We all would agree that “As Seen on TV” is one of the great brands of all time. The brilliant marketeers behind it recognized the extraordinary power of television – people believe as true what they see on TV.
Why that is I’m sure has been the subject of enumerable studies; after all it defines who we are as consumers and sets the stage for a marketplace where the phrase “targeted consumer” takes on real meaning. Between infomercials laden with celebrity endorsement, a tried and (sometimes) true tactic for moving people closer to their wallets coupled with compelling “just like my neighbor” testimonials, and home shopping networks with live celebrities and testimonials whose “it has to be true” quality rings true for millions of people, consumers are drawn to purchase like moths to a light.
The online world has taken this phenomenon and cranked it up a notch. The more modern version of “As Seen on TV”, its sister brand “As Seen on the Internet” – is an even more powerful lure. It is extraordinary how so many people believe that the “default” for the Internet is Truth, as if there were a mysterious group of censors and law enforcement officials who were reading everything found on the Internet to ensure that anything false or fraudulent automatically was removed. If only that were so.
Social networking has taken this propensity to believe anything electronically delivered to an even higher level. People tend to believe as true what others in their electronic neighborhoods say. This tends to be the case whatever the form of visual channel, from “expert” blogs in About.com, to the thousands of pseudo-news blogs, closed social environments like Facebook or MySpace, or in some form of IM (Include Twitter here). The stories of fraudulent promotion on Twitter already are legion. Add to this the hundreds, perhaps thousands of for-hire bloggers who will supply testimonials for a fee, and the potential for online, “As Seen on the Internet” consumer deception increases dramatically.
It was inevitable that at some point the FTC would have to step in. The Federal Trade Commission historically has taken consumer fraud seriously, but the massive amounts of online fraud, ranging from paid for false testimonials to the most severe forms of identity theft , have created a new vigor in that agency.
On December 1, 2009, new Federal Trade Commission’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Guides”), with heightened requirements for bloggers to disclose affiliations with sponsors of those endorsements, go into effect. See FTC Press Release dated October 5, 2009, here. The text of the Guides, 16 CFR Part 235, is available, here. Although these Guides are advisory in nature and do not expand the scope of liability under Section 5, they are intended to provide guidance as to how the FTC would apply governing law to various fact patterns.
The foundation for these Guides is the definition of “Endorsement” or “Testimonial” as “…any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser.” When such testimonial or endorsement exist, the new Guides come into play. These include some of the following:
Consumer Testimonials:
- Must be “unsolicited”;
- Must be truthful;
- Must not contain any representations that would be deceptive, or could not be substantiated, if made directly by the advertiser;
- Must be typical of what a consumer can reasonably expect;
- or must clearly and conspicuously disclose what typical results would be;
- No more “results not typical” which was a safe harbor under the old Guides.
Celebrity Endorsements:
- Must be truthful; Celebrities always had an obligation to use the product and make truthful claims; the Guides clarify that a celebrity now has an obligation to ensure that the claims made are accurate.
- Need not disclose celebrity is being paid if public will reasonably assume they are; but do need to disclose connection if in non-traditional media (a talk show for example), if not obvious celebrity is being compensated;
Expert/Organization Endorsements:
- The expert qualifications must match the endorsement; can’t use a veterinarian to endorse a children's cold remedy.
- If an advertisement refers to the findings of a research organization that conducted research sponsored by the advertiser, the advertiser’s relationship with the research organization should be disclosed in the advertisement.
Within the realm of “consumer testimonials” are blogger testimonials. The Guides are intended to address “professional” bloggers who receive consideration for the blogged testimonial, not the occasional individual personal testimonials, like a mom who used a particular cake mix she mentions.
Of significance is that it is immaterial if the advertiser cannot or does not control the blogger. The issue is whether the statements are sponsored. Whether messages conveyed by bloggers or other “word-of-mouth” marketers are “endorsements” will be decided by the FTC on a case-by-case basis. The fundamental question is whether, when viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statements can be considered “sponsored” by the advertiser and, therefore, an “advertising message.”
There are many other rules and examples identified in the Guides, and are a “must read’ for anyone using testimonials or endorsements in their marketing mix.
The truth in advertising just got a little closer to the truth.
—Steven M. Weinberg, Cowan DeBaets Abrahams & Sheppard, LLP
