Proposed Changes to FTC’s Endorsement Guidelines

posted on 5.23.2022

The Federal Trade Commission, one of the “other” federal agencies whose regulations affect broadcasters’ on-air and online content, is proposing updates to its Endorsement Guides first enacted in the 1980s. 

The endorsement guidelines “regulate false and misleading reviews of products and services,” said attorney David Oxenford of TAB Associate member law firm Wilkinson Barker Knauer, and they also “require disclosure of anything that the endorser receives in change for its review.”

The proposed changes reflect the extent to which advertisers have turned increasingly to the use of social media and product reviews to market their products.

The FTC wants to tighten its guidelines for advertisers against posting online fake positive reviews or manipulating reviews by suppressing bad ones.

“While principally targeted to online marketing, these rules also apply to endorsements on more traditional media platforms,” said Oxenford. 

“Whether it’s fake reviews or influencers who hide that they were paid to post, this kind of deception results in people paying more money for bad products and services, and it hurts honest competitors,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. 

Levine also noted that the FTC is “warning marketers on stealth advertising that targets kids.”

The Endorsement Guides, first enacted in 1980 and amended in 2009, provide guidance to businesses and others to ensure that advertising using endorsements or testimonials is truthful. 

Advertisers who lie to consumers via endorsements or testimonials may violate the FTC Act. 

The guides, among other things, state that advertisers need to be upfront with consumers and clearly disclose unexpected material connections between endorsers and a seller of an advertised product. 

In its notice noted above, the FTC has also:

• Warned social media platforms that some of their tools for endorsers are inadequate and may open them up to liability;
• Clarified that fake reviews are covered under the guides and added a new principle that in procuring, suppressing, boosting, organizing, or editing consumer reviews, advertisers should not distort or misrepresent what consumers think of their products. This would cover review suppression like in the FTC’s recent Fashion Nova “negative review” case;
• Clarified that tags in social media posts are covered under the guides and modified the definition of “endorsers” to bring virtual influencers—that is, computer-generated fictional characters—under the guides; and
• Added an example addressing the microtargeting of a discrete group of consumers.

In addition, the FTC also has proposed adding a new section highlighting that child-directed advertising is of special concern and that children may react differently than adults to endorsements in advertising or related disclosures. 

In order to provide further guidance, the FTC is planning an Oct. 19 event focusing specifically on children’s capacity at different ages and developmental stages to recognize and understand advertising content and distinguish it from other content and the need for and effectiveness of disclosures to children.

Questions? Contact TAB’s Michael Schneider or call (512) 322-9944.
 

---