New FTC Guidelines For Endorsements and Testimonials In Advertising

As media has evolved, so has advertising. In recent years, the rise of social media and the Internet has created new mediums or channels for reaching consumers, leading to new forms of advertising and marketing.

The FTC, an independent agency of the U.S. government that enforces federal antitrust and consumer protection laws by eliminating unfair or deceptive practices, has changed these guidelines for the first time since 1980.

The new guidelines will become effective on December 1 and though they are not laws, they help businesses or organizations avoid being investigated by the commission for deceptive advertising. The guidelines are also unique for being the first to address bloggers and other social media.

Read on to learn about the key features of the new guidelines every business should be aware of:

Disclosure Requirements For Bloggers and Other Endorsers

Advertisers are now liable for failing to disclose a material connection between themselves and those who endorse them. This includes bloggers who are paid to promote or review a product.

The FTC does not intend to investigate individual bloggers or tweeters who accept cash or gifts in exchange for a positive review or for promoting the company, but it will enforce the guidelines on advertisers or sponsor companies, who are liable for claims made by bloggers paid to endorse them.

Bloggers who write reviews about products they have purchased will not be considered as endorsers. The guidelines also do not apply to customers who receive a coupon for a free product and who decide to review the product on their personal blog.

The disclosure requirement does not apply to celebrities who appear in ads. But if celebrities talk about the products they have endorsed in an ad on other media such as talk shows or blogs, they must disclose material connections.

Claims or Testimonials

Any claims made in advertisements will now require substantiation and must clearly express the typical results consumers can expect. It is no longer enough to use best-case scenario testimonial claims accompanied by a disclaimer that says “results may vary.”

The disclaimers should be noticeable so that an average consumer who is reading or watching the ad can read the disclaimer.

According to the guidelines, the advertiser could limit the scope of the disclosure by narrowing the scope of the circumstances shown in the advertisement. For example, if all the testimonials in the advertisement are clearly identified as people who have been members of a weight loss clinic for at least a year, the disclosure can be based on the performance of that group.

The disclosure must include facts that may affect the credibility of an endorsement or testimonial such as research being funded by the company, and whether those providing testimonials received or were expecting to receive any compensation.

Experts such as doctors who offer testimonials in advertisements should have expertise relevant to the product.

Since the guidelines do not exclude professional services firms, many experts advise that law firms and other professional services firms that participate in social media should have guidelines in place, particularly if they make references to their clients or promote them on their blogs or other sites.