FTC Updates Rules for Endorsements, Testimonials - Extending Regulation o Blogs and Social Media
FTC’s 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." Under the FTC Act the FTC has the power to stop unfair trade practices and fraudulent advertising.
The Guides, last updated in 1980, have been updated to reach commercial endorsements hidden as consumer comments on blogs and in social media.
According to the FTC "The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement" which will make the blogger obligated to disclose the payment (whether cash, free products or other inducements). The new Guides codify the existing policy that both the advertiser and the endorser may be liable for false or unsubstantiated claims.
In addition, the 'results not typical' ads should disappear. "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. In contrast to the 1980 version of the Guides – which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical” – the revised Guides no longer contain this safe harbor.
The result of this change is yet another indication that the days of the Web's Wild West past are disappearing. But for those of you who like your content wild and unsubstantiated, there remains hope. The Web is a very big territory and the FTC will be hard pressed to enforce its new policies. The rules have become much more rational, but it will take time and investment to make the reality on the ground (or on the virtual terrain) match the rules on the books.
