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Direct Response Marketing

Regulations Not Typical

1 Dec, 2009 By: Thomas Haire Response

On Dec. 1, the Federal Trade Commission’s (FTC) new amended Guides Concerning the Use of Testimonials and Endorsements took effect, closing the door on what has been the direct response industry’s top legal story of 2009 and likely opening the door on what will become the leading DR regulatory story of 2010.

As the battle over the proposed changes — including alterations to typicality disclaimer guidelines and endorser liability guidelines as well as, for the first time ever, new guides concerning “blogger” statements and endorsements — wore on during the summer and early fall, there was hope from many in the DR business that lobbying efforts would help minimize the effects of the proposed changes. However, when the final changes were announced on Oct. 5, those hopes were clearly dashed.

These changes are the first to the testimonial and endorsement Guides from the FTC since 1980. And they promise to have a powerful effect on the way marketers promote the effectiveness of their products. Response recently spoke with four of the leading attorneys in the direct response space — Manatt Phelps & Phillips’ Linda Goldstein, Venable’s Gary Hailey, Arnstein & Lehr’s Joel Rothman, and Rutter Hobbs & Davidoff’s Greg Sater — about the new Guides. What came of those conversations are five things every direct response marketer needs to know about the FTC’s latest changes.

Typicality Disclaimers: Dos and Don’ts
Clearly, the biggest change for DR marketers has to do with the removal of the “results not typical” safe harbor. Rothman contends, “The new Guides require clear and conspicuous disclosure of generally expected product performance whenever a testimonial used in marketing is not representative of what consumers can expect. Flashing ‘results not typical’ in eight-point type on the bottom of the screen for half-a-second will not solve the problem. The new FTC Guides require you to ‘clearly and conspicuously disclose the generally expected performance in the depicted circumstances’ and that you ‘must possess and rely on adequate substantiation’ for whatever you disclose as ‘generally expected.’”

However, the attorneys do present a wide range of options for marketers looking to maintain the use of their strongest testimonials in DR spots or long-form shows. For instance, Hailey says, “The FTC has said that ‘results not typical’-type supers don’t provide a safe harbor anymore. But strong typicality supers will still go a long way.”

He adds there are three keys to good on-screen disclaimers: make it clear and conspicuous (“no fine print, on-screen long enough to be read, unavoidable if presented online”); use simple language and don’t make it too wordy — it must be understood by consumers; and balanced and honest language. “For instance, for a financial product, you wouldn’t say, ‘Results may vary,’ but rather, ‘(Testimonial name) is one of our most successful customers. Most customers will earn little or no money.’”

He also says that a strong voiceover can also mitigate the FTC’s interest in whether or not your testimonials are running afoul of the new Guides. “Relying on typicality supers alone may be risky,” Hailey says. “Try to have the host or voiceover announcer introduce your testimonials in a way that makes it clear they are not average customers — that they were chosen from your most successful customers.”

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