The Federal Trade Commission (FTC) recently updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”). The primary principles of the Endorsement Guides remain the same—namely, that advertising must be honest and not misleading, that endorsers must disclose any material connection to the brand, that the claims, reviews, or testimonial material from the endorser must be true and represent typical results, and that any required disclosures must be clear and conspicuous. The updated Endorsement Guides provide additional specificity to address how those principles apply in the current marketplace.
Highlights of the changes include the following:
1. What Is an Endorsement?
The definition of “endorsement” is broadened to cover a wider array of messages, including tags, reviews, and any other promotional messages “that consumers are likely to believe reflects the opinion, beliefs, findings, or experiences” of the endorser. Endorsements include fake reviews, virtual influencers, testimonials, social media tags, and the names/seals of organizations.
2. What Qualifies as “Clear and Conspicuous”?
While disclosures have been required to be “clear and conspicuous” for many years, the updated Endorsement Guides specify that to be clear and conspicuous, a disclosure must be “difficult to miss and easily understandable by ordinary consumers.” To meet this standard, a disclosure should be unavoidable and stand out from surrounding text or audio by its color, font, size, location, duration, speed, and/or cadence, as applicable. The disclosure must not contravene surrounding messaging. A “sponsored post” label or other platform-provided disclosure tool may be insufficient.
Also, the FTC is now advising that commonly used disclosures that do not contain the brand or product name may be ambiguous, since they may not properly identify the sponsoring advertiser. While #ad or #sponsored may still be effective in some contexts, the FTC advises that disclosures such as “Sponsored by [BRAND]” or “Promotion by [BRAND]” would be clearer.
3. Distortion of Consumer Reviews
The updated Endorsement Guides specifically prohibit procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, or editing consumer reviews to distort what consumers think of a product. For example, a company should not publish only 5-star reviews and delete its 1-star reviews.
4. Disclosure of Material Connections
Material connections between an advertiser and endorser must be disclosed, where a “material connection” is one that would affect the weight or credibility of an endorsement. Material connections can include incentivized reviews, reviews by employees, and fake negative reviews by competitors. A review can be considered incentivized if the advertiser provides the endorser with payments, discounts, early access, or free products.
5. Advertiser’s Liability and Monitoring Obligations
Any party involved in publishing a claim (the advertiser, endorser, agency, or other intermediaries) can be held liable for a violation of the Endorsement Guides. The updated Endorsement Guides better explain the advertiser’s responsibility to monitor endorser and influencer activity, including: (a) an endorser can only make claims that the advertiser can make, meaning an advertiser cannot incentivize an influencer to make a false claim about a product; and (b) an endorser’s truthful claim can still be false advertising if the endorser has an atypical experience or result, provided a clear and conspicuous disclosure of expected results is not provided.
6. Advertising to Children Is of Special Concern
The updated Endorsement Guides note, with little detail, that advertising to children warrants “special concern,” and that advertising suitable for adults may be inappropriate for children.
The FTC also provided an updated FAQ document, available here, that primarily addresses when and how to disclose material connections. For more information or assistance interpreting how the FTC’s Endorsement Guides apply to your current advertising practices, please contact the authors or any attorney with FBT’s Advertising practice.