Proposed Rule2022-12327
Guides Concerning the Use of Endorsements and Testimonials in Advertising
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 26, 2022
Issuing agencies
Federal Trade Commission
Abstract
The Federal Trade Commission ("FTC" or "Commission") is seeking public comment on proposed revisions to its Guides Concerning the Use of Endorsements and Testimonials in Advertising ("the Guides").
Full Text
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<title>Federal Register, Volume 87 Issue 142 (Tuesday, July 26, 2022)</title>
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[Federal Register Volume 87, Number 142 (Tuesday, July 26, 2022)]
[Proposed Rules]
[Pages 44288-44306]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-12327]
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FEDERAL TRADE COMMISSION
16 CFR Part 255
Guides Concerning the Use of Endorsements and Testimonials in
Advertising
AGENCY: Federal Trade Commission.
ACTION: Proposed changes to guides; request for comments.
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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') is
seeking public comment on proposed revisions to its Guides Concerning
the Use of Endorsements and Testimonials in Advertising (``the
Guides'').
DATES: Comments must be received on or before September 26, 2022.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Invitation to Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Endorsement Guides;
P204500'' on your comment and file your comment online at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If you prefer to file your comment on paper, mail
your comment to the following address: Federal Trade Commission, Office
of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B),
Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Michael Ostheimer (202-326-2699),
<a href="/cdn-cgi/l/email-protection#3c51534f4854595551594e7c5a485f125b534a"><span class="__cf_email__" data-cfemail="1e73716d6a767b77737b6c5e786a7d30797168">[email protected]</span></a>, Attorney, Division of Advertising Practices, Bureau
of Consumer Protection, Federal Trade Commission, Room CC-10603, 600
[[Page 44289]]
Pennsylvania Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Overview of the Current Guides
II. History of the Guides
III. Discussion of Comments Received in Response to Regulatory
Review Notice
IV. Section-by-Section Description of Proposed Amendments
V. Proposed Revised Endorsement and Testimonial Guides
VI. Invitation to Comment
I. Overview of the Current Guides
The Guides, 16 CFR part 255, are designed to assist businesses and
others in conforming their endorsement and testimonial advertising
practices to the requirements of section 5 of the FTC Act. Although the
Guides interpret laws administered by the Commission, and thus are
advisory in nature, proceedings to enforce the requirements of law as
explained in the Guides can be brought under the FTC Act. In any such
proceeding, the Commission would have the burden of proving that a
particular use of an endorsement or testimonial was deceptive under the
law.
The Guides define both endorsements and testimonials broadly to
mean any advertising message that consumers are likely to believe
reflects the opinions, beliefs, findings, or experience of a party
other than the sponsoring advertiser. 16 CFR 255.0(b) and (c). The
Guides state that endorsements must reflect the honest opinions,
findings, beliefs, or experience of the endorser. 16 CFR 255.1(a).
Furthermore, endorsements may not contain any representations that
would be deceptive, or could not be substantiated, if made directly by
the advertiser. Id. The Guides state that an advertisement presenting
consumer endorsements about the performance of an advertised product
will be interpreted as representing that the product is effective for
the purpose depicted in the advertisement. 16 CFR 255.2(a). They
further advise that an advertisement employing a consumer endorsement
on a central or key attribute of a product will be interpreted as
representing that the endorser's experience is representative of what
consumers will generally achieve. 16 CFR 255.2(b). If an advertiser
does not have adequate substantiation that the endorser's experience is
representative, the advertisement should clearly and conspicuously
disclose what the generally expected performance would be in the
depicted circumstances. Id.
The Guides define an expert endorser as someone who, as a result of
experience, study, or training, possesses knowledge of a particular
subject that is superior to that generally acquired by ordinary
individuals. 16 CFR 255.0(e). An expert endorser's qualifications must
in fact, give him or her the expertise that he or she is represented as
possessing with respect to the endorsement. 16 CFR 255.3(a). Moreover,
an expert endorsement must be supported by an actual exercise of that
expertise and the expert's evaluation of the product must have been at
least as extensive as someone with the same degree of expertise would
normally need to conduct in order to support the conclusions presented.
16 CFR 255.3(b).
The Guides advise that when there is a connection between the
endorser and the seller of the advertised product that might materially
affect the weight or credibility of the endorsement (i.e., the
connection is not reasonably expected by the audience), such connection
must be fully disclosed. 16 CFR 255.5.
Among other things, the Guides also state that: (1) when the
advertisement represents that the endorser uses the endorsed product,
the endorser must have been a bona fide user of it at the time the
endorsement was given, 16 CFR 255.1(c); (2) advertisers are subject to
liability for false or unsubstantiated statements made through
endorsements, or for failing to disclose material connections between
themselves and their endorsers; and endorsers also may be liable for
statements made in the course of their endorsements, 16 CFR 255.1(d);
(3) advertisements presenting endorsements by what are represented to
be ``actual consumers'' should utilize actual consumers, or clearly and
conspicuously disclose that the persons are not actual consumers, 16
CFR 255.2(c); and (4) an organization's endorsement must be reached by
a process sufficient to ensure that the endorsement fairly reflects the
collective judgment of the organization. 16 CFR 255.4.
II. History of the Guides
In December 1972, the Commission published for public comment
proposed Guides Concerning the Use of Endorsements and Testimonials in
Advertising, 37 FR 25548 (Dec. 1, 1972). Interested parties submitted
extensive comment. On May 21, 1975, the Commission promulgated, under
the Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 41-58, three
sections of the 1972 proposal as final guidelines (16 CFR 255.0, 255.3
and 255.4) and republished three others, in modified form, for
additional public comment. 40 FR 22127 (May 21, 1975). The Commission
received public comment on the three re-proposed guidelines, as well as
on one of the final guidelines. On January 18, 1980, the Commission
promulgated three new sections as final guidelines (16 CFR 255.1, 255.2
and 255.5) and modified an example to one of the final guidelines
adopted in May 1975 (16 CFR 255.0 Example 4). 45 FR 3870 (Jan. 18,
1980).
As part of its periodic regulatory review, the Commission sought
public comment on the Endorsement Guides in January 2007. 72 FR 2214
(Jan. 18, 2007). In November 2008, the Commission discussed the
comments it received in 2007, proposed certain revisions to the Guides,
and requested comment on those proposed revisions. 73 FR 72374 (Nov.
28, 2008). In October 2009, the Commission substantively amended the
Guides, adding what are now 16 CFR 255.0(a), 255.1(d) and 255.2(a),
significantly modifying the guidance in 16 CFR 255.0(b), and modifying
or adding numerous examples. 74 FR 53124 (Oct. 15, 2009).
In February 2020, again as part of its ongoing regulatory review
process, the Commission published a Federal Register notice seeking
comment on the overall costs, benefits, and regulatory and economic
impact of the Guides as well as a number of specific questions focused
on the material connections section of the Guides (16 CFR 255.5). 85 FR
10104 (Feb. 21, 2020). In light of the disruption caused by the
Coronavirus pandemic, the Commission extended the comment period for
two months. 85 FR 19709 (Apr. 8, 2020).
III. Overview of Comments Received in Response to Regulatory Review
Notice
The Commission received 108 unique substantive comments in response
to its regulatory review notice.\1\ Having
[[Page 44290]]
considered those comments and its own extensive consumer protection
experience, the Commission now proposes various amendments to the
Guides and invites comments on these proposed changes.
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\1\ Approximately seventy-five comments were submitted by
individual consumers, most of whom were apparently university
students fulfilling class assignments. The remaining commenters
were: American Influencer Council, Inc. (``AIC''); American
Financial Services Association (``AFSA''); <a href="http://Amazon.com">Amazon.com</a>, Inc.
(``Amazon''); Association of National Advertisers (``ANA''); BBB
National Programs (``BBB''); Shirley Boyd, Esq. (``Boyd''); Campaign
for a Commercial Free-Childhood and Center for Digital Democracy
(``CCFC''); Competition and Markets Authority (``CMA''); Consumer
Reports; Council for Responsible Nutrition (``CRN''); Common Sense
Media (``CSM''); Consumer World (``CW''); Digital Content Next
(``DCN''); Esports Bar Association (``Esports Bar''); Entertainment
Software Association (``ESA''); Prof. Chris Jay Hoofnagle
(``Hoofnagle''); Interactive Advertising Bureau (``IAB''); Jim
Dudukovich, Esq. (``Dudukovich''); IZEA Worldwide, Inc. (``IZEA'');
Kleinfeld, Kaplan and Becker LLP (``KK&B''); LEGO Group (``LEGO'');
Maastricht University (``Maastricht''); Association of Magazine
Media (``MPA''); North American Insulation Manufacturers Association
(``NAIMA''); internet and Television Association (``NCTA'');
NetChoice; News Media Alliance (``NMA''); National Retail Federation
(``NRF''); Performance-Driven Marketing Institute (``PDMI'');
Pharmavite LLC (``Pharmavite''); Performance Marketing Association
(``PMA''); Princeton University Center for Information Technology
Policy and University of Chicago Department of Computer Science
researchers (``Princeton''); SuperAwesome; and Truth in Advertising,
Inc. (``TINA''). The comments are available online at <a href="https://beta.regulations.gov/document/FTC-2020-0017-0001/comment">https://beta.regulations.gov/document/FTC-2020-0017-0001/comment</a>.
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Most commenters noted that the Guides are beneficial and should be
retained,\2\ and none disagreed. Some comments praised the current
Guides for striking an appropriate balance between protecting consumers
and allowing advertisers to communicate creatively and effectively to
potential customers.\3\
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\2\ See, e.g., Amazon at 3; ANA at 1-3; BBB at 2; CRN at 1; DCN
at 1; Dudukovich at 3; Esports Bar at 2-3; ESA at 2; IAB at 1-2;
IZEA at 1; LEGO at 1; MPA at 2; NAIMA at 1-2; NCTA at 1-2; NMA at 2;
and Pharmavite at 1.
\3\ See, e.g., Amazon at 3; ESA at 2; IAB at 2-3; MPA at 2; NCTA
at 1-2; and PDMI at 2.
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Most comments responded to specific questions the Commission posed
in the February 2020 Federal Register notice about certain provisions
of the current Guides. Those comments are discussed in Part IV, below,
in the context of the specific Guide provisions to which they relate.
In addition, some comments addressed other issues. For example,
some commenters said that the Commission should engage in more vigorous
enforcement activities related to the Guides \4\ and greater
educational efforts.\5\ Other commenters weighed in on whether the
Commission should \6\ or should not \7\ engage in a rulemaking
proceeding to convert some principles in the Guides into trade
regulation rules.
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\4\ See, e.g., Boyd at 5-6, 16; Consumer Reports at 2; IZEA at
1; NRF at 14; and TINA at 22-23.
\5\ See, e.g., AIC at 4-5; Amazon at 3; Dudukovich at 6; and IAB
at 3.
\6\ See, e.g., Boyd at 5-7; Natalie Jacobwith at 3.
\7\ See, e.g., MPA at 4, 7-8; and NRF at 14.
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Some comments urged the Commission to encourage social media
platforms to improve or standardize the built-in tools that some of
them offer to facilitate disclosures of material connections by
platform users.\8\ The Commission supports development of effective,
built-in disclosure tools but is concerned that some of the existing
ones are too poorly contrasting, fleeting, or small, or may be placed
in locations where they do not catch the user's attention. For example,
a social media disclosure tool that superimposes a disclosure over a
posted picture could be poorly contrasting, making the disclosure
inadequate, especially if the picture is only displayed for a few
seconds and contains competing text or other information. Similarly, a
disclosure tool that superimposes a small disclosure in the bottom left
corner of a video for only a few seconds is inconspicuous. Even a tool
that employs a disclosure of sufficient size, duration, and contrast
could be inadequate if it is displayed above, rather than below, a
picture or video that catches the attention of users scrolling through
their feeds. Platforms may be exposing endorsers to liability if users
rely solely on a platform's inadequate tools for their disclosures.
Platforms may also be exposing themselves to liability depending on the
representations they make about these tools. Given that platforms play
a major role in disseminating and monetizing endorsements, and actively
encourage endorsers to promote and amplify their posts, the Commission
believes they should carefully evaluate their tools and what they say
about them to ensure they are not exposing themselves or their users to
liability.
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\8\ See, e.g., AFSA at 2; AIC at 2-3; ANA at 5-6; Dudukovich at
11-12; IAB at 4; NCTA at 9; NRF at 9; PMA at 2; and Princeton at 5;
see also CMA at 3.
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IV. Section-by-Section Discussion of Proposed Revisions to Guides,
Comments Received in Response to February 2020 Federal Register Notice,
and Requests for Additional Comment
The Commission believes the Guides should be retained but a number
of revisions are appropriate. Many of the proposed changes are simply
clarifications or additional examples of the principles embodied in the
existing Guides. Others enunciate basic principles not expressly set
forth in the current Guides but are established in Commission
enforcement actions. Several represent substantive changes from the
current Guides, based upon increased knowledge of how consumers view
endorsements and taking into consideration the comments submitted in
response to the February 2020 Federal Register notice. Some of the new
examples and updates to existing examples reflect the extent to which
advertisers have turned increasingly to the use of social media and
product reviews to market their products.
The Commission seeks comments on these proposed revisions, which
are discussed below by Section.\9\
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\9\ Non-substantive changes to improve readability or to update
examples to reflect changes in marketing methods, technology, or
society that have occurred since the Guides were last updated or
since they were first written (e.g., replacing ``brochure'' with
``web page'') are not discussed below.
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A. Sec. 255.0--Purpose and Definitions
The Guides currently begin with a purpose and definitions section.
Current Sec. 255.0(b) defines an ``endorsement'' 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. As suggested in a comment, the Commission
proposes revising that definition to clarify that ``marketing'' and
``promotional'' messages can be endorsements.\10\ When a social media
user tags a brand in a post, it generally communicates that the poster
uses or likes the brand, so, the revised definition would also indicate
that tags in social media posts can be endorsements. Section 255.0(b)
also currently states that an ``endorser'' may be an individual, group,
or institution. The Commission proposes a modification indicating that
an endorser could instead simply appear to be an individual, group, or
institution. Thus, the Guides would clearly apply to endorsements by
fabricated endorsers.
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\10\ See Boyd at 7.
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The Commission proposes to add a footnote to Sec. 255.0(b). It
would indicate the availability of detailed staff business guidance
regarding endorsements that is updated periodically, while noting that
such staff guidance is not approved by or binding upon the Commission.
Numerous commenters asked the Commission to update the Guides more
frequently, such as every three years.\11\ Some commenters asked that
the Commission provide detailed guidance in the Guides about acceptable
and unacceptable language and placement for disclosures of material
connections and their use on particular platforms,\12\ while others
asked the Commission to continue to allow marketers flexibility in the
crafting and placement of necessary disclosures.\13\ Commenters also
differed on whether to incorporate FTC staff business guidance into the
Guides, with some saying it would be useful \14\ and others taking the
position that the social media landscape is ever-changing and the
Guides should focus on general principles.\15\ One commenter
[[Page 44291]]
suggested cross-referencing staff guidance in the Guides.\16\ The
Commission believes that its current approach for endorsement-related
guidance makes sense, with the Guides focused on general principles and
examples, and the more informal and easily updated staff guidance
focused on specific questions and issues that arise in this area. The
new footnote would ensure that people reading the Guides are aware of
this additional staff guidance.
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\11\ See, e.g., AIC at 1, 3; and Pharmavite at 2.
\12\ See, e.g., CRN at 2-4; Pharmavite at 1-2; PMA at 2; and
Anna Keltner at 3.
\13\ See, e.g., ESA at 5-6; IAB at 2-3; and MPA at 6-7.
\14\ See, e.g., Consumer Reports at 9; CRN at 2; Dudukovich at
9; Pharmavite at 1-2; and TINA at 12.
\15\ See, e.g., ANA at 3; BBB at 3; and NCTA at 2.
\16\ See TINA at 12.
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Current Sec. 255.0(d) defines a ``product'' as any product,
service, company or industry. At the suggestion of a commenter,\17\ the
Commission proposes modifying the definition to clarify that a
``product'' includes a ``brand.''
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\17\ See Boyd at 7.
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In response to comments requesting further guidance on what
constitutes a clear and conspicuous disclosure, the Commission proposes
adding a new definition of ``clear and conspicuous'' in a new Sec.
255.0(f). It would define a ``clear and conspicuous'' disclosure as a
disclosure that ``is difficult to miss (i.e., easily noticeable) and
easily understandable by ordinary consumers.'' It would give specific
guidance with respect to visual and audible disclosures, stress the
importance of ``unavoidability'' when the communication involves social
media or the internet, and say that the disclosure should not be
contradicted or mitigated by, or inconsistent with, anything in the
communication. While not mandating that a disclosure be both visual and
audible under all circumstances, it would say that when the triggering
claim is visual the disclosure should be at least visual; that when the
triggering claim is audible, the disclosure should be at least audible;
that when the triggering claim is both visual and audible, the
disclosure should be both; and that a simultaneous audible and visual
disclosure is more likely to be clear and conspicuous. Finally, the
proposed definition notes that when an endorsement targets a specific
audience, such as older adults, its effectiveness will be evaluated
from the perspective of members of that group.
Example 1 to Sec. 255.0 currently provides an example of an
endorsement and illustrates the principle that an endorsement may not
be presented out of context or reworded so as to distort the endorser's
opinion. One commenter noted that it was unclear in the example who
distorted the endorser's opinion.\18\ The Commission proposes to modify
the example to clearly identify the responsible party.
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\18\ See Dudukovich at 17.
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Current Example 5 to Sec. 255.0 involves a television
advertisement in which a professional golfer implicitly endorses a
brand of golf balls by being shown practicing her swing using the
balls, even though she says nothing in the ad. The Commission proposes
expanding this example to illustrate that use of the same video footage
in a social media post can be an endorsement as long as the endorsed
brand is tagged or otherwise readily identifiable by viewers.
Example 6 to Sec. 255.0 currently illustrates how a paid actor
hosting a product infomercial and reading from a script can still be
making an endorsement. The Commission proposes adding a scenario to
this example to show how the same actor can talk about the product
without making an endorsement and deleting Example 7, which had also
focused on illustrating statements that were not endorsements.
Example 8 to Sec. 255.0, which would be renumbered as Example 7,
currently provides scenarios in which an individual consumer's social
media posts would and would not be considered endorsements. Two
commenters asked for further explanation of the Commission's
reasoning.\19\ The Commission proposes to clarify the example. When a
consumer buys the product with her own money under ordinary
circumstances and chooses to post about it, the post is not an
endorsement under the Guides because the consumer has no connection to
the manufacturer beyond being an ordinary purchaser and her message
cannot be attributed to the product's manufacturer. The revised example
would note that the same would be true for a consumer review.
Furthermore, if the consumer received a coupon for a free trial product
from the manufacturer simply based upon her purchase history and if the
manufacturer did not ask coupon recipients for reviews, then the
consumer's unsolicited review would not be an endorsement because it
cannot be attributed to the manufacturer. However, if the consumer
received the free product as part of a marketing program that
periodically provides free products from various manufacturers, where
the consumer has the option of writing a review, the consumer's review
would be an endorsement because of her connection to the manufacturer
through the marketing program.
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\19\ See ANA at 8-9; and Dudukovich at 17-18.
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The Commission proposes adding six new examples to this section.
New Example 8 would illustrate an endorsement made through video game
play streamed on social media without an express product
recommendation. New Example 9 illustrates disclosures that are easily
missed and thus are not clear and conspicuous. New Examples 10 and 11
illustrate how a disclosure may need to be evaluated from the
perspective of an advertisement's target audience and that disclosures
need to be clear and conspicuous on multiple common types of platforms
or devices.
New Example 12 derives in part from a commenter's suggestion that
the Guides address an incentivized endorser denigrating a competitor's
product.\20\ The example would state that a fake negative review or
another paid or incentivized negative statement about a competitor's
service does not meet the definition of an ``endorsement.'' It would
note, however, that engaging in such disparagement can be a deceptive
practice.
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\20\ See NAIMA at 5; see also Consumer Reports at 4.
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New Example 13 derives from a commenter's suggestion that the
Guides state, as alleged in FTC v. Devumi, LLC,\21\ that it is illegal
to sell, purchase, or use bots or other fake social media accounts to
market goods and services.\22\ Because such indicators do not express
an advertising message by their mere presence, the example would
acknowledge that an endorser's use of fake indicators of social media
influence is not itself an endorsement issue. The Commission would note
in the example that it is a deceptive practice for users of social
media to purchase or create indicators of social media influence and
then use them to misrepresent their influence for a commercial purpose
and that it is a deceptive practice to sell or distribute such
indicators to such users.
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\21\ See Complaint at 5, FTC v. Devumi, LLC, No. 9:19-cv-81419-
RKA (S.D. Fla. Oct. 18, 2019), <a href="https://www.ftc.gov/system/files/documents/cases/devumi_complaint.pdf">https://www.ftc.gov/system/files/documents/cases/devumi_complaint.pdf</a>.
\22\ See Consumer Reports at 9.
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B. Sec. 255.1--General Considerations
Section 255.1 sets forth principles that apply to endorsements
generally (e.g., endorsements must reflect the honest opinions or
experience of the endorser, and they may not convey any representation
that would be deceptive if made directly by the advertiser).
Section 255.1(d) currently recognizes that advertisers are subject
to liability for false or unsubstantiated statements made through
endorsements, or for failing to disclose material connections between
themselves and their endorsers. The Commission would indicate that an
advertiser may be liable for an
[[Page 44292]]
endorser's deceptive statement even when the endorser is not liable.
The Commission also proposes adding guidance to this subsection on what
actions advertisers should take with respect to their endorsers. Such
guidance previously only appeared in an example.
Current Sec. 255.1(d) also recognizes that endorsers themselves
may be subject to liability for their statements. Commenters asked for
clarification of when endorsers would be liable.\23\ The Commission
proposes moving the discussion of endorser liability to a new Sec.
255.1(e) and indicating that endorsers may be liable for their
statements such as when they make representations that they know or
should know to be deceptive. The level of due diligence required by the
endorsers will depend on their level of expertise and knowledge, among
other factors. Current Examples 3 and 4 involve endorsers who knew or
should have known that their statements were deceptive. Section
255.1(e) would also say that a non-expert endorser may also be liable
when the endorser makes misleading or unsubstantiated representations
about performance or efficacy that are inconsistent with the endorser's
personal experience or that were not made or approved by the advertiser
and that go beyond the scope of the endorser's personal experience.\24\
Current Example 5 involves such an endorser and the Commission proposes
updating it to better illustrate this principle. Finally, Sec.
255.1(e) would also note that endorsers may also be liable for failing
to disclose unexpected material connections between themselves and an
advertiser, such as when they create and disseminate endorsements
without such disclosures.
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\23\ See, e.g., Boyd at 13; and Dudukovich at 18.
\24\ The Commission would add a cross-reference to Sec. 255.3
with respect to the responsibilities of an expert endorser.
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A few commenters suggested that the Guides deal with the disclosure
responsibility of intermediaries such as marketing and public relations
firms.\25\ The Commission proposes adding a new Sec. 255.1(f)
explaining the potential liability of intermediaries. Intermediaries,
such as advertising agencies and public relations firms, may be liable
for their roles in disseminating what they knew or should have known
were deceptive endorsements.\26\ For example, advertising agencies that
intentionally engage in deception or that ignore obvious shortcomings
of claims they disseminate may be liable. They may also be liable for
their roles with respect to endorsements that fail to disclose
unexpected material connections, whether by disseminating
advertisements without necessary disclosures of material connection or
by hiring and directing the endorsers who fail to make necessary
disclosures.\27\
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\25\ See, e.g., Boyd at 13; and Maastricht at 7-8.
\26\ See Complaint at 6, 8, 12-12, 20, FTC v. Marketing
Architects, Inc., No. 2:18-cv-00050 (D. Me. Feb. 6, 2018), <a href="https://www.ftc.gov/system/files/documents/cases/1623101marketingarchitectscomplaint.pdf">https://www.ftc.gov/system/files/documents/cases/1623101marketingarchitectscomplaint.pdf</a> (defendant advertising
agency created and disseminated fictitious weight-loss
testimonials).
\27\ See Complaint at 2-5, In the Matter of Machinima, Inc., No.
C-4569 (Sept. 2, 2015), <a href="https://www.ftc.gov/system/files/documents/cases/160317machinimacmpt.pdf">https://www.ftc.gov/system/files/documents/cases/160317machinimacmpt.pdf</a>. (respondent recruited, hired, and
instructed influencers on behalf of an advertiser, but did not
require the influencers to disclose compensation).
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The Commission proposes adding a new Sec. 255.1(g) stating a
general principle that the use of an endorsement with the image or
likeness of a person other than the actual endorser is deceptive if it
misrepresents a material attribute of the endorser.
The Commission proposes modifying current Example 1 to Sec. 255.1
to note that an endorser does not need to go back and modify or delete
past social media posts as long as the posts were not misleading when
they were made and the dates of the posts are clear and conspicuous to
viewers. However, the example would state that if the post was later
reposted by the endorser or shared by the publisher, it would suggest
to reasonable consumers that the endorser continued to hold the views
expressed in the prior post.
The Commission proposes deleting current Example 2 to Sec. 255.1
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. The Commission proposes to
replace that example with one that illustrates when an endorsement
would likely communicate regular use and ownership.
The Commission proposes editing current Example 3 to Sec. 255.1 to
indicate that a paid endorser and the company paying the endorser are
both potentially liable for the endorser's social media post that fails
to disclose the endorser's relationship to the company. The Commission
proposes altering the example and adding a new cross-reference in this
example to the Guides' material connection provisions (Sec. 255.5) to
make clear that those provisions apply to paid consultants and not just
employees or those hired to be endorsers. The Commission also proposes
adding alternative language to the example illustrating how the
advertiser could be liable when the endorser is not liable.
The Commission proposes adding new Examples 6 and 7 to illustrate
the principle in new Sec. 255.1(g) involving the use of an image or
likeness of a person other than the actual endorser to misrepresent a
material attribute of the endorser. These examples involve endorsements
for an acne product using an image of a person with much better skin
than the actual endorser, a weight-loss product with an image of a
person weighing much less than the actual endorser, and a learn-to-read
program with a picture of a significantly younger child than the child
of the endorser.
C. Sec. 255.2--Consumer Endorsements
Section 255.2 of the Guides provides guidance specific to the use
of consumer endorsements, commonly referred to as testimonials.
Current Sec. 255.2(a) addresses the need for adequate
substantiation for claims made through endorsements. The Commission
proposes clarifying that this need for substantiation applies to both
express and implied claims.
Current Sec. 255.2(b) states that when the advertiser does not
have substantiation that an endorser's experience is representative of
what consumers will generally achieve, an ad should clearly and
conspicuously disclose the generally expected performance in the
depicted circumstances. The Commission proposes adding a clarifying
statement that the disclosure of the generally expected performance
should be presented in a manner that does not itself misrepresent what
consumers can expect.
The Commission proposes adding a new Sec. 255.2(d) that addresses
consumer reviews and articulates a fundamental principle not expressly
set forth in the existing Guides. It would state that in procuring,
suppressing, boosting, organizing, or editing consumer reviews of their
products, advertisers should not take actions that have the effect of
distorting or otherwise misrepresenting what consumers think of their
products. It would also note that this is true regardless of whether
the reviews are considered ``endorsements'' under the Guides.
The Commission proposes to expand current Example 2 of Sec. 255.2
so as to illustrate how a disclosure of expected results can be
misleading when those results are only true under limited circumstances
not clearly stated in the ad.
Because current Example 3 of Sec. 255.2 involves serum cholesterol
lowering claims, the Commission proposes replacing ``adequate
substantiation''
[[Page 44293]]
with ``competent and reliable scientific evidence,'' the type of
substantiation that would be required for such claims.
Current Example 4 of Sec. 255.2 provides two examples of
acceptable weight-loss disclosures of generally expected results under
different circumstances, one where a testimonialist reports her weight
loss over a certain period and one where the testimonialist reports her
weight loss without specifying a time period. The Commission proposes
editing those disclosures to make them more informative for
consumers.\28\ The Commission would also add examples of two
alternative disclosures that would be inadequate, one involving a
disclosure of weight loss per week and the other involving a broad
range of possible weight loss.
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\28\ Example 4 provides an example of a performance claim
requiring substantiation--a claim that WeightAway is an effective
weight loss product. The Commission proposes revising that exemplar
to include the claim that the endorser's weight loss was not just
due to her dietary restrictions and exercise regimen.
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Another proposed addition to Example 4 discusses and illustrates
how outliers can substantially affect the average results such that a
disclosure of generally expected results based upon a mean computation
would be misleading and how, when such is the case, the disclosure
could instead be based upon median results.
The Commission would also add language to Example 4 illustrating a
marketer's liability for procuring fake reviews that appear for its
product on a third-party review website. The marketer is not only
liable for procuring reviews that are not from bona fide users, but is
also liable for any unsubstantiated claims made in those fake
reviews.\29\
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\29\ See Complaint at 5-9, FTC v. Cure Encapsulations, Inc., No.
1:19-cv-00982 (E.D.N.Y. Feb. 26, 2019), <a href="https://www.ftc.gov/system/files/documents/cases/quality_encapsulations_complaint_2-26-19.pdf">https://www.ftc.gov/system/files/documents/cases/quality_encapsulations_complaint_2-26-19.pdf</a>.
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Finally, the Commission proposes adding an alternative scenario to
Example 4 involving an advertisement for a weight-loss program. The
addition would explain that a disclosure of typical weight loss limited
to only successful participants in the program (e.g., only those who
stuck with it for six months), ignoring participants who quit, would be
inadequate.
The Commission proposes four new examples to illustrate the
proposed new Sec. 255.2(d).
New Example 8 addresses an online seller suppressing or not
publishing product reviews based upon their star ratings or their
negative sentiments.\30\ The review portions of the seller's product
pages are misleading as to purchasers' actual opinions of the products.
The example would also provide examples of reviews that need not be
published. The Commission would note that sellers are not required to
display customer reviews that contain unlawful, harassing, abusive,
obscene, vulgar, or sexually explicit content, or content that is
inappropriate with respect to race, gender, sexuality, or ethnicity, or
reviews that the seller reasonably believes are fake, so long as the
criteria for withholding reviews are applied uniformly to all reviews
submitted. The footnote would also note that sellers are not required
to display reviews that are unrelated to their products or services and
that ``services'' include customer service, delivery, returns, and
exchanges. The Commission is particularly interested in consumer
expectations regarding product reviews that are solely about related
services. Do consumers expect that sellers publish such reviews that
are just about a product's shipping or refund practices or the
associated customer service together with other product reviews?
Finally, the example illustrates that it would be deceptive for a
seller to highlight glowing reviews and label them as ``most helpful''
if consumers had not actually voted them most helpful.
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\30\ See Complaint at 1-2, In the Matter of Fashion Nova, LLC,
No. C-4759 (Mar. 18, 2022), <a href="http://www.ftc.gov/system/files/ftc_gov/pdf/1923138C4759FashionNovaComplaint.pdf">http://www.ftc.gov/system/files/ftc_gov/pdf/1923138C4759FashionNovaComplaint.pdf</a>.
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New Example 9 addresses paying purchasers to write positive product
reviews.\31\ Such reviews are deceptive regardless of any disclosure of
the payment, because the manufacturer has required that the reviews be
positive. The proposed example has a cross-reference for when there is
no requirement that the reviews be positive and the reviewers
understand that they are free to write negative reviews without
suffering any consequences.
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\31\ See Complaint at 8, In the Matter of UrthBox, Inc., No. C-
4676 (April 3, 2019), <a href="https://www.ftc.gov/system/files/documents/cases/172_3028_urthbox_complaint_4-3-19_0.pdf">https://www.ftc.gov/system/files/documents/cases/172_3028_urthbox_complaint_4-3-19_0.pdf</a>.
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New Example 10 addresses the unfair practice of threatening
consumers who post negative reviews to third-party websites in order to
coerce the consumers to delete their reviews. Such threats can take the
form of legal,\32\ physical, or other threats. As noted in a new
proposed footnote to the Guides, when the threats are incorporated into
a form contract, they violate the Consumer Review Fairness Act. 15
U.S.C. 45b(b)(1).
---------------------------------------------------------------------------
\32\ See FTC v. Roca Labs, Inc., 345 F. Supp. 3d 1375, 1394-95
(M.D. Fla. 2018).
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Several commenters suggested addressing review gating, i.e.,
practices that involve obtaining customer feedback and then sending
satisfied and dissatisfied customers down different paths in order to
encourage positive reviews and avoid negative reviews.\33\ New Example
11 discusses a marketer soliciting feedback from all customers and only
inviting those who give positive feedback to write online reviews. It
says that such disparate treatment may be an unfair or deceptive
practice if it results in the posted reviews being substantially more
positive than if the marketer had not engaged in the practice.
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\33\ See, e.g., BBB at 5; Boyd at 23; Dudukovich at 13; and TINA
at 22; but see ANA at 14.
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D. Sec. 255.3--Expert Endorsements
Section 255.3 provides guidance with respect to expert
endorsements.
Current Sec. 255.3(a) addresses advertisements that represent
``directly or by implication'' that an endorser is an expert with
respect to the endorsement message. The Commission proposes clarifying
that this section applies to representations made ``expressly or by
implication.'' \34\ The Commission proposes modifying current Example 2
to clarify that the non-medical ``doctor'' expert endorser should have
relevant expertise and that the non-medical and non-specialized doctors
referenced in the example do not necessarily have enough expertise to
endorse the product even with a clear and conspicuous disclosure. The
Commission also proposes amending current Example 6--adding a sentence
about the potential liability of the expert endorser and the
advertiser, including a cross-reference to Sec. 255.1. The Commission
would clarify that what matters is the expert's ``purported'' degree of
expertise, not the expert's actual degree of expertise. Finally, the
Commission would also indicate in Example 6 that scientific evidence is
expected to support a serum cholesterol lowering claim.
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\34\ The Commission proposes making a similar change to Sec.
255.2(c).
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E. Sec. 255.4--Endorsements by Organizations
Section 255.4 provides guidance specific to the use of endorsements
by organizations.
The Commission proposes to renumber the current example in Sec.
255.4 as Example 1 and to add two additional examples.
New Example 2 would say that if a manufacturer sets up an
apparently independent review website that reviews the manufacturer's
own
[[Page 44294]]
products and competing products, that website is deceptive because it
is not in fact independent.\35\
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\35\ See Complaint at 8-9, In the Matter of Son Le, No. C-4619
(May 31, 2020), <a href="https://www.ftc.gov/system/files/documents/cases/162_3178_c4619_trampolinesafetyofamerica_complaint_0.pdf">https://www.ftc.gov/system/files/documents/cases/162_3178_c4619_trampolinesafetyofamerica_complaint_0.pdf</a>.
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New Example 3 addresses a third-party review site that provides
rankings of various manufacturers' products and accepts payments in
exchange for higher rankings. This practice was challenged in the
Commission's case against LendEDU.\36\ One commenter asked whether,
based on that case, a disclosure is only required on such websites when
they make claims that they are ``objective,'' ``accurate,'' and
``unbiased.'' \37\ The revised example would say that a paid ranking
boost is deceptive regardless of whether the website makes an express
claim of independence or objectivity. It also would note the potential
lability of a manufacturer that pays for a higher ranking. Finally, it
would say that if a manufacturer makes payments to the review site but
not for higher rankings, there should be a clear and conspicuous
disclosure regarding the payments, with a cross-reference to an example
involving payments for affiliate links.
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\36\ See Complaint at 15, In the Matter of Shop Tutors, Inc.,
No. C-4719 (Feb. 3, 2020), <a href="https://www.ftc.gov/system/files/documents/cases/182_3180_lendedu_complaint.pdf">https://www.ftc.gov/system/files/documents/cases/182_3180_lendedu_complaint.pdf</a>.
\37\ See AFSA at 2.
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F. Sec. 255.5--Disclosure of Material Connections
Section 255.5 of the current Guides states that advertisers must
disclose connections between themselves and their endorsers that might
materially affect the weight or credibility of the endorsement (i.e.,
the connection is not reasonably expected by the audience). The text of
this section also includes the example of a television ad featuring an
endorser who is neither represented in the advertisement as an expert
nor is known to a significant portion of the viewing public.
The Commission believes the requirement that material connections
between advertisers and endorsers be disclosed is appropriate and
should be retained. The Commission proposes specifying that such
disclosures must be ``clear and conspicuous,'' adding a definition of
that phrase (as discussed above), and deleting the more ambiguous
statement that such disclosures must be ``fully'' disclosed. It also
proposes to delete the existing example from the text of the section
and to replace it with more general guidance. A commenter asked for
further guidance about what types of relationships could constitute
material connections.\38\ The proposed revised text of Sec. 255.5
would explain that material connections can include a business, family,
or personal relationship; monetary payment; the provision of free or
discounted products or services to the endorser, including products or
services unrelated to the endorsed product; early access to a product;
or the possibility of winning a prize, of being paid, or of appearing
on television or in other media promotions. The new guidance would
state that a material connection can exist regardless of whether the
advertiser requires an endorsement for the payment or free or
discounted products.
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\38\ See Boyd at 9.
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Several commenters asked that the Commission provide examples of
immaterial connections that need no disclosure.\39\ The Commission
proposes instead to recognize in the text of Sec. 255.5 that some
connections may be immaterial because they are too insignificant to
affect the weight or credibility given to endorsements.
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\39\ See, e.g., ANA at 10-12; CMA at 2; and NCTA at 10.
---------------------------------------------------------------------------
One commenter suggested that the Guides recognize that, for
influencers primarily famous because of their social media presence,
their sponsorships are often expected.\40\ Without accepting or
rejecting that proposition, the Commission proposes stating that an
endorser's material connection need not to be disclosed when it is
understood or expected by all but an insignificant portion of the
audience.
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\40\ See NRF at 4.
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One commenter requested that the Guides state that the exact nature
or amount of an endorser's compensation need not be disclosed,\41\
while another commenter asked that the Guides require influencers to
state the amount of their compensation because it will help star-struck
consumers appreciate the lack of honesty in celebrity posts.\42\ The
Commission proposes clarifying that the disclosure of a material
connection does not require the complete details of the connection, but
it must clearly communicate the nature of the connection sufficiently
for consumers to evaluate its significance.
---------------------------------------------------------------------------
\41\ Id. at 10.
\42\ See Hoofnagle at 3.
---------------------------------------------------------------------------
Commenters also expressed widely diverging opinions on the extent
to which the Guides should address disclosures of material connections
to children. Most of these commenters agreed that, as children grow,
they are better able to understand what advertisements are and to
distinguish them from other content. They also agreed that it is easier
for children to recognize traditional television advertising than
influencer marketing, with its blurring of organic content and
marketing. Commenters diverged as to the ages at which and the extent
to which disclosures can be effective. Some variously argued that
disclosures of material connections are never effective for children,
are ineffective at certain young ages, or should be more robust for
children at certain ages.\43\ At least one commenter argued that
disclosures can work for younger kids.\44\ Several commenters urged the
Commission not to address this issue in the Guides at all and rely
instead on self-regulatory organizations.\45\ One commenter also noted
that improving disclosures can help parents identify advertising to
children.\46\ Some commenters discussed or cited research studies in
this area to support their views \47\ or referred to the value of
additional research.\48\
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\43\ See CCFC at 3, 25; CSM at 1, 10; and TINA at 10-11.
\44\ See SuperAwesome at 2; see also NetChoice at 11.
\45\ See ANA at 9-10; DCN at 2; IAB at 5; and NCTA at 2-3.
\46\ See CCFC at 23.
\47\ See, e.g., CCFC at 16-17, 21-23; CSM at 3-4, 6, 9;
SuperAwesome at 3-5; and TINA at 10-11.
\48\ See, e.g., BBB at 4; and CSM at 10.
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The Commission recognizes that it is difficult for children--
especially younger children--to discern ads from entertainment or other
content in the digital environment, where the lines are blurred much
more than in traditional ``linear'' media, like television. For
example, it may not be apparent to them when influencers are being paid
to promote a product featured in their video and social media posts.
Although not addressed in the comments, parents may play a role in
promoting children's understanding of advertising and lessening the
effects of potentially deceptive practices. The Commission would
benefit from more evidence than provided in the comments to develop
specific guidance or best practices in this area. FTC staff thus plans
to hold a public event to gather research and expert opinion on: (a)
children's capacities at different ages and developmental stages to
recognize and understand advertising content and distinguish it from
other content; (b) the need for and efficacy of disclosures as a
solution to the problem facing children of different ages; and, (c) if
disclosures can be efficacious, the most effective format, placement,
and wording for disclosures. As discussed below, the Commission also
proposes
[[Page 44295]]
adding a new Sec. 255.6 addressing endorsements directed to children.
The current Example 3 to Sec. 255.5 makes clear that consumers
would not expect that a celebrity was paid for endorsing a medical
procedure during a routine interview on a television talk show, that
knowledge of such a financial interest would likely affect the weight
or credibility consumers give to that endorsement, and that the
celebrity's financial connection to the advertiser should be disclosed.
One commenter said that the Guides should indicate that disclosures at
the end of a talk show are not clear and conspicuous.\49\ The
Commission proposes edits to Example 3 noting that the disclosure
should be during the interview and that a disclosure during the show's
closing credits is not clear and conspicuous. A different commenter
suggested that the Guides say that disclosure obligations exist even if
an endorser is not paid for a particular post.\50\ Revised Example 3
would say that, if the celebrity makes the endorsement in one of her
social media posts, her connection to the advertiser should be
disclosed regardless of whether she was paid for the particular post.
The revised example would also illustrate that receipt of free or
discounted services can constitute a material connection.
---------------------------------------------------------------------------
\49\ See CW at 2-5.
\50\ See Dudukovich at 30, 62.
---------------------------------------------------------------------------
One comment suggested that the Guides address the reuse of an
influencer's social media endorsement.\51\ Revised Example 3 would also
state that, when reusing a celebrity's social media posts in its own
social media, an advertiser should clearly and conspicuously disclose
its relationship to the celebrity (assuming the initial post
necessitated a disclosure).
---------------------------------------------------------------------------
\51\ See IZEA at 1.
---------------------------------------------------------------------------
The current Example 4 to Sec. 255.5 addresses the consumer
expectation that an expert endorser would be reasonably compensated for
appearing in an ad. The Commission proposes clarifying that the
existing guidance applies to traditional ads, such as television ads,
and adding an alternative scenario involving a post on the expert's own
social media account, a context in which consumers would be less likely
to expect that the expert was compensated and more likely to expect
that the expert is expressing an independent opinion.
The current Example 5 to Sec. 255.5 addresses a scenario in which
restaurant patrons are informed before they enter that they will be
interviewed by an advertiser as part of its TV promotion of its new
food product. A commenter suggested that we clarify why this
information is material.\52\ The Commission proposes explaining that a
patron might want to give the product a good review in the hope of
appearing on television.
---------------------------------------------------------------------------
\52\ See Dudukovich at 24-25.
---------------------------------------------------------------------------
Several commenters said that incentivized reviews need disclosures
even if the incentives are not conditioned on the reviews being
positive.\53\ Current Example 6 to Sec. 255.5 addresses the situation
where ``extras'' who want to work in commercials are recruited to use a
product and endorse it in an infomercial in exchange for compensation
and exposure. The Commission proposes expanding the example to address
ordinary consumers recruited to try a product for free and write online
reviews of it in exchange for payment; the example would state the need
to disclose this connection in the resulting reviews. The example has a
cross-reference to Sec. 255.2(d) and Example 9 of Sec. 255.2 for
situations in which an incentive is conditioned on a review being
positive or recruited consumers have reason to believe there are or may
be negative consequences from posting reviews which are not positive.
Multiple comments also raised concerns regarding incentivized reviews
being included in an average star rating.\54\ The proposed example
states that, even if adequate disclosures appear in each incentivized
review, the practice could still be deceptive if those solicited
reviews' star ratings are included in an average star rating for the
product, and their inclusion materially increases that average star
rating.
---------------------------------------------------------------------------
\53\ See, e.g., AFSA at 3-4; BBB at 4-5; Boyd at 21-22;
Dudukovich at 12-13; NAIMA at 4-5; and TINA at 21; but see CRN at 4-
5.
\54\ See, e.g., AFSA at 4; BBB at 5; NAIMA at 5; and TINA at 21-
22.
---------------------------------------------------------------------------
The Commission proposes to modify Example 7 to Sec. 255.5 to say
that if a significant proportion of viewers are likely unaware that a
woodworking influencer received a valuable piece of equipment for free
from its manufacturer, he should clearly and conspicuously disclose
that he got it for free. The Commission would make this example
conditional in recognition of the possibility that the followers of
some influencers or types of influencers may expect that they receive
free products from advertisers. The Commission would also add a cross-
reference to Sec. 255.1(d) about the liability and responsibilities of
advertisers.
The current Example 8 to Sec. 255.5 addresses an employee's
endorsement of an employer's product in an online community and the
resulting need for a disclosure. A comment asked that the Commission
add a statement about the employer educating its employees about
disclosure requirements. The Commission proposes adding an explanation
of an employer's obligations and noting that this guidance also applies
to online consumer reviews.
The Commission is also proposing the addition of three new examples
to Sec. 255.5.
The first one arises from the request of commenters that the
Commission include an example illustrating conditions under which
third-party certifications and seals of approval, which typically
require payment to the certifying organization to fund the evaluation,
do not require a disclosure.\55\ New Example 10, which is a slightly
edited version of an example in the Green Guides,\56\ recognizes that
consumers would reasonably expect that marketers have to pay non-
profit, third-party organizations reasonable fees for some
certifications and seals.
---------------------------------------------------------------------------
\55\ See CRN at 4; and KK&B at 1-2; see also NAIMA at 4.
\56\ See Guides for the Use of Environmental Marketing Claims,
16 CFR 290.6, Example 8.
---------------------------------------------------------------------------
Second, multiple commenters asked that the Guides address the need
to disclose affiliate relationships and the adequacy of affiliate links
\57\ while one commenter asserted that consumers understand such links
and that no disclosure is necessary.\58\ New Example 11 addresses the
disclosure of affiliate links. It says that a blogger who writes
independent content reviewing products and who monetizes that content
with affiliate links should clearly and conspicuously disclose the
compensation.
---------------------------------------------------------------------------
\57\ See, e.g., AFSA at 4; BBB at 5, 11-12; Boyd at 24-25; CRN
at 3, Consumer Reports at 10; Dudukovich at 14, 52; Maastricht at 7;
and NMA at 3.
\58\ See NRF at 10.
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Third, new Example 12 recognizes that, just as with television
commercials, consumers can reasonably expect that people appearing in
certain newer-form advertisements are compensated for their statements.
G. New Sec. 255.6--Endorsements Directed to Children
As discussed above, endorsements directed to children may be of
special concern. The Commission proposes adding a section simply
acknowledging that fact, as to which we are aware of no disagreement.
It would state, ``Endorsements in advertisements addressed to children
may be of special concern because of the character of the audience.
Practices which would not
[[Page 44296]]
ordinarily be questioned in advertisements addressed to adults might be
questioned in such cases.'' The Commission proposed a very similar
section in 1972 as Sec. 255.6,\59\ but withdrew it in 1975, stating
that it had ``determined that the area of children's advertising could
not be completely covered in these Guides.'' \60\ The Commission now
believes that even as more evidence is gathered about the effects of
children's advertising, there is ample basis to recognize that children
may react differently than adults to endorsements in advertising or to
related disclosures.
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\59\ See 37 FR 25,548 (Dec. 1, 1972).
\60\ See 40 FR 22,127 (May 1, 1975).
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Request for Comment
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before September 26,
2022. Write ``Endorsement Guides; P204500'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Because of the agency's heightened security screening, postal mail
addressed to the Commission will be subject to delay. We strongly
encourage you to submit your comments online through the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website. To ensure the Commission considers your
online comment, please follow the instructions on the web-based form.
If you file your comment on paper, write ``Endorsement Guides;
P204500'' on your comment and on the envelope, and mail your comment to
the following address: Federal Trade Commission, Office of the
Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B),
Washington, DC 20580.
Because your comment will be placed on the public record, you are
solely responsible for making sure that your comment does not include
any sensitive or confidential information. In particular, your comment
should not contain sensitive personal information, such as your or
anyone else's Social Security number; date of birth; driver's license
number or other state identification number or foreign country
equivalent; passport number; financial account number; or credit or
debit card number. You are also solely responsible for making sure your
comment does not include any sensitive health information, such as
medical records or other individually identifiable health information.
In addition, your comment should not include any ``[t]rade secret or
any commercial or financial information which . . . is privileged or
confidential''--as provided in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including
competitively sensitive information such as costs, sales statistics,
inventories, formulas, patterns, devices, manufacturing processes, or
customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted publicly at <a href="http://www.regulations.gov">www.regulations.gov</a>--as legally required by FTC
Rule 4.9(b)--we cannot redact or remove your comment, unless you submit
a confidentiality request that meets the requirements for such
treatment under FTC Rule 4.9(c), and the General Counsel grants that
request.
Visit the FTC website to read this document and the news release
describing it. The FTC Act and other laws that the Commission
administers permit the collection of public comments to consider and
use in this proceeding as appropriate. The Commission will consider all
timely and responsive public comments it receives on or before
September 26, 2022. For information on the Commission's privacy policy,
including routine uses permitted by the Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
List of Subjects in 16 CFR Part 255
Advertising, Trade practices.
0
Accordingly, the Federal Trade Commission proposes to revise 16 CFR
part 255 to read as follows:
PART 255--GUIDES CONCERNING USE OF ENDORSEMENTS AND TESTIMONIALS IN
ADVERTISING
Sec.
255.0 Purpose and definitions.
255.1 General considerations.
255.2 Consumer endorsements.
255.3 Expert endorsements.
255.4 Endorsements by organizations.
255.5 Disclosure of material connections.
255.6 Endorsements directed to children.
Authority: 38 Stat. 717, as amended; 15 U.S.C. 41-58.
Sec. 255.0 Purpose and definitions.
(a) The Guides in this part represent administrative
interpretations of laws enforced by the Federal Trade Commission for
the guidance of the public in conducting its affairs in conformity with
legal requirements. Specifically, the Guides address the application of
section 5 of the FTC Act (15 U.S.C. 45) to the use of endorsements and
testimonials in advertising. The Guides provide the basis for voluntary
compliance with the law by advertisers and endorsers. Practices
inconsistent with these Guides may result in corrective action by the
Commission under section 5 if, after investigation, the Commission has
reason to believe that the practices fall within the scope of conduct
declared unlawful by the statute. The Guides set forth the general
principles that the Commission will use in evaluating endorsements and
testimonials, together with examples illustrating the application of
those principles. The Guides do not purport to cover every possible use
of endorsements in advertising.\1\ Whether a particular endorsement or
testimonial is deceptive will depend on the specific factual
circumstances of the advertisement at issue.
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\1\ Staff business guidance applying section 5 of the FTC Act to
endorsements and testimonials in advertising is available on the FTC
website. Such staff guidance addresses details not covered in these
Guides and is updated periodically but is not approved by or binding
upon the Commission.
---------------------------------------------------------------------------
(b) For purposes of this part, an ``endorsement'' means any
advertising, marketing, or promotional message (including verbal
statements, tags in social media posts, demonstrations, or depictions
of the name, signature, likeness or other identifying personal
characteristics of an individual or the name or seal of an
organization) that consumers are likely to believe reflects the
opinions, beliefs, findings, or experiences of a party other than the
sponsoring advertiser, even if the views expressed by that party are
identical to those of the sponsoring advertiser. The party whose
opinions, beliefs, findings, or experience the message appears to
reflect will be called the ``endorser'' and could be or appear to be an
individual, group, or institution.
(c) The Commission intends to treat endorsements and testimonials
identically in the context of its enforcement of the Federal Trade
Commission Act and for purposes of
[[Page 44297]]
this part. The term endorsements is therefore generally used
hereinafter to cover both terms and situations.
(d) For purposes of this part, the term ``product'' includes any
product, service, brand, company, or industry.
(e) For purposes of this part, an ``expert'' is an individual,
group, or institution possessing, as a result of experience, study, or
training, knowledge of a particular subject, which knowledge is
superior to what ordinary individuals generally acquire.
(f) For purposes of this part, ``clear and conspicuous'' means that
a disclosure is difficult to miss (i.e., easily noticeable) and easily
understandable by ordinary consumers. If a communication's
representation necessitating a disclosure is made through visual means,
the disclosure should be made in at least the communication's visual
portion; if the representation is made through audible means, the
disclosure should be made in at least the communication's audible
portion; and if the representation is made through both visual and
audible means, the disclosure should be made in the communication's
visual and audible portions. A disclosure presented simultaneously in
both the visual and audible portions of a communication is more likely
to be clear and conspicuous. A visual disclosure, by its size,
contrast, location, the length of time it appears, and other
characteristics, should stand out from any accompanying text or other
visual elements so that it is easily noticed, read, and understood. An
audible disclosure should be delivered in a volume, speed, and cadence
sufficient for ordinary consumers to easily hear and understand it. In
any communication using an interactive electronic medium, such as
social media or the internet, the disclosure should be unavoidable. The
disclosure should not be contradicted or mitigated by, or inconsistent
with, anything else in the communication. When an endorsement targets a
specific audience, such as older adults, ``ordinary consumers''
includes members of that group.
(g) Examples:
(1) Example 1. A film critic's review of a movie is excerpted in an
advertisement placed by the film's producer. When so used, the excerpt
is an endorsement because readers would view it as a statement of the
critic's own opinions and not those of the producer. If the excerpt
alters or quotes from the text of the review in a way that does not
fairly reflect its substance, the advertisement would be deceptive
because it distorts the endorser's opinion. (See Sec. 255.1(b))
(2) Example 2. A television commercial depicts two unidentified
shoppers in a supermarket buying a laundry detergent. One comments to
the other how clean the advertised brand makes the shopper's clothes.
The other shopper then replies, ``I will try it because I have not been
fully satisfied with my own brand.'' This obviously fictional
dramatization would not be an endorsement.
(3) Example 3. In an advertisement for a pain remedy, an announcer
unfamiliar to consumers except as a spokesperson for the advertising
drug company praises the drug's ability to deliver fast and lasting
pain relief. The spokesperson purports to speak, not on the basis of
their own opinions, but rather in the place of and on behalf of the
drug company. The announcer's statements would not be considered an
endorsement.
(4) Example 4. A manufacturer of automobile tires hires a well-
known professional automobile racing driver to deliver its advertising
message in television commercials. In these commercials, the driver
speaks of the smooth ride, strength, and long life of the tires. Many
consumers are likely to believe this message reflects the driver's
personal views, even if the driver does not say so, because consumers
recognize the speaker as primarily a racing driver and not merely as a
spokesman. Accordingly, consumers may well believe the driver would not
speak for an automotive product without actually believing in their
statements and having personal knowledge sufficient to form the beliefs
expressed. The attribution of these beliefs to the driver makes this
message an endorsement under the Guides.
(5) Example 5. (i) A television advertisement for a brand of golf
balls includes a video of a prominent and well-recognized professional
golfer practicing numerous drives off the tee. The video would be an
endorsement even though the golfer makes no verbal statement in the
advertisement.
(ii) The golfer is also hired to post the video to their social
media account. The post is an endorsement if viewers can readily
identify the golf ball brand, either because it is apparent from the
video or because it is tagged or otherwise mentioned in the post.
(6) Example 6. (i) An infomercial for a home fitness system is
hosted by a well-known actor. During the infomercial, the actor
demonstrates the machine and states, ``This is the most effective and
easy-to-use home exercise machine that I have ever tried. Even if the
actor is reading from a script, the statement would be an endorsement,
because consumers are likely to believe it reflects the actor's
personal views.
(ii) Assume that, rather than speaking about their experience with
or opinion of the machine, the actor says that the machine was designed
by exercise physiologists at a leading university, that it isolates
each of five major muscle groups, and that it is meant to be used for
fifteen minutes a day. After demonstrating various exercises using the
machine, the actor finally says how much the machine costs and how to
order it. As the actor does not say or do anything during the
infomercial that would lead viewers to believe that the actor is
expressing their own views about the machine, there is no endorsement.
(7) Example 7. (i) A consumer who regularly purchases a particular
brand of dog food decides one day to purchase a new, more expensive
brand made by the same manufacturer. The purchaser posts to their
social media account that the change in diet has made their dog's fur
noticeably softer and shinier, and that in her opinion, the new dog
food definitely is worth the extra money. Because the consumer has no
connection to the manufacturer beyond being an ordinary purchaser,
their message cannot be attributed to the manufacturer and the post
would not be deemed an endorsement under the Guides. The same would be
true if the purchaser writes a consumer product review on the
manufacturer's website, a retailer's website, or an independent review
website.
(ii) Assume that rather than purchase the dog food with their own
money, the consumer receives it for free because the store routinely
tracks purchases and the dog food manufacturer arranged for the store
to provide a coupon for a free trial bag of its new brand to all
purchasers of its existing brand. The manufacturer does not ask coupon
recipients for product reviews and recipients likely would not assume
that the manufacturer expects them to post reviews. The consumer's post
would not be deemed an endorsement under the Guides because this
unsolicited review cannot be attributed to the manufacturer.
(iii) Assume now that the consumer joins a marketing program under
which participants periodically receive free products from various
manufacturers and can write reviews if they want to do so. If the
consumer receives a free bag of the new dog food through this program,
their positive review would be considered an endorsement under the
Guides because of their connection to the manufacturer through the
marketing program.
[[Page 44298]]
(8) Example 8. A college student, who has earned a reputation as an
excellent video game player, live streams their game play. The
developer of a new video game pays the student to play and live stream
its new game. The student plays the game and appears to enjoy it. Even
though the college student does not expressly recommend the game, the
game play is considered an endorsement.
(9) Example 9. (i) An influencer who is paid to endorse a vitamin
product in their social media posts discloses their connection to the
product's manufacturer only on the profile pages of their social media
accounts. The disclosures are not clear and conspicuous because people
seeing their paid posts could easily miss the disclosures.
(ii) Assume now that the influencer discloses their connection to
the manufacturer in the posts themselves, but that, in order to see the
disclosures, consumers have to click on a link labeled simply ``more.''
Those disclosures are not clear and conspicuous.
(iii) Assume now that the influencer relies solely upon a social
media platform's built-in disclosure tool for one of these posts. The
disclosure appears in small white text, it is set against the light
background of the image that the influencer posted, it competes with
unrelated text that the influencer superimposed on the image, and the
post appears for only five seconds. The disclosure is easy to miss and
thus not clear and conspicuous.
(10) Example 10. A television advertisement promotes a smartphone
app that purportedly halts cognitive decline. The ad presents multiple
endorsements by older senior citizens who are represented as actual
consumers who used the app. The advertisement discloses via both audio
and visual means that the persons featured are actors. Because the
advertisement is targeted at older consumers, whether the disclosure is
clear and conspicuous will be evaluated from the perspective of older
consumers, including those with diminished auditory, visual, or
cognitive processing abilities.
(11) Example 11. (i) A social media advertisement promoting a
cholesterol-lowering product features a testimonialist who says how
says by how much they lowered their serum cholesterol. The claimed
reduction greatly exceeds what is typically experienced by users of the
product and a disclosure of typical results is required. The marketer
has been able to identify from online data collection Spanish speaking
individuals with high cholesterol levels who are unable to understand
English and microtargets a Spanish-language version of the ad to them,
disclosing the typical results in English. The adequacy of the
disclosure will be evaluated from the perspective of the targeted
individuals.
(ii) Assume now that the ad has a disclosure that is clear and
conspicuous when viewed on a computer browser but that is not clear and
conspicuous when the ad is rendered on a smartphone. Because some
consumers will view the ad on their smartphones, the disclosure is
inadequate.
(12) Example 12. An exterminator purchases fake negative reviews of
competing exterminators. A paid or otherwise incentivized negative
statement about a competitor's product is not an endorsement, as that
term is used in the Guides. Nevertheless, such statements, e.g., a paid
negative review of a competing product, can be deceptive in violation
of section 5.
(13) Example 13. A motivational speaker buys fake social media
followers to impress potential clients. The use by endorsers of fake
indicators of social media influence, such as fake social media
followers, is not itself an endorsement issue. The Commission notes,
however, that it is a deceptive practice for users of social media
platforms to purchase or create indicators of social media influence
and then use them to misrepresent such influence to potential clients,
purchasers, investors, partners, or employees or to anyone else for a
commercial purpose. It is also a deceptive practice to sell or
distribute such indicators to such users.
Sec. 255.1 General considerations.
(a) Endorsements must reflect the honest opinions, findings,
beliefs, or experience of the endorser. Furthermore, an endorsement may
not convey any express or implied representation that would be
deceptive if made directly by the advertiser (see Sec. 255.2(a) and
(b) regarding substantiation of representations conveyed by consumer
endorsements).
(b) An advertisement need not present an endorser's message in the
exact words of the endorser unless the advertisement presents the
endorsement as a quotation. However, the endorsement may not be
presented out of context or reworded so as to distort in any way the
endorser's opinion or experience with the product. An advertiser may
use an endorsement of an expert or celebrity only so long as it has
good reason to believe that the endorser continues to subscribe to the
views presented. An advertiser may satisfy this obligation by securing
the endorser's views at reasonable intervals where reasonableness will
be determined by such factors as new information about the performance
or effectiveness of the product, a material alteration in the product,
changes in the performance of competitors' products, and the
advertiser's contract commitments.
(c) When the advertisement represents that the endorser uses the
endorsed product, the endorser must have been a bona fide user of it at
the time the endorsement was given. Additionally, the advertiser may
continue to run the advertisement only so long as it has good reason to
believe that the endorser remains a bona fide user of the product (see
Sec. 255.1(b) regarding the ``good reason to believe'' requirement).
(d) Advertisers are subject to liability for misleading or
unsubstantiated statements made through endorsements when there is a
connection between the advertiser and the endorser, or for failing to
disclose unexpected material connections between themselves and their
endorsers (see Sec. 255.5). An advertiser may be liable for an
endorser's deceptive statement even when the endorser is not liable.
Advertisers should:
(1) Provide guidance to their endorsers on the need to ensure that
their statements are not misleading and to disclose unexpected material
connections;
(2) Monitor their endorsers' compliance; and
(3) Take action sufficient to remedy non-compliance and prevent
future non-compliance.
(e) Endorsers may be liable for statements made in the course of
their endorsements, such as when an endorser makes a representation
that the endorser knows or should know to be deceptive. Also, an
endorser who is not an expert may be liable for misleading or
unsubstantiated representations regarding a product's performance or
effectiveness when the representations 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 (for the responsibilities of an endorser who is an expert,
see Sec. 255.3). Endorsers may also be liable for failing to disclose
unexpected material connections between themselves and an advertiser,
such as when an endorser creates and disseminates endorsements without
such disclosures.
(f) Intermediaries, such as advertising agencies and public
relations firms, may
[[Page 44299]]
be liable for their roles in disseminating what they knew or should
have known were deceptive endorsements. They may also be liable for
their roles with respect to endorsements that fail to disclose
unexpected material connections, whether by disseminating
advertisements without necessary disclosures or by hiring and directing
endorsers who fail to make necessary disclosures.
(g) The use of an endorsement with the image or likeness of a
person other than the actual endorser is deceptive if it misrepresents
a material attribute of the endorser.
(h) Examples:
(1) Example 1. (i) A building contractor states in an advertisement
disseminated by an advertiser, ``I use XYZ exterior house paint because
of its remarkable quick drying properties and durability.'' This
endorsement must comply with the pertinent requirements of Sec. 255.3.
Subsequently, the advertiser reformulates its paint to enable it to
cover exterior surfaces with only one coat. Prior to continued use of
the contractor's endorsement, the advertiser must contact the
contractor in order to determine whether the contractor would continue
to use the paint and to subscribe to the views presented previously.
(ii) Assume that, before the reformulation, the contractor had
posted an endorsement of the paint to their social media account. Even
if the contractor would not use or recommend the reformulated paint,
there is no obligation to modify or delete their post as long as the
date of that post is clear and conspicuous to viewers. If the
contractor reposts or the advertiser shares the contractor's original
endorsement after the reformulation, consumers would expect that the
contractor continued to hold the views expressed in the original post.
(2) Example 2. In a radio advertisement, a well-known DJ talks
about how much they enjoy making coffee with a particular coffee maker
in the morning. The DJ's comments likely communicate that they own and
regularly use the coffee maker. If they do not own it or used it only
during a demonstration by its manufacturer, the ad would be deceptive.
(3) Example 3. (i) A dermatologist is a paid advisor to a
pharmaceutical company and is asked by the company to post about its
products on their professional social media account. The dermatologist
posts that the company's newest acne treatment product is ``clinically
proven'' to work. Before giving the endorsement, the dermatologist
received a write-up of the clinical study in question, which indicates
flaws in the design and conduct of the study that are so serious that
they preclude any conclusions about the efficacy of the product. Given
their medical expertise, the dermatologist should have recognized the
study's flaws and is subject to liability for their false statements
made in the advertisement. The advertiser is also liable for the
misrepresentation made through the endorsement (see Sec. 255.3
regarding the product evaluation that an expert endorser must conduct).
Even if the study was sufficient to establish the product's proven
efficacy, the pharmaceutical company and the dermatologist are both
potentially liable if the endorser fails to disclose their relationship
to the company (see Sec. 255.5 regarding the disclosure of unexpected
material connections).
(ii) Assume that the expert had asked the pharmaceutical company
for the evidence supporting its claims and there were no apparent
design or execution flaws in the study shown to the expert, but that
the pharmaceutical company had withheld a larger and better controlled,
non-published proprietary study of the acne treatment which failed to
find any statistically significant improvement in acne. The expert's
``clinically proven'' to work claim would be deceptive and the company
would be liable for the claim, but because the dermatologist did not
have a reason to know that the claim was deceptive, the expert would
not be liable.
(4) Example 4. A well-known celebrity appears in an infomercial for
a hot air roaster that purportedly cooks a chicken perfectly in twenty
minutes. During the shooting of the infomercial, the celebrity watches
five attempts to cook chickens using the roaster. In each attempt, the
chicken is undercooked after twenty minutes and requires forty-five
minutes of cooking time. In the commercial, the celebrity places an
uncooked chicken in the roaster. The celebrity then takes from a second
roaster what appears to be a perfectly cooked chicken, tastes the
chicken, and says that if you want perfect chicken every time, in just
twenty minutes, this is the product you need. A significant percentage
of consumers are likely to believe the statement represents the
celebrity's own view and experience even though the celebrity is
reading from a script. Because the celebrity knows that their statement
is untrue, the endorser is subject to liability. The advertiser is also
liable for misrepresentations made through the endorsement.
(5) Example 5. (i) A skin care products advertiser hires an
influencer to promote its products on the influencer's social media
account. The advertiser requests that the influencer try a new body
lotion and post a video review of it. The advertiser does not provide
the influencer with any materials stating that the lotion cures skin
conditions and the influencer does not ask the advertiser if it does.
However, believing that the lotion cleared up their eczema, the
influencer says in their review, ``This lotion cures eczema. All of my
followers suffering from eczema should use it.'' The advertiser is
subject to liability for misleading or unsubstantiated representations
made through the influencer's endorsement. Furthermore, the influencer,
who did not limit their claims to their personal experience and did not
have a reasonable basis for their claim that the lotion cures eczema,
is subject to liability for the misleading or unsubstantiated
representation in endorsement. The influencer and the advertiser may
also be liable if the influencer fails to disclose clearly and
conspicuously being paid for the endorsement (see Sec. 255.5).
(ii) In order to limit its potential liability, the advertiser
should provide guidance to its influencers concerning the need to
ensure that statements they make are truthful and substantiated and the
need to disclose unexpected material connections and take other steps
to discourage or prevent non-compliance. The advertiser should also
monitor its influencers' compliance and take steps necessary to remove
and halt the continued publication of deceptive representations when
they are discovered and to ensure the disclosure of unexpected material
connections (see Sec. Sec. 255.1(d) and 255.5).
(6) Example 6. (i) The website for an acne treatment features
accurate testimonials of users who say that the product improved their
acne quickly and with no side effects. Instead of using images of the
actual endorsers, the website accompanies the testimonials with
pictures of different individuals with near perfect skin. The images
misrepresent the improvements to the endorsers' complexions.
(ii) The same website also sells WeightAway shakes and features an
accurate testimonial from an individual who says, ``I lost 50 pounds by
just drinking the shakes.'' Instead of accompanying the testimonial
with a picture of the actual endorser, who went from 300 pounds to 250
pounds, the website shows a picture of an individual who appears to
weigh about 100 pounds. By suggesting that WeightAway
[[Page 44300]]
shakes caused the endorser to lose one-third of their original body
weight, the image misrepresents the product's effectiveness. Even if it
is accompanied by a picture of the actual endorser, the testimonial
could still communicate a deceptive typicality claim.
(7) Example 7. A learn-to-read program disseminates a sponsored
social media post by a parent saying that the program helped their
child learn to read. The picture accompanying the post is not of the
endorser and their child. The testimonial is from the parent of a 7-
year-old, but the post shows an image of a child who appears to be only
4 years old. By suggesting that the program taught a 4-year-old to
read, the image misrepresents the effectiveness of the program.
Sec. 255.2 Consumer endorsements.
(a) An advertisement employing endorsements by one or more
consumers about the performance of an advertised product or service
will be interpreted as representing that the product or service is
effective for the purpose depicted in the advertisement. Therefore, the
advertiser must possess and rely upon adequate substantiation,
including, when appropriate, competent and reliable scientific
evidence, to support express and implied claims made through
endorsements in the same manner the advertiser would be required to do
if it had made the representation directly, i.e., without using
endorsements. Consumer endorsements themselves are not competent and
reliable scientific evidence.
(b) An advertisement containing an endorsement relating the
experience of one or more consumers on a central or key attribute of
the product or service will likely be interpreted as representing that
the endorser's experience is representative of what consumers will
generally achieve with the advertised product or service in actual,
albeit variable, conditions of use. Therefore, an advertiser should
possess and rely upon adequate substantiation for this representation.
If the advertiser does not have substantiation that the endorser's
experience is representative of what consumers will generally achieve,
the advertisement should clearly and conspicuously disclose the
generally expected performance in the depicted circumstances, and the
advertiser must possess and rely on adequate substantiation for that
representation. The disclosure of the generally expected performance
should be presented in a manner that does not itself misrepresent what
consumers can expect.
(c) Advertisements presenting endorsements by what are represented,
expressly or by implication, to be ``actual consumers'' should utilize
actual consumers in both the audio and video, or clearly and
conspicuously disclose that the persons in such advertisements are not
actual consumers of the advertised product.
(d) In procuring, suppressing, boosting, organizing, or editing
consumer reviews of their products, advertisers should not take actions
that have the effect of distorting or otherwise misrepresenting what
consumers think of their products, regardless of whether the reviews
are considered endorsements under the Guides.
(e) Examples:
(1) Example 1. (i) A web page for a baldness treatment consists
entirely of testimonials from satisfied customers who say that after
using the product, they had amazing hair growth and their hair is as
thick and strong as it was when they were teenagers. The advertiser
must have competent and reliable scientific evidence that its product
is effective in producing new hair growth.
(ii) The web page will also likely communicate that the endorsers'
experiences are representative of what new users of the product can
generally expect. Therefore, even if the advertiser includes a
disclaimer such as, ``Notice: These testimonials do not prove our
product works. You should not expect to have similar results,'' the ad
is likely to be deceptive unless the advertiser has adequate
substantiation that new users typically will experience results similar
to those experienced by the testimonialists.
(2) Example 2. (i) An advertisement disseminated by a company that
sells heat pumps presents endorsements from three individuals who state
that after installing the company's heat pump in their homes, their
monthly utility bills went down by $100, $125, and $150, respectively.
The ad will likely be interpreted as conveying that such savings are
representative of what consumers who buy the heat pump can generally
expect. The advertiser does not have substantiation for that
representation because, in fact, fewer than 20% of purchasers will save
$100 or more. A disclosure such as, ``Results not typical'' or ``These
testimonials are based on the experiences of a few people and you are
not likely to have similar results'' is insufficient to prevent this ad
from being deceptive because consumers will still interpret the ad as
conveying that the specified savings are representative of what
consumers can generally expect.
(A) In another context, the Commission tested the communication of
advertisements containing testimonials that clearly and prominently
disclosed either ``Results not typical'' or the stronger ``These
testimonials are based on the experiences of a few people and you are
not likely to have similar results.'' Neither disclosure adequately
reduced the communication that the experiences depicted are generally
representative. Based upon this research, the Commission believes that
similar disclaimers regarding the limited applicability of an
endorser's experience to what consumers may generally expect to achieve
are unlikely to be effective. Although the Commission would have the
burden of proof in a law enforcement action, the Commission notes that
an advertiser possessing reliable empirical testing demonstrating that
the net impression of its advertisement with such a disclaimer is non-
deceptive will avoid the risk of the initiation of such an action in
the first instance.
(B) The advertiser should clearly and conspicuously disclose the
generally expected savings and have adequate substantiation that
homeowners can achieve those results. There are multiple ways that such
a disclosure could be phrased, e.g., ``the average homeowner saves $35
per month,'' ``the typical family saves $50 per month during cold
months and $20 per month in warm months,'' or ``most families save 10%
on their utility bills.''
(ii) Disclosures like those in Example 2(i)(B) could still be
misleading, however, if they only apply to limited circumstances that
are not described in the advertisement. For example, if the
advertisement does not limit its claims by geography, it would be
misleading if the disclosure of expected results in a nationally
disseminated advertisement was based on the experiences of customers in
a southern climate and the experiences of those customers was much
better than could be expected by heat pump users in a northern climate.
(3) Example 3. An advertisement for a cholesterol-lowering product
features individuals who claim that their serum cholesterol went down
by 120 points and 130 points, respectively; the ad does not mention the
endorsers having made any lifestyle changes. A well-conducted clinical
study shows that the product reduces the cholesterol levels of
individuals with elevated cholesterol by an average of 15% and the
advertisement clearly and conspicuously discloses this fact. Despite
the presence of this disclosure, the advertisement would be deceptive
if
[[Page 44301]]
the advertiser does not have competent and reliable scientific evidence
that the product can produce the specific results claimed by the
endorsers (i.e., a 130-point drop in serum cholesterol without any
lifestyle changes).
(4) Example 4. (i) An advertisement for a weight-loss product
features a formerly obese person. The endorser says in the ad, ``Every
day, I drank 2 WeightAway shakes, ate only raw vegetables, and
exercised vigorously for six hours at the gym. By the end of six
months, I had gone from 250 pounds to 140 pounds.'' The advertisement
accurately describes the endorser's experience, and such a result is
within the range that would be generally experienced by an extremely
overweight individual who consumed WeightAway shakes, only ate raw
vegetables, and exercised as the endorser did. Because the endorser
clearly describes the limited and truly exceptional circumstances under
which they achieved the claimed results, the ad is not likely to convey
that consumers who weigh substantially less or use WeightAway under
less extreme circumstances will lose 110 pounds in six months. If the
advertisement simply says that the endorser lost 110 pounds in six
months using WeightAway together with diet and exercise, however, this
description would not adequately alert consumers to the truly
remarkable circumstances leading to the endorser's weight loss. The
advertiser must have substantiation, however, for any performance
claims conveyed by the endorsement (e.g., that WeightAway is an
effective weight loss product and that the endorser's weight loss was
not caused solely by their dietary restrictions and exercise regimen).
(ii) If, in the alternative, the advertisement simply features
``before'' and ``after'' pictures of a woman who says ``I lost 50
pounds in 6 months with WeightAway,'' the ad is likely to convey that
the endorser's experience is representative of what consumers will
generally achieve. Therefore, if consumers cannot generally expect to
achieve such results, the ad would be deceptive. Instead, the ad should
clearly and conspicuously disclose what they can expect to lose in the
depicted circumstances (e.g., ``women who use WeightAway for six months
typically lose 15 pounds''). A disclosure such as ``Average weight loss
is 1-2 pounds per week'' is inadequate and likely deceptive. It does
not communicate the period over which such weight loss can be expected
and likely implies that such weight loss continues at that rate
indefinitely.
(iii) If the ad features the same pictures but the testimonialist
simply says, ``I lost 50 pounds with WeightAway,'' and WeightAway users
generally do not lose 50 pounds, the ad should disclose what results
they do generally achieve (e.g., ``women who use WeightAway lose 15
pounds on average''). A disclosure such as ``most women who use
WeightAway lose between 10 and 50 pounds'' is inadequate because the
range specified is so broad that it does not sufficiently communicate
what users can generally expect.
(iv) Assume that a WeightAway advertisement contains a disclosure
of generally expected results that is based upon the mean weight loss
of users. If the mean is substantially affected by outliers, then the
disclosure would be misleading. For example, if the mean weight loss is
15 pounds, but the median weight loss is 8 pounds, it would be
misleading to say that the average weight loss was 15 pounds. In such
cases, the disclosure's use of median weight loss instead could help
avoid deception, e.g., ``most users lose 8 pounds'' or ``the typical
user loses 8 pounds.''
(v) Assume that WeightAway's manufacturer procured a fake consumer
review, reading ``I lost 50 pounds with WeightAway,'' and had it
published on a third-party review website. This endorsement is
deceptive because it was not written by a bona fide user (see Sec.
255.1(c)). Moreover, the manufacturer would need competent and reliable
scientific evidence that WeightAway is capable of causing 50-pound
weight loss.
(vi) Assume that WeightAway is a diet and exercise program and a
person appearing in a WeightAway ad says, ``I lost 50 pounds in 6
months with WeightAway.'' Very few WeightAway users lose 50 pounds in 6
months and the ad discloses, ``The typical weight loss of WeightAway
users who stick with the program for 6 months is 35 pounds.'' In fact,
only one-fifth of those who start the WeightAway program stick with it
for 6 months. The disclosure is inadequate because it does not
communicate what the typical outcome is for users who start the
program. In other words, even with the disclosure, the ad does not
communicate what people who join the WeightAway program can generally
expect.
(5) Example 5. An advertisement presents the results of a poll of
consumers who have used the advertiser's cake mixes as well as their
own recipes. The results purport to show that the majority believed
that their families could not tell the difference between the
advertised mix and their own cakes baked from scratch. Many of the
consumers are pictured in the advertisement along with relevant, quoted
portions of their statements endorsing the product. This use of the
results of a poll or survey of consumers represents that this is the
typical result that ordinary consumers can expect from the advertiser's
cake mix.
(6) Example 6. An advertisement appears to show a ``hidden camera''
situation in a crowded cafeteria at breakfast time. A spokesperson for
the advertiser asks a series of patrons of the cafeteria for their
spontaneous, honest opinions of the advertiser's recently introduced
breakfast cereal. Even though none of the patrons is specifically
identified during the advertisement, the net impression conveyed to
consumers may well be that these are actual customers. If actors have
been employed, this fact should be clearly and conspicuously disclosed.
(7) Example 7. (i) An advertisement for a recently released motion
picture shows three individuals coming out of a theater, each of whom
gives a positive statement about the movie. These individuals are
actual consumers expressing their personal views about the movie. The
advertiser does not need to have substantiation that their views are
representative of the opinions that most consumers will have about the
movie. Because the consumers' statements would be understood to be the
subjective opinions of only three people, this advertisement is not
likely to convey a typicality message.
(ii) If the motion picture studio had approached these individuals
outside the theater and offered them free tickets if they would talk
about the movie on camera afterwards or post about it on social media,
that arrangement should be clearly and conspicuously disclosed (see
Sec. 255.5).
(8) Example 8. (i) A camping goods retailer's website has various
product pages. Each product page provides consumers with the
opportunity to review the product and rate it on a five-star scale.
Each such page displays the product's average star rating and a
breakdown of the number of reviews with each star rating, followed by
individual consumers' reviews and ratings. As such, the website is
representing that it is providing an accurate reflection of the view of
the purchasers who submitted product reviews to the website. If the
retailer chose to suppress or otherwise not publish any reviews with
fewer than four stars or reviews that contain negative sentiments, the
product pages
[[Page 44302]]
would be misleading as to purchasers' actual opinions of the products.
(ii) If the retailer chose not to post reviews containing
profanity, that would not be unfair or deceptive even if reviews
containing profanity tend to be negative reviews. However, it would be
misleading if the retailer blocked only negative reviews containing
profanity, but posted positive reviews containing profanity. It would
be acceptable for the retailer to have a policy against posting reviews
unrelated to the product at issue or related services, for example
reviews complaining about the owner's policy positions. But it would be
misleading if the retailer chose to filter reviews based on other
factors that are only a pretext for filtering them based on negativity.
Sellers are not required to display customer reviews that contain
unlawful, harassing, abusive, obscene, vulgar, or sexually explicit
content, or content that is inappropriate with respect to race, gender,
sexuality, or ethnicity, or reviews that the seller reasonably believes
are fake, so long as the criteria for withholding reviews are applied
uniformly to all reviews submitted. Neither are sellers required to
display reviews that are unrelated to their products or services.
Customer service, delivery, returns, and exchanges are related to the
seller's products and services.
(iii) Assume now, that each product page starts with a glowing
five-star review that is labeled as ``the most helpful review.''
Labeling the review as the most helpful suggests it was voted most
helpful by consumers visiting the website. If the initial review on
each such page was selected by the retailer and was not selected as the
most helpful review by other consumers, labeling it as the most helpful
would be deceptive.
(9) Example 9. A manufacturer offers to pay genuine purchasers $20
each to write positive reviews of its products on third-party review
websites. Such reviews are deceptive even if the payment is disclosed
because their positive nature is required by, rather than being merely
influenced by, the payment. If, however, the manufacturer did not
require the reviews to be positive and the reviewers understood that
there were no negative consequences from writing negative reviews, a
clear and conspicuous disclosure of the material connection would be
appropriate (see Sec. 255.5 and Sec. 255.6 (f)(2) (Example 6)).
(10) Example 10. A manufacturer threatens consumers who post
negative reviews of its products to third-party review websites with
legal action or with physical threats in order to coerce the consumers
to delete their reviews. Such threats amount to an unfair practice
because consumers would be misled as to purchasers' actual opinions of
the product.\2\
---------------------------------------------------------------------------
\2\ The Consumer Review Fairness Act makes it illegal for
companies to include standardized contract provisions that threaten
or penalize people for posting honest reviews. 15 U.S.C. 45b.
---------------------------------------------------------------------------
(11) Example 11. A marketer contacts recent online, mail-order, and
in-store purchasers of its products and asks them to provide feedback
to the marketer. The marketer then invites purchasers who give very
positive feedback to post online reviews of the products on third-party
websites. Less pleased and unhappy purchasers are simply thanked for
their feedback. Such a practice may be an unfair or deceptive practice
if it results in the posted reviews being substantially more positive
than if the marketer had not engaged in the practice. If, in the
alternative, the marketer had simply invited all recent purchasers to
provide feedback on third-party websites, the solicitation would not
have been unfair or deceptive, even if it had expressed its hope for
positive reviews.
Sec. 255.3 Expert endorsements.
(a) Whenever an advertisement represents, expressly or by
implication, that the endorser is an expert with respect to the
endorsement message, then the endorser's qualifications must in fact
give the endorser the expertise that the endorser is represented as
possessing with respect to the endorsement.
(b) Although an expert may, in endorsing a product, take into
account factors not within the endorser's expertise (such as taste or
price), the endorsement must be supported by an actual exercise of that
expertise in evaluating product features or characteristics with
respect to which the endorser has expertise and which are relevant to
an ordinary consumer's use of or experience with the product. This
evaluation must have included an examination or testing of the product
at least as extensive as someone with the same degree of expertise
would normally need to conduct in order to support the conclusions
presented in the endorsement. To the extent that the advertisement
implies that the endorsement was based upon a comparison to another
product or other products, such comparison must have been included in
the expert's evaluation; and as a result of such comparison, the expert
must have concluded that, with respect to those features on which the
endorser is expert and which are relevant and available to an ordinary
consumer, the endorsed product is at least equal overall to the
competitors' products. Moreover, where the net impression created by
the endorsement is that the advertised product is superior to other
products with respect to any such feature or features, then the expert
must in fact have found such superiority (see Sec. 255.1(e) regarding
the liability of endorsers).
(c) Examples:
(1) Example 1. An endorsement of a particular automobile by one
described as an ``engineer'' implies that the endorser's professional
training and experience are such that the endorser is well acquainted
with the design and performance of automobiles. If the endorser's field
is, for example, chemical engineering, the endorsement would be
deceptive.
(2) Example 2. An endorser of a hearing aid is simply referred to
as ``Doctor'' during the course of an advertisement. The ad likely
implies that the endorser is a medical doctor with substantial
experience in the area of hearing. If the endorser is not a medical
doctor with substantial experience in audiology, the endorsement would
likely be deceptive. A non-medical ``doctor'' (e.g., an individual with
a Ph.D. in audiology) or a physician without substantial experience in
the area of hearing might be able to endorse the product, but at
minimum, the advertisement must clearly and conspicuously disclose the
nature and limits of the endorser's expertise
(3) Example 3. A manufacturer of automobile parts advertises that
its products are approved by the ``American Institute of Science.''
From its name, consumers would infer that the ``American Institute of
Science'' is a bona fide independent testing organization with
expertise in judging automobile parts and that, as such, it would not
approve any automobile part without first testing its efficacy by means
of valid scientific methods. If the American Institute of Science is
not such a bona fide independent testing organization (e.g., if it was
established and operated by an automotive parts manufacturer), the
endorsement would be deceptive. Even if the American Institute of
Science is an independent bona fide expert testing organization, the
endorsement may nevertheless be deceptive unless the Institute has
conducted valid scientific tests of the advertised products and the
test results support the endorsement message.
(4) Example 4. A manufacturer of a non-prescription drug product
represents that its product has been
[[Page 44303]]
selected over competing products by a large metropolitan hospital. The
hospital has selected the product because the manufacturer, unlike its
competitors, has packaged each dose of the product separately. This
package form is not generally available to the public. Under the
circumstances, the endorsement would be deceptive because the basis for
the hospital's choice--convenience of packaging--is neither relevant
nor available to consumers, and the basis for the hospital's decision
is not disclosed to consumers.
(5) Example 5. A person who is identified as the president of a
commercial ``home cleaning service'' states in a television
advertisement that the service uses a particular brand of cleanser,
instead of leading competitors it has tried, because of this brand's
performance. Because cleaning services extensively use cleansers in the
course of their business, the ad likely conveys that the president has
knowledge superior to that of ordinary consumers. Accordingly, the
president's statement will be deemed to be an expert endorsement. The
service must, of course, actually use the endorsed cleanser. In
addition, because the advertisement implies that the cleaning service
has experience with a reasonable number of leading competitors' brands
available to consumers, the service must, in fact, have such
experience, and have determined, based on its expertise, that the
endorsed product's cleaning ability is at least equal (or superior, if
such is the net impression conveyed by the advertisement) to that of
the leading competitors' products available to consumers. Because in
this example the cleaning service's president makes no mention that the
endorsed cleanser was ``chosen,'' ``selected,'' or otherwise evaluated
in side-by-side comparisons against its competitors, it is sufficient
if the service has relied solely upon its accumulated experience in
evaluating cleansers without having performed side-by-side or
scientific comparisons.
(6) Example 6. A medical doctor states in an advertisement for a
drug that the product will safely allow consumers to lower their
cholesterol by 50 points. If the materials the doctor reviewed were
merely letters from satisfied consumers or the results of a rodent
study, the endorsement would likely be deceptive because those
materials are not the type of scientific evidence that others with the
purported degree of expertise would consider adequate to support this
conclusion about the product's safety and efficacy. Under such
circumstances, both the advertiser and the doctor would be liable for
the doctor's misleading representation (See Sec. 255.1(d) and (e)).
Sec. 255.4 Endorsements by organizations.
Endorsements by organizations, especially expert ones, are viewed
as representing the judgment of a group whose collective experience
exceeds that of any individual member, and whose judgments are
generally free of the sort of subjective factors that vary from
individual to individual. Therefore, an organization's endorsement must
be reached by a process sufficient to ensure that the endorsement
fairly reflects the collective judgment of the organization. Moreover,
if an organization is represented as being expert, then, in conjunction
with a proper exercise of its expertise in evaluating the product under
Sec. 255.3, it must utilize an expert or experts recognized as such by
the organization or standards previously adopted by the organization
and suitable for judging the relevant merits of such products (see
Sec. 255.1(e) regarding the liability of endorsers).
(a) Example 1. A mattress manufacturer advertises that its product
is endorsed by a chiropractic association. Because the association
would be regarded as expert with respect to judging mattresses, its
endorsement must be supported by an evaluation by an expert or experts
recognized as such by the organization, or by compliance with standards
previously adopted by the organization and aimed at measuring the
performance of mattresses in general and not designed with the unique
features of the advertised mattress in mind.
(b) Example 2. A trampoline manufacturer sets up and operates what
appears to be an independent trampoline review website. The site
reviews the manufacturer's trampolines, as well as those of competing
manufacturers. Because the website falsely appears to be independent,
it is deceptive (see Sec. 255.5).
(c) Example 3. Assume that a third party operates a wireless
headphone review website that provides rankings of different
manufacturers' wireless headphones from most recommended to least
recommended. The website operator accepts money from manufacturers in
exchange for higher rankings of their products. Regardless of whether
the website makes express claims of objectivity or independence, such
paid-for rankings are deceptive. A headphone manufacturer who pays for
a higher ranking on the website may also be held liable for the
deception. A disclosure that the website operator receives payments
from headphone manufacturers would be inadequate because the payments
actually determine the headphones' relative rankings. If, however, the
review website does not take payments for higher rankings, but receives
payments from some of the headphone manufacturers, such as for
affiliate link referrals, it should clearly and conspicuously disclose
that it receives such payments (see Sec. 255.5(k)(11)).
Sec. 255.5 Disclosure of material connections.
When there exists a connection between the endorser and the seller
of the advertised product that might materially affect the weight or
credibility of the endorsement and that connection is not reasonably
expected by the audience, such connection must be disclosed clearly and
conspicuously. Material connections can include a business, family, or
personal relationship. They can include monetary payment or the
provision of free or discounted products or services (including
products or services unrelated to the endorsed product) to an endorser,
regardless of whether the advertiser requires an endorsement in return.
Material connections can also include other benefits to the endorser,
such as early access to a product or the possibility of being paid, of
winning a prize, or of appearing on television or in other media
promotions. Some connections may be immaterial because they are too
insignificant to affect the weight or credibility given to
endorsements. Material connections do not need to be disclosed when
they are understood or expected by all but an insignificant portion of
the audience for an endorsement. A disclosure of a material connection
does not require the complete details of the connection, but it must
clearly communicate the nature of the connection sufficiently for
consumers to evaluate its significance. Additional guidance is provided
by the examples in paragraphs (a) through (l) of this section.
(a) Example 1. A drug company commissions research on its product
by an outside organization. The drug company determines the overall
subject of the research (e.g., to test the efficacy of a newly
developed product) and pays a substantial share of the expenses of the
research project, but the research organization determines the protocol
for the study and is responsible for conducting it. A subsequent
advertisement by the drug company mentions the research results as the
``findings'' of that research organization. Although the design and
conduct of the
[[Page 44304]]
research project are controlled by the outside research organization,
the weight consumers place on the reported results could be materially
affected by knowing that the advertiser had funded the project.
Therefore, the advertiser's payment of expenses to the research
organization should be disclosed in the advertisement.
(b) Example 2. A film star endorses a particular food product in a
television commercial. The endorsement regards only points of taste and
individual preference. This endorsement must, of course, comply with
Sec. 255.1; but, regardless of whether the star's compensation for the
commercial is a $1 million cash payment or a royalty for each product
sold by the advertiser during the next year, no disclosure is required
because such payments likely are ordinarily expected by viewers.
(c) Example 3. (1) During an appearance by a well-known
professional tennis player on a television talk show, the host comments
that the past few months have been the best of the player's career and
during this time the player has risen to their highest level ever in
the rankings. The player responds by attributing that improvement to
seeing the ball better, ever since having laser vision correction
surgery at a specific identified clinic. The athlete continues talking
about the ease of the procedure, the kindness of the clinic's doctors,
the short recovery time, and now being able to engage in a variety of
activities without glasses, including driving at night. The athlete
does not disclose having a contractual relationship with the clinic
that includes payment for speaking publicly about the surgery.
Consumers might not realize that a celebrity discussing a medical
procedure in a television interview has been paid for doing so, and
knowledge of such payments would likely affect the weight or
credibility consumers give to the celebrity's endorsement. Without a
clear and conspicuous disclosure during the interview that the athlete
has been engaged as a spokesperson for the clinic, this endorsement is
likely to be deceptive. A disclosure during the show's closing credits
would not be clear and conspicuous. Furthermore, if consumers are
likely to take away from the interview that the athlete's experience is
typical of those who undergo the same procedure at the clinic, the
advertiser must have substantiation for that claim.
(2) Assume that the tennis player also touts the results of the
surgery--mentioning the clinic by name--in a social media post.
Consumers might not realize that the athlete is a paid endorser and,
because that information might affect the weight consumers give to the
tennis player's endorsement, the relationship with the clinic should be
disclosed--regardless of whether it paid the athlete for that
particular post. It should be disclosed even if the relationship
involves no payments but only the tennis player getting the laser
correction surgery for free or at a reduced cost.
(3) Assume that the clinic uses the tennis player's endorsement in
its own social media posts. The clinic should clearly and conspicuously
disclose its relationship to the athlete in its posts.
(4) Assume that during the appearance on the television talk show,
the tennis player is wearing clothes bearing the insignia of an
athletic wear company with which the athlete also has an endorsement
contract. Although this contract requires wearing the company's clothes
not only on the court but also in public appearances, when possible,
the athlete does not mention the clothes or the company during the
appearance on the show. No disclosure is required because no
representation is being made about the clothes in this context.
(d) Example 4. (1) A television ad for an anti-snoring product
features a physician who says, ``I have seen dozens of products come on
the market over the years and, in my opinion, this is the best ever.''
Consumers would expect the physician to be reasonably compensated for
appearing in the ad. Consumers are unlikely, however, to expect that an
expert endorser like the physician receives a percentage of gross
product sales or owns part of the company, and either of these facts
would likely materially affect the credibility that consumers attach to
the endorsement. Accordingly, the advertisement should clearly and
conspicuously disclose such a connection between the company and the
physician.
(2) Assume that the physician is also paid to post about the
product on social media, a context in which consumers might not expect
that the physician was compensated and more likely to expect that the
physician is expressing an independent, professional opinion.
Accordingly, the post should clearly and conspicuously disclose the
doctor's connection with the company.
(e) Example 5. (1) In a television advertisement, an actual patron
of a restaurant, who is neither known to the public nor presented as an
expert, is shown seated at the counter. The diner is asked for a
``spontaneous'' opinion of a new food product served in the restaurant.
Assume, first, that the advertiser had posted a sign on the door of the
restaurant informing all who entered that day that patrons would be
interviewed by the advertiser as part of its television promotion of
its new ``meat-alternative'' burger. A patron seeing such a sign might
be more inclined to give a positive review of that item in order to
appear on television. The advertisement should thus clearly and
conspicuously inform viewers that the patrons on screen knew in advance
that they might appear in a television advertisement if they gave the
burger a good review because that information may materially affect the
weight or credibility of the endorsement.
(2) Assume, in the alternative, that the advertiser had not posted
the sign and that patrons asked for their opinions about the burger did
not know or have reason to believe until after their response that they
were being recorded for use in an advertisement. No disclosure is
required here, even if patrons were also told, after the interview,
that they would be paid for allowing the use of their opinions in
advertising.
(f) Example 6. (1) An infomercial producer wants to include
consumer endorsements in an infomercial for an automotive additive
product not yet on the market. The producer's staff selects several
people who work as ``extras'' in commercials and asks them to use the
product and report back, telling them that they will be paid a small
amount if selected to endorse the product in the infomercial. Viewers
would not expect that these ``consumer endorsers'' are actors who used
the product in the hope of appearing in the commercial and receiving
compensation. Because the advertisement fails to disclose these facts,
it is deceptive.
(2) Assume that the additive's marketer wants to have more consumer
reviews appear on its retail website which sells a variety of its
automotive products. The marketer recruits ordinary consumers to get a
free product (e.g., a set of jumper cables or a portable air compressor
for car tires) and a $30 payment in exchange for posting a consumer
review of the free product on the marketer's website. The marketer
makes clear and the reviewers understand that they are free to write
negative reviews and that there are no negative consequences of doing
so. Any resulting review that fails to clearly and conspicuously
disclose the incentives provided to that reviewer is likely deceptive
(When the resulting reviews must be positive or reviewers believe they
might face negative consequences from posting negative reviews, a
disclosure would be insufficient, see
[[Page 44305]]
Sec. 255.2(d) and (e)(9)). Even if adequate disclosures appear in each
incentivized review, the practice could still be deceptive if the
solicited reviews contain star ratings that are included in an average
star rating for the product and including the incentivized reviews
materially increases that average star rating.
(g) Example 7. A woodworking influencer posts on-demand videos of
various projects. A tool manufacturer sends the influencer an expensive
full-size lathe in the hope that the influencer would post about it.
The woodworker uses the lathe for several products and comments
favorably about it in videos. If a significant proportion of viewers
are likely unaware that the influencer received the lathe free of
charge, the woodworker should clearly and conspicuously disclose
receiving it for free, a fact that could affect the credibility that
viewers attach to the endorsements. The manufacturer should advise the
woodworker at the time it provides the lathe that this connection
should be disclosed, and it should have reasonable procedures in place
to monitor the influencer's postings for compliance and follow those
procedures (see Sec. 255.1(d)).
(h) Example 8. An online community has a section dedicated to
discussions of robotic products. Community members ask and answer
questions and otherwise exchange information and opinions about robotic
products and developments. Unbeknownst to this community, an employee
of a leading home robot manufacturer has been posting messages on the
discussion board promoting the manufacturer's new product. Knowledge of
this poster's employment likely would affect the weight or credibility
of the endorsements. Therefore, the poster should clearly and
conspicuously disclose their relationship to the manufacturer to
community members. To limit its own liability for such posts, the
employer should be engaged in appropriate training of employees. To the
extent that the employer has directed such endorsements or otherwise
has reason to know about them, it should also be monitoring them and
taking other steps to ensure compliance (see Sec. 255.1(d)). The
disclosure requirements in this example would apply equally to consumer
reviews of the product posted on retail websites or review platforms.
(i) Example 9. A college student signs up to be part of a program
in which points are awarded each time a participant posts on social
media about a particular advertiser's products. Participants can then
exchange their points for prizes, such as concert tickets or
electronics. These incentives would materially affect the weight or
credibility of the college student's endorsements. They should be
clearly and conspicuously disclosed, and the advertiser should take
steps to ensure that these disclosures are being provided.
(j) Example 10. Great Paper Company sells photocopy paper with
packaging that has a seal of approval from the No Chlorine Products
Association, a non-profit third-party association. Great Paper Company
paid the No Chlorine Products Association a reasonable fee for the
evaluation of its product and its manufacturing process. Consumers
would reasonably expect that marketers have to pay for this kind of
certification. Therefore, there is no unexpected material connection
between the company and the association, and the use of the seal
without disclosure of the fee paid to the association would not be
deceptive.
(k) Example 11. A coffee lover creates a blog that reviews coffee
makers. The blogger writes the content independently of the marketers
of the coffee makers, but includes affiliate links to websites on which
consumers can buy these products from their marketers. Whenever a
consumer clicks on such a link and buys the product, the blogger
receives a small portion of the sale. Because knowledge of this
compensation could affect the weight or credibility site visitors give
to the blogger's reviews, the reviews should clearly and conspicuously
disclose the compensation.
(l) Example 12. (1) Near the beginning of a podcast, the host reads
what is obviously a commercial for a product. Even without a statement
identifying the advertiser as a sponsor, listeners would likely still
expect that the podcaster was compensated, so there is no need for a
disclosure of payment for the commercial. Depending upon the language
of the commercial, however, the audience may believe that the host is
expressing their own views in the commercial, in which case the host
would need to hold the views expressed (see Sec. 255.0(b)).
(2) Assume that the host also mentions the product in a social
media post. The fact that the host did not have to make a disclosure in
the podcast has no bearing on whether there has to be a disclosure in
the social media post.
Sec. 255.6 Endorsements directed to children.
Endorsements in advertisements addressed to children may be of
special concern because of the character of the audience. Practices
which would not ordinarily be questioned in advertisements addressed to
adults might be questioned in such cases.
By direction of the Commission.
April J. Tabor,
Secretary.
Note: The following statement will not appear in the Code of
Federal Regulations: Statement of Chair Lina M. Khan Regarding the
Endorsement Guides Review May 19, 2022.
Today, the Commission is voting on releasing proposed revised
``Guides Concerning Use of Endorsements and Testimonials in
Advertising'' and publishing a Notice seeking comment on them
(``Revised Guides''). These Guides tell companies how to use
endorsements, testimonials, influencers, and consumer reviews in ads
without deceiving consumers.
These revisions come at a time when influencer marketing is
becoming increasingly prevalent and as consumers increasingly rely on
online consumer reviews to decide what to buy. Reports indicate that
the global influencer marketing industry is set to grow to
approximately $16.4 billion in 2022.\1\ Indeed, more than 75% of brand
marketers intend to dedicate a budget to influencer marketing in
2022.\2\ Influencers who are paid, receive free product or services, or
have a relationship with a brand sometimes fail to disclose that
material connection, hoping to appear more authentic to consumers.
Consumers' increasing reliance on online reviews can also incentivize
advertisers to harness fake reviews, suppress negative reviews, and
amplify positive ones.
---------------------------------------------------------------------------
\1\ Werner Geyser, The State of Influencer Marketing 2022:
Benchmark Report, Influencer Mktg. Hub (Mar. 2, 2022), <a href="https://influencermarketinghub.com/influencer-marketing-benchmark-report/">https://influencermarketinghub.com/influencer-marketing-benchmark-report/</a>.
\2\ Id. In addition, the global number of influencer marketing
related service offerings grew by 26% in 2021 alone, reaching 18,900
firms offering or specializing in influencer marketing services.
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I want to highlight three novel aspects of these Revised Guides
that strike me as especially important.
First is the Revised Guides' guidance on platforms' relationships
with influencer marketing. Digital platforms profit from influencer
marketing and should bear greater responsibility in this area.\3\ The
Revised Guides warn that some platforms' disclosure tools are
inadequate and may expose influencers
[[Page 44306]]
to liability or, in some instances, leave platforms themselves open to
liability.
---------------------------------------------------------------------------
\3\ Ellen Simon, How Instagram Makes Money, Investopedia (March
17, 2022), <a href="https://www.investopedia.com/articles/personal-finance/030915/how-instagram-makes-money.asp">https://www.investopedia.com/articles/personal-finance/030915/how-instagram-makes-money.asp</a> (noting that, in 2019,
Instagram generated $20 billion in advertising revenue and that 69%
of America's marketers planned to spend most of their 2020
influencer budget on Instagram).
---------------------------------------------------------------------------
Second is the Revised Guides' explicit guidance on consumer
reviews, and specifically the discussion of how encouraging fake
reviews and suppressing negative reviews can result in law violations.
This guidance reflects recent enforcement actions the agency has
taken--including a recent final order settling allegations that Fashion
Nova blocked negative reviews of its products from being posted on its
website.\4\
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\4\ Decision and Order, In re Fashion Nova, LLC, No. C-4759
(F.T.C. 2022), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/1923138C4759FashionNovaOrder_0.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/1923138C4759FashionNovaOrder_0.pdf</a>.
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Third is the Revised Guides' warning that child-directed influencer
advertising is of special concern to the Commission. Those who market
to children cannot assume that compliance with these guides is a safe
harbor.
The kid influencer marketplace is estimated to be as large as $1.7
billion and is rapidly growing.\5\ This type of child-directed
influencer advertising can pose a host of risks. As one recent report
noted, ``unless children are able to differentiate between advertising
and other forms of entertainment, and grasp the persuasive intent of
advertising, then they are at risk of deception. This is especially
true for children under 12, whose advertising literacy--all knowledge
and skills related to understanding advertising--has not yet fully
developed.'' \6\
---------------------------------------------------------------------------
\5\ Agnieszka Guttmann, Kids Advertising Spending Worldwide
2012-2021, By Format, Statista (April 7, 2020), <a href="https://www.statista.com/statistics/750865/kids-advertising-spending-worldwide/">https://www.statista.com/statistics/750865/kids-advertising-spending-worldwide/</a>.
\6\ Miriam Rahali & Sonia Livingstone, #SponsoredAds: Monitoring
Influencer Marketing to Young Audiences 8 (2002), <a href="http://eprints.lse.ac.uk/113644/7/Sponsoredads_policy_brief.pdf">http://eprints.lse.ac.uk/113644/7/Sponsoredads_policy_brief.pdf</a>.
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There is currently no clear or consistent approach to addressing
the problem, and Congress and advocacy groups have called on the FTC to
provide guidance on this issue.\7\ While we presently lack the full
evidentiary record to support specific guidance or to propose best
practices, I am eager for more input that will support more concrete
action in this important area. Accordingly, in tandem with issuing the
Revised Guides today, we are announcing an event to gather information
on stealth advertising targeting children. The public event will be
held in October and will focus on the blurring of advertising and
programming content in child-directed digital media.
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\7\ See, e.g., Letter from Rep. Eshoo, Rep. Castor & Sen. Markey
to Joseph J. Simons, Chair, Fed. Trade Comm'n (Aug. 22, 2019),
<a href="https://eshoo.house.gov/sites/eshoo.house.gov/files/wysiwyg_uploaded/Eshoo-Markey-Castor%20follow%20up%20letter%20to%20FTC%20re%20predatory%20online%20ads%20%28002%29.pdf">https://eshoo.house.gov/sites/eshoo.house.gov/files/wysiwyg_uploaded/Eshoo-Markey-Castor%20follow%20up%20letter%20to%20FTC%20re%20predatory%20online%20ads%20%28002%29.pdf</a>; Letter from Sen. Blumenthal, Sen. Markey, and
Rep. Eshoo to Joseph J. Simons, Chair, Fed. Trade Comm'n (Dec. 6,
2019), <a href="https://www.blumenthal.senate.gov/imo/media/doc/2019.12.06%20-%20FTC%20-%20Child%20Influencers.pdf">https://www.blumenthal.senate.gov/imo/media/doc/2019.12.06%20-%20FTC%20-%20Child%20Influencers.pdf</a>; Letter from
Laura Smith, Legal Director, Truth in Advertising, Inc. & Bonnie
Patten, Executive Director, Truth in Advertising, Inc. to Andrew
Smith, Director, Bureau of Consumer Prot., Fed. Trade Comm'n & Mary
Engle, Associate Director, Div. of Advertising Pracs., Fed. Trade
Comm'n (Aug. 28, 2019), <a href="https://truthinadvertising.org/wp-content/uploads/2019/08/8_28_19-ltr-to-FTC-re-Ryan-ToysReview_Redacted.pdf">https://truthinadvertising.org/wp-content/uploads/2019/08/8_28_19-ltr-to-FTC-re-Ryan-ToysReview_Redacted.pdf</a>.
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I am eager for robust participation at this event and will look
forward to learning from the public as we consider how to move forward
on this important and timely issue.
[FR Doc. 2022-12327 Filed 7-25-22; 8:45 am]
BILLING CODE 6750-01-P
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