Friday, January 9, 2009

FTC Proposes Revisions To Guidelines for Advertising Endorsements

The Federal Trade Commission ("FTC") has requested comment on amendments to its Guides Concerning the Use of Endorsements and Testimonials in Advertising ("Guides"). These Guides govern the use of consumer and expert endorsements and testimonials in advertising — including viral advertising occurring through blogs and other Internet-based endorsement programs. Although the Guides are not binding, they explain how the FTC interprets Section 5 of the FTC Act’s prohibition on unfair or deceptive acts or practices. Consequently, the FTC could bring a Section 5 enforcement action based on practices that are inconsistent with the Guides.

As background, the FTC has not changed its Guides since they were released in 1980. In January 2007, the Commission released two studies it had commissioned on testimonials and issued a broad invitation for comments on the continued importance and appropriateness of the Guides. Twenty-two comments were submitted. Based on this feedback, the Commission is now proposing extensive revisions to the 1980 Guides. The changes to the Guides include:

declaring that both advertisers and endorsers are legally responsible for false or unsubstantiated statements made in endorsements, or failing to disclose material relationships;
eliminating the safe harbor formerly provided by "results not typical" language in consumer testimonials;
expanding the obligation of experts and celebrities to disclose certain contractual relationships (for instance, when speaking on talk shows); and
suggesting potentially sweeping liability for advertisers who encourage blogging about and viral marketing of their products.

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