• FTC Solicits Comments on Use of Endorsements
  • February 12, 2007 | Authors: Linda A. Goldstein; Jeffrey S. Edelstein
  • Law Firm: Manatt, Phelps & Phillips, LLP - New York Office
  • The Federal Trade Commission is requesting public comments on its Guides Concerning the Use of Endorsements and Testimonials in Advertising.

    The Guides are designed to help businesses conform with acceptable endorsement and testimonial advertising practices as required by Section 5 of the FTC Act. They define advertising terms, such as endorsements and testimonials, and contain guidelines associated with the use of endorsements and testimonials to market a product or service. The Commission cautioned that the Guides are advisory only. The FTC retains authority to initiate proceedings to enforce the requirements of Section 5.

    In a news release, the FTC asked all interested parties to comment by March 19, 2007, on the costs and benefits of the existing rules and guides, as well as their regulatory and economic impact. In particular, the Commission said it is interested in potential conflict between the guides and state, local, or other federal laws, and how changes in technology or economic conditions have affected the Guides.

    The FTC also requested comment on two studies about the messages conveyed by consumer endorsements. In the first report, “ The Effect of Consumer Testimonials and Disclosures of Ad Communication for a Dietary Supplement,” the Commission examined the communication effects of a promotional booklet containing three pages of consumer endorsements for a dietary supplement. The authors of the study suggested “that multiple testimonials about a product effectively communicate efficacy claims, i.e., that the product works for the uses discussed in the testimonials. Testimonials also appear to communicate that the product will work for all, most, or about half of the people who use it. Finally, the study suggests that prominent disclosures in ads containing multiple testimonials may be ineffective in limiting the communication of efficacy and typicality claims. This study used disclosures that were more prominent and stronger than the disclosures typically used in ads containing testimonials.”

    The second report, “Effects of Consumer Testimonials in Weight Loss, Dietary Supplement and Business Opportunity Advertisements,” examined the messages conveyed to consumers by one-page print advertisements containing consumer endorsements for a weight-loss program, a cholesterol-lowering dietary supplement, or a business opportunity. Findings indicate that the testimonials used in this study communicated to a substantial percentage of consumers that the advertised products would enable new users to achieve results similar to those portrayed by the testimonialists (i.e., the testimonials communicated product efficacy), and would enable a substantial proportion (half or more) of new users to achieve results similar to those portrayed by the testimonialists (i.e., the testimonials communicated typicality). The FTC wants additional information about any other available research concerning the messages conveyed by consumer testimonials.

    The Guides require advertisers to disclose connections between themselves and their endorsers that might materially affect the weight or credibility of the endorsement. The Guides also point out that consumers ordinarily will expect that endorsers who are well known personalities (i.e., celebrities) or experts will be compensated for their endorsements; therefore, an advertiser need not disclose the payment of compensation to such endorsers. A newish twist on endorsements involves celebrity appearances on talk shows and morning news programs in which they discuss ailments that afflict them or people close to them without disclosing that they’ve been paid sizable fees to do so. The FTC is seeking any extrinsic evidence regarding consumer expectations about celebrity endorsements made during an interview.

    Significance: Public comments serve as a valuable opportunity to provide input into the FTC’s review process. Although the Guides are advisory in nature, they are an important source of information for marketers and instructive as to the FTC’s stance on the issues they cover.