Quik Tip Tuesday: New FTC Guidelines for Endorsements & Testimonials

From mommy bloggers and affiliate marketers to big brand infomercials on late-night television, the new FTC guidelines governing endorsements and testimonials have widespread implications you need to know about.

The last change to these guidelines came in 1980 — long before the internet had risen to such mainstream prominence among consumers. The 1980 Guides did not explicitly state that endorsers and advertisers could be liable under the FTC Act for statements they make in an endorsement. The revised guides, however, 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. In addition, 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 new guidelines will take effect December 1st, 2009.

Keeping an Eye Out
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. One such example that I recently noticed was for the prescription eye drops Restasis®. Dr. Allison Tendler, a board-certified ophthalmologist from Sioux Falls, SD, appears in the commercial, and lauds the benefits of using Restasis®, a product she herself uses “twice a day, every day.” Within the first few frames of the commercial, a disclaimer noting that Dr. Tendler was paid for her endorsement is shown.

A Weighty Issue
Weight loss is a perennially popular market, and there are an abundance of programs and products that serve this “hungry” niche. From Marie Osmond touting the taste-tempting menu from NutriSystem®, to Valerie Bertinelli’s new beach bikini bod (courtesy of Jenny Craig), readers have grown accustomed to seeing the fine print in these ads noting “results not typical.” 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 safe harbor notation of “results not typical” is no longer permitted.

Why this Should Matter to You
If you do any affiliate marketing, you’ve probably already received notices from your advertising partners regarding the new guidelines, and how it will impact their program. Don’t be too quick to hit the “delete” key on these messages — advertisers will no doubt be much more diligent in enforcing these guidelines moving forward. As the guidelines hold both the affiliate marketer, as well as the advertiser responsible, it doesn’t take an MIT grad to deduce that advertisers would sooner drop an affiliate than drop a small fortune fighting a deceptive ad practices case with the FTC.

Taking Lemons, and Making Lemonade
Like many site owners, I do a fair amount of affiliate marketing. At first blush, several of my friends and clients responded quite vehemently that this was just another example of unwanted government intervention — and I was inclined to agree. After giving this additional consideration, however, I changed my mind. Indulge me a moment, and I’ll explain why.

Good-old-fashioned word of mouth advertising has taken on a life of its own. The dawn of social media has given consumers an unprecedented all-access pass to discovering brand data and consumer evaluations with the ease of a mouse click. With so much at stake, is it any wonder that reputation management services are cropping up all over the country?

In all honesty, full disclosure need not be a sour business. In fact, you may be surprised to find that such honesty may be welcomed by your customers, and actually improve your conversions. Of course, how you choose to convey your disclosure is up to you, but make no mistake — it is something that you need to take the time to do. Whether you add fine print to your outbound newsletters, beneath product reviews, or on your policies page (or perhaps in all of these places), taking the time to meet these new guidelines now is sure to save you time, frustration and money down the road.

Oh, and for the record…your affiliate purchases help keep me caffeinated — a fact that my husband is most appreciative of.

UPDATE: 16 October, 2009
In an open letter to FTC Chairman Jon Leibowitz, Randall Rothenberg, CEO of Interactive Advertising Bureau, states that the new FTC guidelines “unfairly and unconstitutionally” impose a set of ethics rules on bloggers and other social media practitioners, while giving traditional media a pass. Read the full story here, from PaidContent.org.

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