Last week, the Federal Trade Commission released its long-awaited, proposed revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising. I'm writing a series of blog posts that do a "deep dive" into the proposed changes. This is Part II, which discusses the FTC's proposed amendments to Section 255.1 of the Guides, which is the "General considerations" section. (You can find Part I here.)
Advertisers' Responsibility for Endorsers
While the FTC has long taken the position that advertisers are responsible for the claims that their endorsers make, and for endorsers' failure to disclose their material connections, the FTC is proposing to update Section 255.1(d) of the Guides to highlight the steps that advertisers should take to monitor the endorsers who are speaking on their behalf. The FTC advises that advertisers should (1) provide guidance to their endorsers on the need to ensure that their statements are not misleading and to disclose material connections, (2) monitor their endorsers' compliance, and (3) take action sufficient to remedy non-compliance and prevent future compliance. Here, the FTC is making an advertiser's monitoring obligations a more formal part of the Guides (not just something mentioned in the examples). It's also worth noting that the FTC is emphasizing an advertiser's obligation not only to advise endorsers about their disclosure obligations, but also about their obligations to ensure that their claims are truthful.
Endorsers' Liability for Their Own Statements
The FTC added a new section to the Guides, Section 255.1(e), which further explains when endorsers are responsible for the statements they make. Here, the FTC explains the principle that endorsers may be liable for their own endorsements, and then gives several examples of when the endorser would liable. First, the FTC says an endorser is liable when "the endorser makes a representation that the endorser knows or should know to be deceptive." Second, the FTC says an endorser (who is not an expert) may be liable for unsubstantiated claims when the endorser makes statements that are "inconsistent with the endorser's personal experience" or "were not made or approved by the advertiser and go beyond the scope of the endorser's personal experience." The FTC also says that endorsers are responsible for failing to disclose unexpected material connections between themselves and the advertiser.
Ad Agency Liability for Deceptive Endorsements
The FTC is also proposing to add a new Section 255.1(f) to address the liability of intermediaries, such as advertising agencies and public relations firms, in connection with their role in disseminating deceptive endorsements. Here, the FTC says that they may be liable if they "knew or should have known" that the endorsements were deceptive. The FTC explains that "advertising agencies that intentionally engage in deception or that ignore obvious shortcomings of claims they disseminate may be liable." The FTC also says that agencies may be liable for endorsers' failure to include proper disclosures, "whether by disseminating advertisements without necessary disclosures or by hiring and directing endorsers who fail to make necessary disclosures."
Using Models to Represent Real Endorsers
From time-to-time, advertisers ask whether it's problematic to use a real testimonial with a fake photo. In what should be a welcome change to the Guides, the FTC is proposing to add a new Section 255.1(g), which states that it's ok to use an endorsement along with a photo of a person that's not the endorser so long as it doesn't "misrepresent a material attribute of the endorser."
In Example 1 (the building contractor), the FTC clears up another important question for advertisers. Here, the FTC says that advertisers don't have an obligation to take down old social media posts that contain endorsements, even if the endorsement is no longer valid. The FTC gave the example of a building contractor who endorsed some paint, but then the formulation of the paint changed. The FTC explains, "there is no obligation to modify or delete their post as long as the date of the post is clear and conspicuous to viewers." Importantly, though, if the original post gets reshared by advertiser or the endorser, then they do have to ensure that the endorsement is still valid.
The FTC is proposing to delete Example 2 (the administrative assistant), which explains that someone shown trying out a keyboard for the first time in a television commercial doesn't need to be a bona fide user of the product. The FTC wants to delete this example because "it is patently obvious that a person asked to try unmarked products and pick the best one is not communicating that she or he is a regular user of the selected product."
In a new Example 2 (the DJ), the FTC says that a well-known DJ who, in a radio commercial, talks about how much the DJ enjoys making coffee with a particular coffee maker, is likely communicating that the DJ, in fact, owns and regularly uses the coffee maker. In an aside that may make advertisers a little nervous, the FTC explains, "If they do not own it or used it only during a demonstration by its manufacturer, the ad would be deceptive." The point here is that if your endorser communicates that the endorser is a bona fide user of the product, then that must really be the case.
The FTC is proposing to beef up Example 3 (the dermatologist), to highlight the responsibility of both the advertiser, and the expert endorser, for statements that the expert endorser might make. Giving the example of a social media post where the dermatologist claims that a product is "clinically proven" to work, the FTC explains that if the dermatologist had received a write up of the clinical study which revealed serious flaws in the study, "the dermatologist should have recognized the study's flaws and is subject to liability for their false statements made in the advertisement." On the other hand, if there were no apparent design flaws in the study, then the endorser would not be responsible for the expert's false statements, even if the advertiser withheld another study which revealed problems with the claim, since the expert did not have a reason to know that the claim was deceptive. The FTC explains that this is a situation where the advertiser, but not the endorser, would be responsible for the false claim.
And, finally, in new Examples 6 (acne and weight loss) and 7 (learn-to-read), the FTC illustrates the principle that, if you're going to use a photo of someone who is not the actual endorser, you should not misrepresent a material attribute of the endorser. For example, if a 300 pound endorser is claiming to have lost 50 pounds with a weight loss program, don't use a photo of someone who weighs only 100 pounds. As an other example, if a parent is endorsing a learn-to-read program because of the success the parent's 7-year-old child had with the program, the advertisement shouldn't depict a child who only appears to be only 4 years old.
Stay tuned for "Part III" of this post, where I'll discuss the proposed changes to the "Consumer endorsements" section of the Guides.
"the dermatologist should have recognized the study's flaws and is subject to liability for their false statements made in the advertisement"