Updated FTC Endorsement Rule

The Federal Trade Commission (FTC) recently revised its guidance with respect to the use of endorsements and testimonials in advertisements. 16 C.F.R. Pt. 255. The new guidance is effective December 1, 2009, and is applicable to advertisements of almost any type by entities subject to FTC jurisdiction if a consumer is likely to believe the advertisement reflects the opinions, beliefs, findings or experiences of the spokesperson or expert portrayed in the advertisement, rather than those of the sponsoring advertiser. The new guidance requires that:

• endorsements reflect the honest opinions and experiences of the endorser. If the endorser’s experience is not representative of what consumers can expect with respect to central or key attributes of the product, the advertisement must disclose clearly and conspicuously the performance that consumers generally can expect. Advertisers can no longer simply use a disclaimer indicating that the endorser’s results are not typical. Endorsements by experts, such as physicians, must be supported by an actual exercise of the person’s expertise in evaluating the product, which includes a reasonable examination or testing of the product with respect to factors that are relevant and available to consumers;
• an advertiser not distort the endorser’s opinion or experience. If a product is changed, the advertiser must assure that the endorser would continue to endorse the reformulated product before again using the endorsement;
• an endorsement by user actually be from a bona fide user of the product. Such an endorsement may only be used for so long as the advertiser has good reason to believe the endorser is a bona fide user of the product;
• an advertiser disclose "material connections" with the endorser of a type or magnitude that ordinarily would not be expected by consumers, both financial and non-financial. Endorsers, for example, are required to disclose clearly and conspicuously that they are being paid for the endorsement, if that is the case, even if the compensation includes only free product, if consumers would not expect the endorser to have been compensated, such as a blogger;
• if an endorser is portrayed to be an actual consumer and is not, the advertisement must disclose clearly and conspicuously that the person is not an actual consumer of the product; and
• an advertiser possess and rely upon adequate substantiation for all claims made in an advertisement.

While FTC guidance only represents the FTC’s interpretation of the law and is not binding, the guidance should be considered by providers. Furthermore, all providers should consider the guidance even if they are not subject to the Federal Trade Commission Act (e.g., certain nonprofit entities) as state deceptive trade practice laws that are applicable to nonprofit organizations may look to the FTC guidance as the applicable standard under the state law. Consequently, providers, for profit and not-for-profit, should consider these rules when using endorsements and testimonials.