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FTC Sets New Guidelines for Endorsements, Testimonials

7 Oct, 2009 Response This Week

WASHINGTON – The Federal Trade Commission (FTC) announced the approval of final revisions to the 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 guidelines, last updated in 1980, now state that advertisements featuring a consumer and conveying an experience with a product or service as “typical” when that is not the case, will be required to clearly disclose what consumers should generally expect. The earlier version of this guideline allowed advertisers to describe the consumer’s experience as long as they included a “results not typical” disclaimer.

“This could have far-reaching effects on advertisers. No longer will direct marketers and advertisers be able to highlight their ‘best’ testimonial – feeling that they will have zero liability by placing the obligatory ‘results not typical’ disclaimer language on the ad,” says Shannon L. Van Dorn, Esq. “This means that in order to avoid potential regulatory hot water, they will have tout the ‘average’ testimonial – and not the exceptional one.”

Other new guidelines address endorsements by bloggers or word-of-mouth marketers, stating anyone who receives cash or in-kind payment to review a product is considered an endorsement. This is the first-ever Act addressing bloggers and others in non-traditional media.

Finally, the Guides address celebrity endorsers, for the first time making them liable for false or unsubstantiated claims.

In reaction to the announcement, the Electronic Retailing Association (ERA), which had fought to keep the regulations from becoming too restrictive, issued a statement and offered guidance on how to keep endorsement and testimonial ads in line with the Act.

“Like the FTC, ERA fully supports enforcement against businesses and individuals that cut corners, and jeopardize the healthy and vibrant $300 billion electronic retailing sector,” says Julie Coons, president and CEO of ERA. “As leaders in self-regulation, we look forward to partnering with the FTC to ensure the relevant communities are educated and fully able to comply before they become involved in costly legal challenges.”

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