What if Paris Hilton were to rave to her followers about how much she likes her McDonald’s salad, or Roger Federer tweets photos of Coppertone lotion to his followers, or Khaby Lame shows up on TikTok in a Puma logo shirt. Any problem here? Any special requirements? On June 29, 2023, the Federal Trade Commission (“FTC”) delivered an updated version of its Guides Concerning Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”), which are administrative interpretations concerning application of section 5 of the FTC Act. The Guides are not law; they are advisory and intended to give guidance to businesses and others to ensure that advertising using reviews or endorsements is truthful, but they are the FTC’s litigating positions, and an advertiser violates them at its own risk. The updated Endorsement Guides are available here (starting at page 44 of 84).
The FTC also issued an updated version of its guidance document, titled FTC’s Endorsement Guides: What People are Asking, that answers frequently asked questions about the Endorsement Guides (the “FAQs”), including when and how to disclose material connections between an advertiser and an endorser; the FAQs are available here.
On June 30, 2023, the FTC also proposed a rule on the use of consumer reviews and testimonials which would prohibit certain specified unfair or deceptive acts or practices involving consumer reviews or testimonials. The proposed rule is available here and is subject to a 60-day comment period. Please read the proposed rule and comment if you will be adversely affected.
The Endorsement Guides define an “endorsement” as any advertising, marketing, or promotional message for a product that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser. When a relationship exists between the endorser and the advertiser that might materially affect the weight or credibility of the endorsement (such as a sponsorship payment or the provision of free or discounted products), and that connection is not reasonably expected by the audience, that connection must be disclosed clearly and conspicuously. Otherwise, the advertiser is engaging in a deceptive trade practice.
Some of the highlights from the updated Endorsement Guides and FAQs are listed below:
- It is not enough to just put #ad in the description of TikTok or YouTube videos, due to the small size text used (which is unlikely to be considered a clear and conspicuous disclosure) – instead, #ad text or the relevant disclosure should be superimposed in larger text over the video and the FAQ’s note that a disclosure presented simultaneously in both the visual and audible portions of an ad are more likely to be clear and conspicuous.
- If you have an endorsement deal with a brand and you criticize or post negative comments about a competing brand, you have to disclose your endorser relationship.
- If you mention or show an advertiser’s products in a post on social media, but you don’t post any comments or say anything positive about the product, that may still be considered an endorsement for which you need to make a disclosure if you have a relationship with the advertiser.
- Tagging a brand in a social media post can be an endorsement but it is not a sufficient disclosure that you have a connection to the brand – the post must do more than simply tagging the brand to disclose your relationship with a brand. There is no special mandated wording to make a disclosure. The best disclosures are simple, like “This is an ad for BRAND” or “This video is paid for by BRAND” or “BRAND paid me to tell you about it.” The FAQs also state that starting a post with “Ad,” “Paid Ad,” “#Ad,” or “Advertising” or “Advertisement” would also likely be effective, but adding the brand name in the disclosure would be clearer (i.e. Paid ad for BRAND” or “Paid post for BRAND”). Advertisers and endorsers need to be particularly careful in their use of endorsements directed to children and teens.
- A single blanket disclosure on a home page that many products discussed on the site are provided free by their manufacturers is not a sufficient disclosure because it doesn’t tell viewers which products were and weren’t provided for free – each relationship must be disclosed so that it is clear which products were provided for free and which were not.
- A button or hyperlink on a webpage to a disclosure, or a click to “see more” link, is not sufficient because it is easily avoidable and therefore not clear and conspicuous – the disclosure must be immediately available. For online disclosures to be effective, they must be unavoidable.
- When posting endorsements on Facebook, it is no longer permissible to disclose your endorsement relationship in the comments section (as that is not clear and conspicuous) – you should post the disclosure within the post or content. An influencer may not solely rely upon a social media platform’s built-in disclosure tool and must ensure that a disclosure is unavoidable and clear and conspicuous.
- An endorser’s note of “thank you” to the sponsoring company is not a sufficient disclosure because it doesn’t communicate that the endorser got something for free or was given something in exchange for the endorsement – instead, the endorser must let the viewer know what they are thankful for when it comes to sponsorships, gifts, or merchandise, such as “thanks BRAND for the free product” or “thanks BRAND for the gift of ABC product.”
- “Gifted” is not a sufficient disclosure with respect to a gifted product, as the brand must also be identified – for example, “Gifted by BRAND.”
- When a review in a blog is sponsored by a marketer, the disclosure of that relationship should be part of the endorsement to which it relates and must be placed where it catches the consumer’s attention (such as a picture or a headline that is part of the review) – but should not be placed at the end or outside of the blog.
- Targeting reviews only from customers who you think are more likely to be satisfied with a product is not permitted. If a manufacturer forwards only favorable reviews for its products to a third-party review website or omits unfavorable reviews, it is engaging in a deceptive practice.
- You can contact unhappy customers who left negative reviews and respond to their concerns and ask them if they will add updates to their reviews, but you cannot ask them to change or delete their initial negative reviews.
- It is a deceptive practice for users of social media platforms to purchase or create indicators of social media influence (such as fake social media followers), and then use them to misrepresent such influence to potential clients, purchasers, investors, partners, or employees or to anyone else for commercial purposes.
- In procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, reporting, or editing consumer reviews of their products, advertisers should not take actions that have the effect of distorting or otherwise misrepresenting what consumers think of their products, regardless of whether the reviews are considered endorsements under the Guides.
- Advertisers are liable for misleading or unsubstantiated statements made through endorsements or for failing to disclose unexpected material connections between themselves and their endorsers. Advertisers should: (1) provide guidance to endorsers on the need to ensure that their statements are not misleading and disclose material connections; (2) monitor their endorsers’ compliance, keep records of monitoring efforts, and create a policy to do so; and (3) take action to remedy any non-compliance. Brands are responsible for providing their influencers and endorsers with the guidelines and rules of disclosure and for monitoring the actions of their endorsers. If a company sends influencers a free gift, it should instruct them to clearly and conspicuously disclose the gift in any social media posts or other endorsements and tell them how it should be disclosed.
- Advertising agencies, public relations firms, and similar intermediaries may be liable for their roles in creating or disseminating endorsements containing representations that they know are deceptive or that fail to disclose material connections.
Contact Donna Thomas at firstname.lastname@example.org to discuss how the FTC’s updated Endorsement Guides may affect your company’s advertising and to mitigate any legal exposure resulting from your use of reviews and endorsements.