

There are three substantial changes or clarifications as to how the FTC will consider testimonial advertising. First, the guides now explicitly indicate that both endorsers and advertisers could be held liable for their statements – not just the advertisers.

Second, celebrity endorsements are held to the same standard, except in cases where it is clear that the celebrity is acting, not actually or apparently voicing his or her own opinion.

Third, advertisements must now substantiate that "the endorser's experience is representative of what a consumer will generally achieve, " or else the advertiser will be required to "clearly and conspicuously disclose the generally expected performance in the depicted circumstances." (Guides p 22) However, the revised guides do not completely prohibit the use of disclaimers of typicality: 

Bloggers and "new media"

In many respects, the revised guides’ explanation of what is required of "bloggers" and how they will be judged is as clear as mud.

On the one hand, the FTC indicates that it does "not believe that all uses of new consumer-generated media to discuss product attributes or consumer experiences should be deemed ‘endorsements’ within the meaning of the Guides." (Guides p 8) The FTC indicates that the focus will be on the relationship between the "advertiser" and the "speaker," and that "sponsored" communication (including links to items for sale that generate a commission for the blogger) must be prominently disclosed.

If the speaker is entirely independent, there is no endorsement; if the speaker is part of an overall marketing campaign, the speech is an "endorsement." The guides describe several potential tests to determine that independence, however, the FTC did not provide a bright line rule.

A free product provided by a marketing or PR professional, and reviewed positively by a blogger might or might not be an endorsement, depending on the product's value, frequency the blogger receives products, and readership size and demographics, among other potential variables. Additionally, both an advertiser and blogger "are subject to liability for misleading or unsubstantiated representations made in the course of the blogger’s endorsement." (Guides p 51)

Even the FTC's statement that it does "not consider reviews published in traditional media ... to be sponsored advertising messages," is immediately qualified by the comment, "Of course, this view could be different if the reviewer were receiving a benefit directly from the manufacturer (or its agent)." (Guides pp 47-48)

Although bloggers and other new media speakers are explicitly obligated to make these disclosures, the guides indicate that they are not the FTC's target. "As with traditional media, the Commission’s law enforcement activities will continue to focus on advertisers." (Guides, FN 79, p 39)

Advertisers working with bloggers

While the actual disclosure requirements are placed on the final speakers, advertisers and manufacturers are not off the hook. In fact, both are responsible for monitoring the bloggers with whom they work, and are liable for deceptive claims those bloggers make about their products. (Guides p 64; 15 CFR 255.1, Example 5)

How monitoring is to be done is left to the discretion of individual businesses and advertisers.

Additional resources

FTC Act, 15 U.S.C. 45 § 5

FTC Guides Concerning the Use of Endorsements and Testimonials in Advertising, 16 C.F.R. 255

FTC Additional Information, agency Web site, links to videos "About the Endorsement Guides" with Mary Engle, FTC Associate Director of Consumer Protection

Blog With Integrity Webinar, with Mary Engle

Interactive Advertising Bureau, "Randall Rothenberg's Open Letter to FTC"

BlogHer Blog, "The New FTC Guidelines and What They Mean to You"

Edward Champion Blog, Interview with Richard Cleland, FTC Bureau of Consumer Protection

OverLawyered Blog, "Required FTC blogger disclosure" (contains links to many other legal and policy-oriented posts on this subject), "FTC vs bloggers, cont," and "Where did you get that keychain?"

New York Times, "New FTC Rules Has Bloggers & Twitterers Mulling"  

Liza Barry-Kessler, U.W. 1997, is the managing partner of Privacy Counsel LLC, Milwaukee, where she works with businesses and organizations to protect their reputations, their data, and their people. Her primary practice areas are issues related to social media, or to data security and privacy.