From AAIA Capital Report

The Federal Trade Commission (FTC) announced on Oct. 5 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 notice incorporates several changes to the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising, which address endorsements by consumers, experts, organizations and celebrities, as well as the disclosure of important connections between advertisers and endorsers. The guides were last updated in 1980.

Under the revised guides, 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. The revisions eliminate a safe harbor previously available, which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as "results not typical."

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 – connections that consumers would not expect – must be disclosed. Specifically mentioned in the revisions are bloggers or other "word-of-mouth" marketers. 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.

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. The revised guides also make it clear that 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.

The guides are administrative interpretations of the law intended to help advertisers comply with the Federal Trade Commission Act – 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.

A full copy of the FTC revisions, which go into effect on Dec. 1, can be found by clicking here.