Truth in Endorsement? New FTC Advertising Guidelines in the US

On December 1, 2009, new Federal Trade Commission guidelines will go into effect regarding the use of endorsements and testimonials in advertising.

The FTC has not revised these kind of guidelines for more than a quarter century; technological changes alone suggest a need for revision. Manipulative or deceptive advertisement is not in the best long term interest of business or consumer. The new guidelines require full disclosure in various ways in an attempt to encourage truth in advertising.

That much must be applauded, but debates are forming over some of the details in applying the policies which suggest the need for clarification and perhaps revision. The policies may not only curb excess, but also chill legitimate business because the onus becomes too great or risky.

Some party may honestly wish to endorse or receive an endorsement about a product or service, but fear that some circumstance or potential circumstance about such an endorsement may expose him or her to too great a liability. Where the liability is to something deceptive, the fear is well-placed, but what about shades of legal meaning where the burden of proof may lie heavily on the nature of the endorsement?

It may be deceptive for a chemical engineer to endorse an automobile’s mechanical design (§255.3) since his expertise lies outside automotive design–but what if the engineer has some additional relevant qualification like a long standing hobby or on the job experience? Legal justice may be attainable, but only if it can be afforded without destroying the business.

The FTC Guidelines assume an inspiring and true testimonial may conceivably mislead the consumer into thinking the experience is reasonable for himself or herself despite disclaimers or caveats. For affiliates and affiliate providers, an outstanding testimonial may now be construed as “representative of what consumers will generally achieve with the advertised product in actual, albeit variable, conditions of use” (§255.2) despite disclaimers to the contrary. (A type of endorsement for the purposes of the FTC guidelines is a “testimonial.”)

Further, “unless the advertiser possesses and relies upon adequate substantiation for this representation [e.g., massively expensive drug research], the advertisement should either clearly and conspicuously disclose what the generally expected performance would be in the depicted circumstances or clearly and conspicuously disclose the limited applicability of the endorser’s experience to what consumers may generally expect to achieve.”

Thus if the advertiser is to use testimonials, he or she must also demonstrate “the generally expected performance” in “the depicted circumstances” (which presumably must also be legally demonstrable). How can advertisers in general and affiliates and affiliate providers in particular reasonably comply (or know they have complied) with such a burden of proof? Need the evidence behind “generally expected performance” include product use where the customer or client has not adequately followed product directions? (Defining “adequately” might be a problem in itself.)

While some encouragement may be derived from assurances that the FTC may first issue warning of non-compliance (and it may just launch into litigation), yet the devil is still in the details. Nonetheless, in principle we again affirm the value of and need for full disclosure and honest representation in advertisement and in testimonial use.

Feel free to offer your constructive opinion on the subject. I am not a lawyer, nor do I offer legal counsel.

P.S. Jim Edwards has helpfully interviewed “Mr. Rich Cleland, Assistant Deputy at The Federal Trade Commission about the changes /additions to FTC advertising guidelines as they apply to Bloggers, Affiliates, Online Advertisers and Internet Merchants.”

Tags: truth in advertising