[Federal Register Volume 74, Number 198 (Thursday, October 15, 2009)]
[Rules and Regulations]
[Pages 53124-53143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-24646]
[[Page 53123]]
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Part IV
Federal Trade Commission
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16 CFR 255
Guides Concerning the Use of Endorsements and Testimonials in
Advertising Federal Acquisition Regulation; Final Rule
Federal Register / Vol. 74, No. 198 / Thursday, October 15, 2009 /
Rules and Regulations
[[Page 53124]]
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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: Final Rule; Notice of adoption of revised Guides.
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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') is
adopting revised Guides Concerning the Use of Endorsements and
Testimonials in Advertising (``the Guides'').
DATES: Effective December 1, 2009.
FOR FURTHER INFORMATION CONTACT: Shira Modell, Attorney, Division of
Advertising Practices, Bureau of Consumer Protection, Federal Trade
Commission, Washington, D.C., 20580; (202) 326-3116.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. OVERVIEW OF THE COMMISSION'S REVIEW OF THE GUIDES
II. REVIEW OF COMMENTS ON PROPOSED REVISIONS TO THE GUIDES
III. SECTION-BY-SECTION DESCRIPTION OF ADDITIONAL CHANGES TO PROPOSED
GUIDES PUBLISHED IN NOVEMBER 2008
IV. REVISED ENDORSEMENT AND TESTIMONIAL GUIDES
I. OVERVIEW OF THE COMMISSION'S REVIEW OF THE GUIDES
The Commission began a review of the Guides pursuant to the
agency's ongoing regulatory review of all current rules and guides. In
January 2007, the Commission published a Federal Register notice
seeking comment on the overall costs, benefits, and regulatory and
economic impact of the Guides. 72 FR 2214 (Jan. 18, 2007). The
Commission also requested comment on consumer research it commissioned
regarding the messages conveyed by consumer endorsements and on several
other specific issues, the most significant of which was the use of so-
called ``disclaimers of typicality'' accompanying testimonials that do
not represent experiences that consumers can generally achieve with the
advertised product or service. Specifically, the Commission asked about
the potential effect on advertisers and consumers if the Guides
required clear and conspicuous disclosure of the generally expected
performance whenever the testimonial is not generally representative of
what consumers can expect. Twenty-two comments were filed in response
to this notice.
In November 2008, the Commission published a Federal Register
notice, 73 FR 72374 (Nov. 28, 2008), that discussed the comments it had
received in 2007, proposed certain revisions to the Guides, and
requested comment on those revisions. Seventeen comments were filed.\1\
After reviewing those comments, the Commission is now making additional
changes to the Guides, and adopting the resulting revised Guides as
final.\2\The revised Guides include additional changes not incorporated
in the proposed revisions published for public comment in November
2008. See 73 FR 72374 (Nov. 28, 2008).
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\1\Comments were submitted by the American Association of
Advertising Agencies (``AAAA''), the American Advertising Federation
(``AAF''), the Council for Responsible Nutrition (``CRN''), the
Direct Marketing Association (``DMA''), the Direct Selling
Association (``DSA''), the Electronic Retailing Association
(``ERA''), the Interactive Advertising Bureau, Inc. (``IAB''), the
Promotion Marketing Association, Inc. (``PMA''), the U.S. Chamber of
Commerce (``C of C''), the Association of National Advertisers
(``ANA''), the Public Relations Society of America (``PRSA''),
Higher Power Marketing (``HPM''), the Natural Products Association
(``NPA''), the National Association of Realtors (``NAR''), the Word
of Mouth Marketing Association (``WOMMA''), BzzAgent, Inc.
(``BzzAgent''), the Personal Care Products Council (``PCPC), Kelley
Drye & Warren, LLP, Monyei-Hinson, and Heath-McLeod. In some cases,
a comment was submitted by more than one party. Citations to these
joint comments identify the individual commenters (e.g., AAAA/AAF).
In addition, several commenters signed on to more than one comment.
\2\The Guides represent administrative interpretations
concerning the application of Section 5 of the FTC Act (15 U.S.C.
45) to the use of endorsements and testimonials in advertising. They
are advisory in nature, and intended to give guidance to the public
in conducting its affairs in conformity with Section 5.
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II. REVIEW OF COMMENTS ON PROPOSED REVISIONS TO THE GUIDES
Nearly all of the comments received by the Commission took issue
with, or raised questions about, one or more of the changes included in
the proposed revised Guides.\3\ Several argued that there was no need
for the Guides to be revised at all, and that the 1980 Guides, combined
with continued industry self-regulation and the Commission's case-by-
case law enforcement, would adequately balance the needs of advertisers
and the interest of consumer protection.\4\ As discussed below, others
argued that the evidence in the record did not support the proposed
changes,\5\ that the proposed revisions to the Guides could have a
negative affect on emerging media channels and impede the ability of
businesses to communicate with consumers through legitimate
testimonials and endorsements,\6\ and that the Commission should look
to industry to address any problems in the marketplace and, where
appropriate, to revise existing self-regulatory frameworks to address
the evolving concerns posed by emerging digital advertising
channels.\7\ As discussed below, the application of the Guides to new
media and the Commission's proposed elimination of the ``safe harbor''
afforded by the 1980 Guides to non-typical testimonials accompanied by
disclaimers of typicality were issues addressed in a number of the
comments.
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\3\The exceptions were the comments filed by Monyei-Hinson
(calling for stringent regulation of endorsements and new media, and
specific rules regarding holding celebrities accountable and
disclosing celebrity pay); and Heath-McLeod (agreeing overall with
the proposed changes but calling for, among other things, minimum
standards for the size and clarity of disclosures).
\4\AAAA/AAF, at 8, 10, 18; PRSA, at 2; ANA, at 2; DMA, at 3
(stating that the current approach should be continued ``[u]ntil
there is a demonstrated market failure across all media channels'').
\5\PMA, at 3; DMA, at 3 (stating that there is an ``insufficient
basis to support a conclusion that the current regulatory and market
safeguards inadequately protect consumers'').
\6\DMA, at 1.
\7\IAB, at 3.
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A. Analysis of Comments Concerning What Communications Should Be
Considered ``Endorsements'' Under Sec. Section 255.0 of the Guides
1. General Issues
As proposed by the Commission in its November 2008 Federal Register
notice, Section 255.0(b) of the Guides would state in part that:
[A]n endorsement means any advertising message (including verbal
statements, 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.
One commenter stated that defining endorsements based on a
subjective measure of consumer understanding - that is, by the sole
criterion of whether consumers are likely to believe the statement
reflects the views of the
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endorser, rather than that of advertiser - creates inherent
uncertainty.\8\
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\8\PRSA, at 3.
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The Guides have always defined ``endorsements'' by focusing on the
message consumers take from the speech at issue.\9\ Indeed, this focus
on consumer takeaway is completely consistent with the approach the
Commission uses to determine whether a practice is deceptive, and thus
in violation of the FTC Act.\10\ Accordingly, the Commission concludes
that no additional changes to the proposed revised definition of
``endorsement'' are warranted.
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\9\The proposed revised definition reflects only one change from
the definition adopted in 1980: the addition of the phrase ``even if
the views expressed by that party are identical to those of the
sponsoring advertiser.''
\10\FTC Policy Statement on Deception, appended to Cliffdale
Associates, Inc., 103 F.T.C. 110, 174, 175 (1984) (citation omitted)
(hereafter ``Deception Policy Statement'') (stating that in
determining whether a representation, omission, or practice is
deceptive, ``we examine the practice from the perspective of a
consumer acting reasonably in the circumstances'').
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2. New Media - Consumer-Generated Content as an ``Endorsement'' Within
the Meaning of the Guides
The Commission's November 2008 proposal included several examples
applying various Guide provisions to new forms of consumer-generated
media, such as the use of blogs in word of mouth marketing campaigns,
and several commenters focused specifically on these examples.\11\ Some
of the comments questioned whether statements in certain of these new
media qualify as ``endorsements'' under the Guides, given, among other
things, the advertiser's limited control over the messages disseminated
to the public.\12\ Other commenters argued that it was premature for
the Commission to apply the Guides to these new media without the
opportunity for further discussion about these media and guidance on
the scope of the liability that the Guides would create for
advertisers,\13\ with some suggesting that the future growth of these
new media wouldbe adversely affected if they were subject to the Guides
because advertisers would be deterred from using them.\14\ These
commenters opined that the Commission should, instead, defer to
industry self-regulation, as it has done in the past when industry has
proven itself capable of protecting consumers.\15\
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\11\WOMMA defines ``word of mouth marketing'' as ``Giving people
a reason to talk about your products and services, and making it
easier for that conversation to take place. It is the art and
science of building active, mutually beneficial consumer-to-consumer
and consumer-to-marketer communications.'' http://womma.org/womm101
(last visited Oct. 1, 2009).
\12\ E.g., BzzAgent, at 4-5.
\13\ERA/CRN, at 33; PMA, at 17 (citing the ``near-endless''
variety of possible relationships between bloggers and the companies
about whose products they blog); see also DMA, at 4-5 (stating that
the Commission should not apply the same principles ``addressing
narrow concerns associated with endorsements made through a print
medium to dynamic channels such as the Internet''; rather than apply
the Guides to these new media, the Commission should address the
issue by means of case-by-case law enforcement actions under the
1980 Guides, so it can give appropriate consideration to the unique
characteristics of this particular medium of communication).
\14\IAB, at 3 (``If the Commission were to adopt guidelines
addressing new media without a sufficient understanding of how such
new technologies are being harnessed or may be used in the future,
the Commission might risk dissuading the development of novel means
of advertising that effectively serve the interests of consumers in
ways not yet imagined.''); AAAA/AAF, at 17 (``[R]egulating these
developing media too soon may have a chilling effect on blogs and
other forms of viral marketing, as bloggers and other viral
marketers will be discouraged from publishing content for fear of
being held liable for any potentially misleading claim.''); DMA, at
5 (noting a potential ``chilling effect on the use of the Internet
as a communication channel'').
\15\ E.g., IAB, at 3; C of C, at 5 (the industry has already
successfully self-regulated).
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One commenter observed that the proposed Guides could leave the
impression that any blog that speaks positively about a product would
necessarily be covered by the Guides, and thus by Section 5, and that
such an outcome would be wrong for a blog:
that functions similarly to traditional media . . . if (1) the blog
provides content that is editorially independent of any sponsor or
marketer of a product or service, and (2) there is no material
connection with the marketer of a product or service that is discussed
in the blog that would call into question the editorial independence of
the blog.\16\
\16\PCPC, at 1-2 (asserting that ``a magazine article or
newspaper article that reviews a product is not an `endorsement' for
purposes of advertising law, so too is a blog that performs this
same function,'' and that receipt by the blogger of a free product
sample for review purposes does not change this analysis, ``provided
that the product itself does not have such a high value that would
make its receipt material (e.g., a car), since the resulting
editorial content - good or bad - is not controlled by the
marketer''); see also IAB, at 4 (stating that bloggers, like movie
critics, are provided free product because the marketer wants
unbiased feedback).
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Two commenters with particular interest in word of mouth marketing
also addressed the application of the Guides to these new consumer-
generated media. One noted the distinction between blogs that are just
personal communication spaces, and those that are essentially
commercial communication spaces, asserting that although an
``advertising message'' is intended by the latter - making it subject
to the Guides - no such message is intended by the former and the
Guides should not apply.\17\
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\17\WOMMA, at 6.
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Similarly, the other commenter noted that the Guides should not
``inadvertently regulate everyday word-of-mouth communications among
actual consumers regardless of whether such communications take place
in person, via e-mail or in new mediums such as blogs or social
networking Web sites.''\18\ This commenter stated that even if
consumers participate in advertising sampling programs, their online
comments about a particular product should not be considered commercial
speech and these consumers should not be deemed ``endorsers'' when they
are free to say whatever they want about the product (or not say
anything at all) without the advertiser having any control over their
statements.\19\ By extension, this commenter contended that neither the
advertiser nor the publisher should be liable for any false or
unsubstantiated statements made by these consumer reviewers.\20\
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\18\BzzAgent, at 1; see also id. at 4-5 (FTC should
``distinguish between honest word of mouth shared among actual
consumers from marketing messages spread by controlled consumer
endorsers ''; consumers who participate in BzzAgent network
marketing program are the former).
\19\BzzAgent, at 6-8 (if mere provision of samples to honest
reviewers is considered proxy for control, reviewers would
inadvertently qualify as endorsers, even though their views are
their own, not those of the company that provided the free product).
\20\ Id. at 6-8 (noting that modern companies that distribute
product samples to facilitate honest word of mouth communications
are analogous to distributor who offers free samples to grocery
shoppers, that participants in these network marketing program are
analogous to supermarket shoppers who try the free sample and
perhaps tell their friends about it, and that neither of these
scenarios should be encompassed by the Guides).
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The comments correctly point out that the recent development of a
variety of consumer-generated media poses new questions about how to
distinguish between communications that are considered ``endorsements''
within the meaning of the Guides and those that are not. The Commission
disagrees, however, with those who suggest that there is not yet an
adequate basis to provide guidance in this area. As set forth below,
after considering the observations provided by various commenters, the
Commission is setting forth a construct for analyzing whether or not
consumer-generated content falls within the definition of an
endorsement in Section 255.0(b) of the Guides. The Commission will, of
course, consider each use of these new media on a case-by-case basis
for purposes of law enforcement, as it does with all advertising.
The Commission does not believe that all uses of new consumer-
generated
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media to discuss product attributes or consumer experiences should be
deemed ``endorsements'' within the meaning of the Guides. Rather, in
analyzing statements made via these new media, the fundamental question
is whether, viewed objectively, the relationship between the advertiser
and the speaker is such that the speaker's statement can be considered
``sponsored'' by the advertiser and therefore an ``advertising
message.''In other words, in disseminating positive statements about a
product or service, is the speaker: (1) acting solely independently, in
which case there is no endorsement, or (2) acting on behalf of the
advertiser or its agent, such that the speaker's statement is an
``endorsement'' that is part of an overall marketing campaign? The
facts and circumstances that will determine the answer to this question
are extremely varied and cannot be fully enumerated here, but would
include: whether the speaker is compensated by the advertiser or its
agent; whether the product or service in question was provided for free
by the advertiser; the terms of any agreement; the length of the
relationship; the previous receipt of products or services from the
same or similar advertisers, or the likelihood of future receipt of
such products or services; and the value of the items or services
received. An advertiser's lack of control over the specific statement
made via these new forms of consumer-generated media would not
automatically disqualify that statement from being deemed an
``endorsement'' within the meaning of the Guides. Again, the issue is
whether the consumer-generated statement can be considered
``sponsored.''
Thus, a consumer who purchases a product with his or her own money
and praises it on a personal blog or on an electronic message board
will not be deemed to be providing an endorsement.\21\ In contrast,
postings by a blogger who is paid to speak about an advertiser's
product will be covered by the Guides, regardless of whether the
blogger is paid directly by the marketer itself or by a third party on
behalf of the marketer.
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\21\Even if that consumer receives a single, unsolicited item
from one manufacturer and writes positively about it on a personal
blog or on a public message board, the review is not likely to be
deemed an endorsement, given the absence of a course of dealing with
that advertiser (or others) that would suggest that the consumer is
disseminating a ``sponsored'' advertising message.
This is not to say that use of a personal blog means that the
statements made therein would necessarily be deemed outside the
scope of the Guides; the Commission would have to consider the rest
of the indicia set forth above to determine if the speaker was
essentially ``sponsored'' by the advertiser.
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Although other situations between these two ends of the spectrum
will depend on the specific facts present, the Commission believes that
certain fact patterns are sufficiently clear cut to be addressed here.
For example, a blogger could receive merchandise from a marketer with a
request to review it, but with no compensation paid other than the
value of the product itself. In this situation, whether or not any
positive statement the blogger posts would be deemed an ``endorsement''
within the meaning of the Guides would depend on, among other things,
the value of that product, and on whether the blogger routinely
receives such requests. If that blogger frequently receives products
from manufacturers because he or she is known to have wide readership
within a particular demographic group that is the manufacturers' target
market, the blogger's statements are likely to be deemed to be
``endorsements,'' as are postings by participants in network marketing
programs. Similarly, consumers who join word of mouth marketing
programs that periodically provide them products to review publicly (as
opposed to simply giving feedback to the advertiser) will also likely
be viewed as giving sponsored messages.\22\
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\22\The fact that the participants technically might be free not
to say anything about any particular product they receive through
the program does not change the Commission's view that positive
statements would be deemed to be endorsements. The underlying
purpose of these word of mouth marketing programs is to generate
positive discussion about the advertiser's products.
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Finally, the Commission disagrees with those who suggest that
including in the Guides examples based on these new media would
interfere with the vibrancy of these new forms of communication, or
that the Commission should, instead, defer to industry self-regulation.
Whether or not the Guides include examples based on these new media
does not affect the potential liability of those who use these media to
market their products and services. The Guides merely elucidate the
Commission's interpretation of Section 5, but do not expand (or limit)
its application to various forms of marketing. Furthermore, the
Commission notes that spending on these new social media is projected
to increase,\23\ and the commenters who expressed concerns about the
future of these new media if the Guides were applied to them did not
submit any evidence supporting their concerns. Moreover, to the extent
that consumers' willingness to trust social media depends on the
ability of those media to retain their credibility as reliable sources
of information, application of the general principles embodied in the
Guides presumably would have a beneficial, not detrimental, effect. And
although industry self-regulation certainly can play an important role
in protecting consumers as these new forms of marketing continue to
evolve and new ones are developed,\24\ self-regulation works best when
it is backed up by a strong law enforcement presence. Thus, for
example, the National Advertising Division of the Council of Better
Business Bureaus will refer matters to the Commission when advertisers
refuse to participate in, or do not abide by the decisions of, NAD's
self-regulatory review and dispute resolution process. The Commission
believes that guidance as to the types of consumer-generated content
that will be considered ``endorsements'' within the meaning of the
Guides, and as to the responsibilities of the parties involved, informs
both advertisers and endorsers of their attendant responsibilities in
ensuring that advertising is truthful and non-misleading, and reduces
potential misunderstanding of their obligations under Section 5 of the
FTC Act.\25\
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\23\According to WOMMA, $1.35 billion was spent on social media
marketing in 2007, and that figure is expected to reach $3.7 billion
by 2011. (http://www.ft.com/cms/s/0/9a58f44c-1fae-11de-a1df-00144feabdc0.html) (last visited Oct. 1, 2009).
\24\Indeed, some industry groups have made established codes of
ethics that are very much in line with the approach taken in the
Guides. For example, WOMMA attached to its comment a copy of the
Word of Mouth Marketing Ethics Code of Conduct.
\25\The examples involving new media included in the revised
Guides are based on specific fact patterns that lend themselves to
relatively clear answers. The Commission recognizes that many other
hypotheticals could be posited that would be far more difficult to
answer; those will have to be considered on a case-by-case basis.
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3. New Example
The Commission is adding a new Example 8 to Section 255.0 to
provide additional guidance about application of the factors set forth
in Part II.A.2 above to statements made in consumer-generated media.
This example posits three different fact patterns in which a consumer
writes a positive blog review about a new product she has tried. In the
first hypothetical, her statement is not deemed to be an endorsement
within the meaning of the Guides because of the lack of any
relationship whatsoever between the speaker and the manufacturer. In
the second hypothetical, a coupon for a free trial of the new product
is generated by the store's computer, based on her purchases; again,
given the absence of a
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relationship between the speaker and the manufacturer or other factors
supporting the conclusion that she is acting on behalf of the
manufacturer (i.e., that her statement is ``sponsored''), her review
would not be deemed to be an endorsement. In the third fact pattern,
however, there is an ongoing relationship between the consumer and a
network marketing program, and economic gain by the consumer based on
the stream of products, thereby making the blog posting an endorsement
within the meaning of the Guides.
4. Other Issues
Another commenter asked the Commission to address several
questions. First, would a product review written by an employee of an
organization to inform the organization's members about the
availability, qualities, and features of particular products and
services of interest to them be an endorsement by the organization
within the meaning of the Guides?\26\ Second, assuming such a review
would not be covered by the Guides, would the use of that review (or of
quotations from it), in an advertisement disseminated by the seller of
that product create ``endorser'' liability for the organization if the
organization did not consent to or otherwise participate in the
seller's use of the product review?\27\
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\26\NAR, at 1.
\27\ Id. at 1-2.
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The answer to the first question is that such a review published in
the organization's own journal would not be considered an endorsement
because the Commission would not consider the review to be an
advertisement, and there is no sponsoring advertiser. However, if that
review was used in an ad disseminated by the manufacturer of a product
that received a favorable review, the organization's statements would
become an ``endorsement'' within the meaning of Section 255.0(d). (See
Section 255.0, Example 1.) Nonetheless, assuming that the organization
did not know about the manufacturer's plan to use that review and did
not receive any compensation for its use, the organization would not be
liable for its use, even if the review did not comply with the Guide
provisions concerning endorsements by organizations. (See Section
255.4.)
B. Section 255.1 - General Considerations
Although no commenters addressed the General Considerations section
of the Guides, the Commission is making two additional revisions to
Section 255.1. First, a proposed cross-reference to Example 3 in
Section 255.3 (endorsements by experts) is being deleted from Section
255.1(a). Second, a cross-reference to the Guide provisions in Section
255.3 that set forth the standards that expert endorsers must meet is
being added to new Example 3 in Section 255.1.
C. Comments Concerning the Liability of Endorsers and Advertisers for
Endorsements Disseminated Through New Media
Several comments questioned whether the advertiser should be liable
for statements made by endorsers who use new media. One suggested that
the advertiser should be liable for comments of an ``endorser'' only if
the advertiser had the ability to control the consumer's
statements.\28\ Thus, if consumers are free to say what they wish about
the product - or, if they choose, to say nothing about it - the
advertiser should not face potential liability.\29\
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\28\Bzz Agent, at 4-5; see also IAB, at 4 (stating that making
marketers liable for ``actions of third parties over whom they
exercise uncertain control'' could lead to unintended consequences).
\29\Bzz Agent, at 4-5.
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Several comments specifically expressed concern about proposed new
Example 5 to Section 255.1, with some concerned that the example
suggests that bloggers potentially would be liable under Section 5 for
simply giving their honest appraisal of a product and how it affected
them personally.\30\ Commenters also focused on the fact that the
advertiser could be liable for statements made by the blogger.\31\
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\30\WOMMA, at 9; ANA, at 6.
\31\ANA, at 6 (stating that advertiser would be liable for
blogger's statements and failure to disclose material connections);
DMA, at 4-5 (stating that advertiser would be liable for statements
made by blogger over whom it has no control); PMA, at 17 (stating
that example appears to create liability for any company that sells
a product that is reviewed by a blogger).
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The Commission recognizes that because the advertiser does not
disseminate the endorsements made using these new consumer-generated
media, it does not have complete control over the contents of those
statements. Nonetheless, if the advertiser initiated the process that
led to these endorsements being made -e.g., by providing products to
well-known bloggers or to endorsers enrolled in word of mouth marketing
programs - it potentially is liable for misleading statements made by
those consumers.
Imposing liability in these circumstances hinges on the
determination that the advertiser chose to sponsor the consumer-
generated content such that it has established an endorser-sponsor
relationship. It is foreseeable that an endorser may exaggerate the
benefits of a free product or fail to disclose a material relationship
where one exists. In employing this means of marketing, the advertiser
has assumed the risk that an endorser may fail to disclose a material
connection or misrepresent a product, and the potential liability that
accompanies that risk. The Commission, however, in the exercise of its
prosecutorial discretion, would consider the advertiser's efforts to
advise these endorsers of their responsibilities and to monitor their
online behavior in determining what action, if any, would be warranted.
New Example 5 should not be read to suggest that an advertiser is
liable for any statement about its product made by any blogger,
regardless of whether there is any relationship between the two.
However, when the advertiser hires a blog advertising agency for the
purpose of promoting its products - as posited by the specific facts
set forth in this example - the Commission believes it is reasonable to
hold the advertiser responsible for communicating approved claims to
the service (which, in turn, would be responsible for communicating
those claims to the blogger).
The commenters expressing concern that the blogger in new Example 5
potentially could be liable for giving her honest opinion of the
product (that it cures eczema) and discussing her personal experience
with it appear to have misread the example. The blogger did not either
give her opinion about subjective product characteristics (e.g., that
she liked the fragrance) or relate her own experience with it (the
example does not say that she had eczema). Rather, she made a blanket
claim that the product ``cures'' eczema without having any
substantiation for that claim. The Commission is revising new Example
5, however, to clarify that both the advertiser and the blogger are
subject to liability for misleading or unsubstantiated representations
made in the course of the blogger's endorsement.
D. Comments Addressing Celebrity Endorsements
The 1980 Guides did not explicitly state that endorsers, as well as
advertisers, could be liable under the FTC Act for statements they make
in an endorsement. To make that potential liability more apparent to
those who might be considering making an endorsement (and to those
counseling prospective endorsers), the Commission's proposed revised
Guides included new language in Section
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255.1(d) stating that ``Endorsers . . . may be liable for statements
made in the course of their endorsements.''The Commission's proposal
also included several new examples featuring celebrities and experts.
(See, e.g., Section 255.0, Example 6; Section 255.1, Examples 3 and 4.)
One comment asserted that proposed new Example 6 in Section
255.0\32\ suggests that any recognizable figure who speaks about the
attributes of a product or service would be considered an endorser,
even if the celebrity's statements are clearly scripted and do not
contain an expression of personal belief.\33\ This commenter also
asserted that ``under this new standard, when coupled with the proposed
changes to endorser liability, a celebrity with a well-known voice who
provides a scripted voice-over is just as liable for an advertisement's
message as a celebrity who promotes a product with direct statements of
endorsement, such as ``I use product X every day. It works for
me.''\34\
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\32\In that example, an infomercial for a home fitness system is
hosted by a well-known entertainer. The entertainer demonstrates the
machine and states that it is the most effective and easy-to-use
home exercise machine that she has ever tried. The example states
that even if she is reading from a script, this statement would be
an endorsement, because consumers are likely to believe it reflects
the entertainer's views.
\33\PMA, at 12.
\34\ Id.
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Two commenters stated that the proposed revisions to the Guides
could unfairly expose celebrities to liability for advertising claims
that they lack the knowledge to verify or the authority to change;
indeed, they noted, celebrities who attempted to deviate from the
script they are given might be subject to legal action for breach of
contract.\35\ Because the proposed revised Guides provide little
guidance about when celebrities would be liable for their endorsements,
according to these commenters, celebrities might become concerned about
potential liability; and if so, they could be deterred from endorsing
products, thereby depriving advertisers of a long-standing and valuable
advertising technique.\36\
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\35\AAAA/AAF, at 11; PMA, at 13.
\36\AAAA/AAF, at 11; PMA, at 12.
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Specifically, the commenters pointed out that celebrities are under
contract to read the script that is provided to them, and do not have
control over the content of the final ad, including how their
endorsements will appear; nor do they possess the expertise needed to
assess whether a particular claim violates the FTC Act.\37\ The
proposed Guide revisions, they asserted, could be interpreted as
imposing an obligation on celebrity endorsers to ensure that claims
made by the advertiser and communicated by the celebrities are
independently verified and properly substantiated - thereby requiring
celebrities to educate themselves not only on the product at issue, but
also on the relevant industry and competition.\38\ One comment opined
that absent knowledge and control, celebrity liability based solely on
participation in an ad would be contrary to existing case law.\39\
Another stated that it was not necessary to include a celebrity
liability provision in the Guides, but to the extent that the FTC
determined that such a guide is necessary, a narrowly tailored
provision enumerating the circumstances under which a celebrity may be
held liable would accomplish the Commission's goals without creating an
unnecessary chilling effect.\40\
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\37\AAAA/AAF, at 11-13; PMA, at 13.
\38\AAAA/AAF, at 11-12; see also PMA, at 11.
\39\AAAA/AAF, at 13.
\40\PMA, at 13.
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The commenters also asked the Commission to reconsider new Example
4 to revised Section 255.l\41\ because ``it could unfairly expose
celebrities to liability for claims beyond his/her expertise or
control.''\42\ They pointed out not only does the celebrity have no
control over the final version of the roasting bag infomercial, but
even during filming there could be activities of which the celebrity
was unaware and thus for which he or she should not be held liable.\43\
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\41\In that example, a well-known celebrity appears in an
infomercial for an oven roasting bag that purportedly cooks every
chicken perfectly in thirty minutes. During the shooting of the
infomercial, the celebrity watches five attempts to cook chickens
using the bag. In each attempt, the chicken is undercooked after
thirty minutes and requires sixty minutes of cooking time. In the
commercial, the celebrity places an uncooked chicken in the roasting
bag and places the bag in one oven. He then takes a bag from a
second oven, removes what appears to be a perfectly cooked chicken,
tastes it, and says that if you want perfect chicken every time, in
just thirty minutes, this is the product you need.
\42\AAAA/AAF, at 13-14; see also PMA, at 14.
\43\AAAA/AAF, at 13-14; PMA, at 14 (stating that a celebrity
cannot keep up with every element of production on infomercial set
or know how final product will be edited).
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The addition of new Section 255.1(d) and the new examples featuring
celebrities does not create new liability for celebrities,\44\ but
serves merely to let them (and their advisors) know about the potential
liability associated with their endorsement activities. Indeed, as the
Commission noted when it proposed Section 255.1(d), this new provision
merely ``explicitly recognizes two principles that the Commission's law
enforcement activities have already made clear,'' one of which is
``that endorsers may also be subject to liability for their
statements.''73 FR at 72377.
---------------------------------------------------------------------------
\44\As the Commission noted in its November 2008 Federal
Register notice, law enforcement actions have been brought against
well-known personalities (i.e., celebrities) who have acted as
endorsers. 73 Fed Reg. at 72377 (citing Cooga Mooga, Inc., 92 F.T.C.
310 (1978) (consent order)).
---------------------------------------------------------------------------
Nor should Example 6 to Section 255.0 be read to suggest that every
appearance by a well-known personality will be deemed an endorsement.
As the Commission previously noted, this example was added ``to
illustrate that the determination of whether a speaker's statement is
an endorsement depends solely on whether consumers believe that it
represents the endorser's own view.''Id. Example 6 does not expand the
scope of potential endorser liability but merely ``clarifies that
whether the person making the statement is speaking from a script, or
giving the endorsement in his or her words, is irrelevant to the
determination.''Id. In this example, the celebrity's statement that the
home fitness system being advertised ``is the most effective and easy-
to-use home exercise machine that she has ever tried'' would clearly be
understood by consumers as an expression of personal belief. Moreover,
new Example 7 to Section 255.0 presents a situation in which well-known
persons who appear in advertising are not deemed to be endorsers.
The Commission is not persuaded that a celebrity endorser's
contractual obligation to read the script he or she is given should
confer immunity from liability for misrepresentations made in the
course of that endorsement.\45\ The celebrity has decided to earn money
by providing an endorsement. With that opportunity comes the
responsibility for the celebrity or his or her legal representative to
ensure in advance that the celebrity does not say something that does
not ``reflect [his or her] honest opinions, findings, beliefs, or
experience.''See 16 CFR 255.1(a). Furthermore, because celebrity
endorsers are liable for what they say, not for the rest of the
advertisement, their lack of control over the final version of a
commercial does not warrant the immunity sought by the commenters. Nor
are they required to become experts on the product or the industry,
although they may have an obligation to make reasonable inquiries of
the advertiser that there is an
[[Page 53129]]
adequate basis for assertions that the script has them making.
---------------------------------------------------------------------------
\45\ Cf. FTC v. Publishing Clearing House, Inc., 106 F.3d 407 (9
th Cir. 1997) (affirming liability for restitution of telephone
solicitor who read facially deceptive script ``word for word'').
---------------------------------------------------------------------------
The Commission believes that the commenters misread FTC v. Garvey,
383 F.3d 891 (9 th Cir. 2004). The Ninth Circuit noted that it had
previously held that direct participation in the acts in question or
authority to control them was sufficient to hold an individual liable
for injunctive relief, although more was required to hold that person
liable for restitution. Id. at 900. The only issue before the court was
restitution because, as the court noted, the Stipulated Final Order
entered by the district court ``apparently applies to the Garvey
defendants and provides the FTC all of the injunctive relief it could
get against [them] . . . . [A]ll the FTC stands to gain from the Garvey
defendants here is restitution; the issue of injunctive relief is
moot.''Id. at 900 n.10. Although the court ultimately concluded,
contrary to the Commission's view, that the ``substantiation [Garvey]
had was sufficient - at least for someone in [his] position'' to avoid
liability for restitution, id. at 902 (footnote omitted), that decision
was based solely on the facts of that case and does not foreclose
``participant'' liability for celebrities.
Finally, it should be noted that proposed new Example 4 sets forth
a specific set of facts in which the celebrity is liable only for
statements that he personally made that were clearly contrary to what
he observed with his own eyes, not for things out of his control. That
is not to say that a celebrity who participates in the making of a
claim that he or she should realize is exceptional -e.g., this product
causes you to lose 10 pounds in 7 days - is excused from making
reasonable inquiries as to the advertiser's basis for those claims, but
Example 4 posits very different circumstances. Accordingly, the
Commission has concluded that no additional changes should be made to
proposed new Example 4.
E. Comments Addressing Revisions to Section 255.2 of the Guides - Use
of Testimonials Reflecting Non-typical Consumer Experiences
Many of the comments submitted in response to the November 2008
Federal Register notice criticized the proposed changes to the
provisions of Section 255.2 that address the use of testimonials that
do not reflect the results consumers can generally expect to achieve
using the advertised product or service.
The 1980 Guides said that a testimonial relating a consumer's
experience with respect to a key attribute of the advertised product or
service:
will be interpreted as representing that the endorser's experience is
representative of what consumers will generally achieve with the
advertised product in actual, albeit variable, conditions of use.
Therefore, unless the advertiser possesses and relies upon adequate
substantiation for this representation, the advertisement should either
clearly and conspicuously disclose what the generally expected
performance would be in the depicted circumstances or clearly and
conspicuously disclose the limited applicability of the endorser's
experience to what consumers may generally expect to achieve.
As revised per the November 2008 Federal Register notice, Section
255.2 would state that an ad featuring consumer testimonials will
likely convey that the testimonialists' experiences are representative
of what consumers can generally expect from the product or service in
actual, albeit variable, circumstances, and that:
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.
73 FR at 72392 (footnote omitted). Thus, the proposed revisions
would eliminate the safe harbor that the 1980 Guides extended to non-
typical testimonials accompanied by results not
typical disclaimers, and require advertisers to meet the
same substantiation requirements that would apply if they made that
performance claim directly, rather than through the means of a
testimonial.
The comments argued that the Commission does not have an adequate
basis for changing the Guides in this manner; that the change would
impermissibly chill truthful speech in violation of the First
Amendment; and that it would simultaneously limit the use of
testimonials - to the detriment of both advertisers and consumers - and
impose substantial burdens on those who continue to use them. For the
most part, these arguments repeat criticisms made in response to the
January 2007 Federal Register notice, and thus have already been
considered by the Commission.
1. Comments Arguing That the Proposed Revisions to Section 255.2 Are
Unwarranted and Not Supported by Reliable Evidence
Several commenters argued that the Commission lacks an adequate
basis for its proposed change to Section 255.2 because the staff's two
consumer research reports\46\ are flawed and/or too limited in scope to
warrant application to the entire advertising universe.\47\ Others
asserted that there is little evidence consumers are deceived by
testimonials. According to these comments, consumers understand that
aspirational testimonials are reflective of specific consumers'
circumstances,\48\ and many of the respondents in the Commission's
studies who took away messages of typicality from the endorsements
tested in those studies did not actually believe them, so the
testimonials were not deceptive.\49\ One commenter submitted the
results of new consumer survey research purporting to show that changes
to Section 255.2 are not needed because most consumers expect their
results to differ from the featured consumer's or endorser's results,
and that almost all believe that a number of factors influence the
results that ordinary consumers have when using products advertised
using testimonials.\50\
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\46\The first report, ``The Effect of Consumer Testimonials and
Disclosures of Ad Communication for a Dietary Supplement''
(hereafter ``Endorsement Booklet Study''), was designed to examine
whether consumer endorsements communicate product efficacy and
typicality, and whether any of several prominent disclosures qualify
or limit the claims conveyed by the ads. The second report,
``Effects of Consumer Testimonials in Weight Loss, Dietary
Supplement and Business Opportunity Advertisements,'' was designed
to explore the communication of product efficacy and typicality by
advertisements containing testimonials of individuals who claimed to
have achieved specific (that is, numerically quantified) results
with the advertised product or system.
\47\AAAA/AAF/CRN/DMA/DSA/ERA/IAB/PMA/C of C, at 3-4 (hereafter
``C of C''); AAAA/AAF, at 6-7; PMA, at 10-11; ANA, at 2-3; ERA/CRN,
at 3-4, 25 (stating that it is improper to rely on two studies of
print ads to develop federal policy for all advertisements
containing testimonials in any type of media, including media that
were not tested in these studies).
\48\AAAA/AAF, at 6-7.
\49\ERA/CRN, at 17-20; see also PRSA, at 3 (questioning premise
that consumers would naturally assume that endorsement represents
typical results).
\50\Kelley Drye, at 9.
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Two commenters noted that whether a particular disclaimer of
typicality is sufficient is a determination that must be made based on
the facts of the particular advertisement.\51\ One argued
[[Page 53130]]
that there was no logical connection between the Commission's concern
about the legibility of disclaimers and the proposed changes to Section
255.2, and that the appropriate remedy is requiring bigger, clearer
disclaimers.\52\
---------------------------------------------------------------------------
\51\ERA/CRN, at 21-22; C of C, at 4 (stating that each ad
containing a testimonial should be analyzed on its own merits); see
also ANA, at 3 (stating that revisions would put the Commission's
traditional case-by-case law enforcement approach into doubt).
\52\ERA/CRN, at 8.
---------------------------------------------------------------------------
The staff's two consumer research reports were put on the public
record in January 2007, and comments criticizing those reports were
considered by the Commission when it issued the November 2008 Federal
Register notice. The Commission concluded that:
After reviewing the staff's consumer research reports (including the
new tables), as well as all of the issues raised by the commenters, the
Commission believes that the results of the staff's studies do provide
useful empirical evidence concerning the messages that testimonials
convey to consumers and the effects of various types of disclaimers on
the communication of efficacy and typicality claims.
73 FR at 72385 (footnote omitted). The current comments, including
the newly submitted consumer research, do not persuade the Commission
that its previous conclusion was incorrect.\53\
---------------------------------------------------------------------------
\53\Although Kelley Drye's survey does suggest some baseline
level of scepticism about testimonials, several other points about
this research should be noted. First, the survey used a probability
sample to recruit participants. As a result, even though
participants were asked whether they would expect to do better than,
the same as, or worse than individuals who gave testimonials for
weight-loss or money-making programs, the survey did not screen them
to determine whether they were actually interested in losing weight
or in joining a money-making program. (For example, 10% of the
participants who said they would lose less weight than the
testimonialist explained that they were not very overweight.)
Consumers who were potentially interested in such programs might
have given different responses.
Second, because it was conducted by telephone, the survey asked
about testimonials in the abstract, rather than showing participants
ads containing testimonials and actually assessing the messages
conveyed by those ads. Consumers may bring pre-existing beliefs to
the ads they encounter, but the relevant issue for determining
whether an ad is deceptive under Section 5 is what claims they take
away from those ads.
Third, even without the persuasive power of an actual
testimonial, 31% of those who were asked about testimonials for
weight loss programs and 24% of those who were asked about
testimonials for money-making programs said they would do as well or
better than the testimonialist.
Finally, the questions that purport to address whether consumers
believe a variety of factors influence the results consumers have
when using products advertised by testimonials were very leading.
For example, one question was I am now going to read you
a statement, please tell me if you personally agree or disagree with
that statement: when using a weight-loss program, the results people
experience are influenced by a variety of factors, including how
closely a person follows the program, a person's own metabolism, and
other factors. StrategyOne, Testimonial Advertising
Research, at 9 (2009) (attached to Kelley Drye comment).
---------------------------------------------------------------------------
The Commission agrees that each ad must be evaluated on its own
merits to determine whether it is misleading. The proposed revisions to
Section 255.2 would not change that fundamental tenet of the
Commission's approach to law enforcement. Nor would they prohibit the
use of disclaimers of typicality.\54\ The proposed revisions would
eliminate the safe harbor for ``results not typical'' and similar
disclaimers that developed following the issuance of the 1980 Guides,
thereby putting advertisers who use testimonials on the same legal
footing as those who convey the same claims to consumers directly (that
is, without testimonials).
The Commission disagrees, however, with those who contend that,
rather than proceed with the proposed changes to Section 255.2 and
eliminate that safe harbor, it should simply require larger, clearer
disclaimers.\55\ Even disclaimers substantially larger than those that
are typically used by advertisers would likely not be effective.
Specifically, despite the presence of strongly worded, highly prominent
disclaimers of typicality, between 44.1% and 70.5% of respondents in
the Endorsement Booklet Study indicated that the dietary supplement in
question would reduce breathing problems, increase energy levels, or
relieve pain in at least half of the people who try it. Nor would
mandating larger disclaimers comport with the Commission's longstanding
preference for testimonials that either reflect generally expected
results or are accompanied by clear and conspicuous disclosures of what
the generally expected performance would be in the depicted
circumstances. See 73 FR at 72379 (reviewing the history of Section
255.2).
---------------------------------------------------------------------------
\54\See 73 FR at 72392 n.106.
\55\The 1980 Guides did not specify the size of, or language to
be used in, disclaimers of typicality, calling instead for them to
be ``clear and conspicuous.''The Commission frequently adopts such a
performance standard for disclosures, because it recognizes that
giving advertisers flexibility to meet the specific needs of their
particular message is often preferable to attempting to mandate
specific language, font, and other requirements applicable across-
the-board to all ads. Advertisers thus have always been free under
the Guides to make their disclaimers as large and clear as they
deemed appropriate to convey the necessary information to consumers.
---------------------------------------------------------------------------
2. Argument that the proposed revisions to Section 255.2 will chill
truthful speech in contravention of First Amendment
Several commenters argued that the proposed changes to the Guides
would deter advertisers from using truthful testimonials - either
because they would be unable to generate adequate substantiation that
those testimonials reflected the results consumers could generally
expect or because they would be unwilling to risk a challenge by the
Commission.\56\ Either way, they contend, the advertiser's First
Amendment rights will be infringed. One commenter making this argument
noted that it might be virtually impossible for an advertiser to
determine generally expected results to the FTC's satisfaction a
priori. Another contended that as revised, the Guides would either be
forcing speech or imposing significant costs on truthful speech (that
is, the cost of research to test the effectiveness of a disclaimer),
resulting either way in a chilling effect.\57\ One asserted that the
proposed change raises First Amendment concerns because there are less
restrictive means available to achieve Commission's goal of preventing
deception -i.e., requiring that the current typicality disclaimer be
displayed more prominently.\58\
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\56\C of C, at 2; see also HPM, at 1 (stating that Commission
would be preventing truthful speech); ERA/CRN, at 4, 6 (stating that
advertisers would have ``to accompany facially truthful testimonial
statements with disclosures of information that may be
unknowable'').
\57\ANA, at 1, 4.
\58\PMA, at 5.
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Finally, other commenters suggested that, notwithstanding the
Commission's statement in the revised Guides that it could not rule out
the possibility that a disclaimer of typicality would not be deceptive,
73 FR at 72392 n.106, marketers would not, as a practical matter, be
able to proceed with such a disclaimer, regardless of how clear and
conspicuous it was.\59\ Thus, according to the commenters, by
suppressing the use of disclaimers of typicality, the revised Guides
would have the effect of chilling commercial speech.\60\
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\59\ANA, at 3-4 (citing FTC's reliance on the staff's studies);
ERA/CRN, at 28, 30 (stating that an advertiser would face difficulty
in proving that its disclaimer was not deceptive).
\60\ERA/CRN, at 28.
---------------------------------------------------------------------------
The Commission has previously addressed arguments that its proposed
elimination of the safe harbor afforded by the 1980 Guides to non-
typical testimonials accompanied by disclaimers of typicality
contravened the First Amendment. 73 FR at 72385-
[[Page 53131]]
87. None of the arguments raised in this new round of comments changes
the Commission's conclusion that its proposed change to the Guides
withstands Constitutional scrutiny. However, the Commission believes
that the following points warrant reiteration.
First, although the literal words of an individual testimonial may
be truthful, those words cannot be viewed in isolation. It is well
established that ``an ad may be amenable to more than one reasonable
interpretation.''Telebrands Corp., 140 F.T.C. 278, 290 (2005), aff'd,
457 F.3d 354 (4th Cir. 2006); see, e.g., Kraft, Inc., 114 F.T.C. 40,
120-21 n.8 (1991); Thompson Medical Co., 104 F.T.C. 648, 787 n.7
(1984). Moreover, ``[w]here an ad conveys more than one meaning, only
one of which is misleading, a seller is liable for the misleading
interpretation even if nonmisleading interpretations are
possible.''Telebrands Corp., 140 F.T.C. at 290; see, e.g., Bristol-
Myers Co., 102 F.T.C. 21, 320 (1983), aff'd, 738 F.2d 554 (2d Cir.
1984); National Comm'n on Egg Nutrition v. FTC, 570 F.2d 157, 161 n.4
(7th Cir. 1977). A secondary message understood by reasonable consumers
is actionable if deceptive, even though the primary message is
accurate. Deception Policy Statement, 103 F.T.C. at 178 n.21; see
National Comm'n on Egg Nutrition, 88 F.T.C. 89, 185 (1976), enforced in
part, 570 F.2d 157 (7th Cir. 1977); Jay Norris Corp., 91 F.T.C. 751,
836 (1978), aff'd, 598 F.2d 1244 (2d Cir. 1979).
The critical question for determining whether an ad is deceptive
under Section 5 of the FTC Act - for all advertising, whether or not
testimonials are involved - is what is the net impression consumers
take away from the ad as a whole. The revised language in Section 255.2
would come into play only if a truthful testimonial: (1) conveys to
consumers that the testimonialist's results are ``representative of
what consumers will generally achieve with the advertised product or
service in actual, albeit variable, conditions of use''; and (2) the
advertiser does not have adequate substantiation for that claim. In
other words, the Guides call for a disclosure only if the ad is
misleading (and thus not protected by the First Amendment\61\) without
a disclosure. On the other hand, if the advertisement, taken as a
whole, does not convey an unsubstantiated, and thus misleading, message
of typicality, no disclosure is necessary.
---------------------------------------------------------------------------
\61\ Central Hudson Gas & Elec. Corp. v. Public Service Comm'n
of New York, 447 U.S. 557, 566 (1980) (commercial speech that
concerns unlawful activity or is misleading is not entitled to
constitutional protection and may be freely regulated).
---------------------------------------------------------------------------
Second, as noted above, the revised Guides would not prohibit the
use of disclaimers of typicality. Although the Commission is,
admittedly, skeptical that most disclaimers of typicality will be
effective in preventing deception, Section 255.2 does not rule out the
possibility that a clear, conspicuous, and informative disclaimer could
accomplish this goal. See 16 CFR 255.2 n.1 (noting also that this does
not affect the Commission's burden of proof in litigation). An
advertiser unable to disclose what consumers can generally expect from
its product could conduct consumer research to determine whether its ad
is misleading.
For the foregoing reasons, the Commission concludes that the
revisions to Section 255.2 will not impermissibly chill truthful speech
in violation of the First Amendment.
3. The Proposed Revisions to Section 255.2 Are Impractical and
Burdensome
A number of commenters asserted that the Commission's revisions to
Section 255.2(b) will be impractical for advertisers to implement, and
that the net effect will be detrimental both to consumers and to new
businesses that have not had enough sales to generate adequate
substantiation.\62\ To the extent that some of these arguments echo
those already made in comments submitted in response to the
Commission's January 2007 Federal Register notice, the Commission has
already considered them once, but does so now again.
---------------------------------------------------------------------------
\62\ E.g., DMA, at 2 (stating that revisions would be a
potential barrier to new businesses, or to introduction of new
products); PRSA, at 5-6 (stating that removing safe harbor will work
against consumers' best interests because requiring research to
determine ``typical results'' could end up depriving them of
important information).
---------------------------------------------------------------------------
One commenter criticized the Commission's proposed revision of the
sentence in the 1980 Guides that stated that testimonials about the
performance of the advertised product ``will'' convey typicality
claims; as revised, that phrase would state that they ``will . . .
likely'' convey such claims.\63\ In the view of this commenter, the new
language will impose a burden on advertisers by making them responsible
for determining how testimonials will be interpreted. As a result, many
may decide to include generally representative disclaimers that are not
actually necessary, thereby entailing expensive research costs to
generate the needed data.
---------------------------------------------------------------------------
\63\AAAA/AAF, at 4-5.
---------------------------------------------------------------------------
The revision in question would recognize that, depending on how a
testimonial is crafted and used in a particular ad, it might not convey
a typicality claim; thus, the comment correctly points out that
advertisers who use testimonials will be responsible for knowing what
messages consumers take away from their ads. But advertisers already
bear this responsibility. Moreover, the revision actually makes the
Guides less restrictive, by allowing for the possibility that a
testimonial will not convey a typicality claim, and thus not require
any further qualification.
Most of the commenters who addressed the proposed changes to
Section 255.2, however, asserted that those changes are problematic
because many advertisers - especially those in weight loss and health-
related industries - would not be able to determine what the generally
expected performance would be in the depicted circumstances, and thus
would no longer be able to use aspirational testimonials. Specifically,
they contend, determining generally expected results is impractical or
extremely difficult for products whose results differ depending on the
individual physiology of participants and their commitment to the
program.\64\ The hardship imposed by eliminating the use of disclaimers
of typicality would be especially great, according to the commenters,
for those small businesses and new companies that will not have
sufficiently large pools of customers from whom generally expected
results can be culled, and thus they will not be able to use
testimonials.\65\
---------------------------------------------------------------------------
\64\ E.g., C of C, at 3; AAAA/AAF, at 9; ERA/CRN, at 5-6; see
also NPA, at 1-2.
\65\PMA, at 11; ERA/CRN, at 3 (stating that requiring disclosure
of ``generally expected results'' supported by the level of
substantiation generally required of any other material claim ``will
work substantial hardship on many advertisers for many products,''
especially advertisers of new products).
---------------------------------------------------------------------------
Other commenters raised questions about the nature and scope of the
study that would satisfy the Commission for purposes of determining
what results consumers can generally expect from the advertised
product, including whether results from controlled studies could be
used.\66\ Two comments
[[Page 53132]]
asserted that any disclosure that attempted to explain all the factors
that could affect the results consumers could generally expect from the
advertised product could itself be deceptive.\67\ In the end, the
commenters contend, advertisers would either incur substantial costs
trying to create substantiation that will meet the Commission's
approval or cease using truthful, aspirational testimonials.\68\ Based
on these considerations, the commenters maintain that the FTC should
continue to allow disclaimers of typicality.\69\
---------------------------------------------------------------------------
\66\NPA, at 2 (stating that the Commission's assertion in the
November 2008 Federal Register notice that marketers would be able
to design reliable studies of product efficacy did not appear to be
based on anything other than optimism, and did not address whether
data from controlled studies - that might differ from consumers'
experiences in non-controlled settings - would be acceptable); PMA,
at 7-8 (questioning whether the ``typical consumer'' includes
everyone who signed up or only those who finished program); C of C,
at 2 (stating that there is ``no way to be sure how real consumers
will use an exercise device when no one is monitoring them''; ``it
may not be feasible to generate typicality data that would meet the
Commission's strict standards for the substantiation of such
claims''); ERA/CRN, at 4-5 (stating that the FTC does not explain
the basis for its confidence that methodologically sound means of
determining generally expected results can be devised for most
products; scientific tests may show nothing about average results
consumers can expect when results derive from frequency, intensity
and commitment with which consumers use the product in question);
see also AAAA/AAF, at 8 (stating that the determinations required by
the Guides would likely require costly studies).
\67\PRSA, at 6 (stating that disclosure would be confusing
because of the amount of information advertisers would have to
provide); PMA, at 3.
\68\ERA/CRN, at 6 (stating that the Commission would be setting
up a Hobson's choice for marketers: abstain from using truthful
testimonials because information about typical results is
unobtainable, or risk FTC action); ANA, at 1 (stating that
``advertisers fearing FTC enforcement proceedings may be forced to
incur substantial costs trying to create quantitative support for
the typicality of a testimonial statement or to refrain from
providing truthful information to consumers''); NPA, at 2 (stating
that the fact that consumers' habits vary widely ``creates confusion
about what constitutes a typical consumer in the first place'').
\69\ E.g., PMA, at 8 (stating that ``Because there is no
`typical' or `average' consumer and there are so many variables
impacting weight loss or medical conditions, a typicality disclaimer
is in fact the best way to properly disclose the limited
applicability of testimonial results.'').
---------------------------------------------------------------------------
At the outset, the Commission notes that some of the comments
misread the proposed revisions to Section 255.2 as requiring them to
determine with precision what ``the typical consumer'' would achieve
with the product.\70\ This is not what the Commission intends.
---------------------------------------------------------------------------
\70\C of C, at 2 (stating that ``There may be no real doubt that
the product is effective for consumers generally, and there may be
no real doubt that the individual testimonials used in the
advertisement are truthful. Yet, the advertiser would not be able to
use such testimonials safely unless it could substantiate what the
`typical' consumer would achieve.'' (footnote omitted)); PMA, at 7
(stating that it is impossible to capture substantiation for the
```typical consumer' experience'' because there is no such thing as
a typical consumer when it comes to weight loss or health care); see
also PRSA, at 5-6 (noting the difficulty in determining ``typical
results'').
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Advertisers are not required to identify a ``typical consumer'' of
their product and then determine what result that consumer achieved.
Rather, the required disclosure in this circumstance is ``the generally
expected performance in the depicted circumstances.''Thus, advertisers
are provided some reasonable leeway to make this disclosure. For
example, the term ``generally expected results'' is used rather than
``average'' in order to convey that this disclosure would not have to
be based on an exact mathematical average of users of the product, such
as might be developed from a valid survey of actual users. For example,
substantiation for a ``generally expected results'' disclosure could be
extrapolated from valid, well-controlled clinical studies of patients
matching the profile of the persons in the ad, even though consumers'
real world results are not likely to match exactly the results in the
clinical study.\71\ In some instances, advertisers may rely on
generally accepted scientific principles (e.g., the average individual
needs a net calorie deficit of 3,500 calories to lose 1 pound) to
determine generally expected results.
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\71\If such studies are adequate to reasonably substantiate the
efficacy claim of the product for the target audience of the ad,
there is no reason why they could not reasonably be relied on to
substantiate a ``generally expected results'' disclosure, provided
that the data generated by the studies are relevant to the subjects
of the ad at issue and the disclosure is not otherwise misleading.
For example, it would be problematic to extrapolate from a study
using obese young men to an ad using testimonials from older
overweight women.
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In other cases, the advertiser may be able to limit the scope of
the disclosure by limiting the circumstances depicted in the
advertisement. For example, if all of the testimonials used in an
advertisement are clearly identified as persons who have been members
of a weight loss clinic for at least one year, the disclosure can be
based on performance data from that group.\72\ In any event, the
disclosure of generally expected results should clearly identify the
group from which the data were obtained.\73\
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\72\The disclosure should also describe the source of the data.
\73\As well as identifying the group for whom those data are
relevant, the disclosure should set forth other information that
would be meaningful in assessing the study's results, such as the
duration of the study. For example, in an ad showing formerly
overweight men, a disclosure might state ``in an 8-week clinical
study, men who were at least 30 pounds overweight lost an average of
2 pounds per week.''
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The Commission recognizes that differences in physiology and
commitment will affect the results that individual consumers will get
from a particular weight loss or fitness product or program. The
proposed revisions to Section 255.2 do not prescribe a uniform one-
size-fits-all disclaimer, however, and an advertiser could take these
factors into consideration in crafting a disclosure. With meaningful
disclosures, consumers not only would have a realistic sense of what
they can expect from a product or service, but could also take away the
message that if they dedicate themselves as much as the testimonialist
did, they might achieve even more.\74\
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\74\Even truthful consumer testimonials provide only marginally
useful information to consumers. In general, it is impossible for
consumers to verify the reported experiences. Indeed, even the
testimonialist may incorrectly attribute the performance benefit to
the product. The additional disclosures will, on the whole, provide
more useful information to consumers than the ritualistic ``results
not typical'' disclaimers, even if they are not without some flaws.
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Nevertheless, as the Commission recognized in the November 2008
Federal Register notice, 73 FR at 72382, some advertisers may not have
the information available to them to be able to disclose the generally
expected performance of their product or service to consumers. In these
cases, advertisers using testimonials need either to exercise care not
to convey a typicality claim, or to rely on statements of general
endorsement of the product, e.g., ``I've tried many products and this
was the best.''\75\
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\75\If the advertiser does not yet have sufficient information
as to the results consumer can generally expect to achieve with its
product, it can still use general testimonials -i.e., testimonials
that do not make specific performance claims - provided the net
takeaway of the ad is not misleading. For example, a testimonialist
might praise the taste of a company's reduced calorie foods, or the
fact that a particular exercise video was the ``best ever.''
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Disclosing the results consumers can generally expect from the
advertised product under the circumstances depicted in the ad will
entail costs associated with the data collection and analysis. Those
costs, however, are no different from what the advertiser would incur
if it made the same performance claim directly, rather than though a
testimonial, and there is no reason why the substantiation requirements
should differ between the two forms of advertising if the message
conveyed to consumers is the same. Nor is there any reason why a new
company that might not yet have data showing how well its product
performs should be allowed to convey a performance claim through
testimonials that it would not be able to substantiate if it made that
claim directly.
The effect of the revision at issue is to treat ads that use
testimonials the same as all other ads. Section 5 of the FTC Act
requires advertisers to have substantiation for the messages that
consumers reasonably take from their ads, which means they must first
know what messages consumers take away from those ads. The Commission
sees no
[[Page 53133]]
reason why an advertiser should be exempt from those basic obligations
simply because it chooses to communicate its claims through the use of
testimonials; yet, that is precisely the effect of the safe harbor
afforded by the 1980 Guides. Accordingly, the Commission concludes that
the safe harbor for non-typical testimonials accompanied by disclaimers
of typicality should be eliminated, and the revisions to Section 255.2
of the Guides that were proposed in the November 2008 Federal Register
notice should be adopted in final form without further revision, except
for the addition of the phrase ``or service'' in Section 255.2(b) and
the revisions to news Example 4 and 7 discussed below.
4. Revisions to Examples 4 and 7 in Section 255.2
The Commission is modifying and expanding a new example proposed in
November 2008 in which a testimonialist touts the results she achieved
using a product called WeightAway under an extreme regimen (exercising
6 hours daily and eating nothing but raw vegetables). Two new fact
patterns added to the example demonstrate how the description of the
circumstances under which a testimonialist achieved her results can
determine the information that should be disclosed in the
advertisement.
Thus, when the ad just features ``before'' and ``after'' pictures
with the caption ``I lost 50 pounds in 6 months with WeightAway,'' the
ad is likely to convey that her experience is representative of what
consumers will generally achieve. Therefore, if consumers cannot
generally expect to achieve such results, the ad should clearly and
conspicuously disclose what they can expect to lose in the depicted
circumstances (e.g., ``most women who use WeightAway for 6 months lose
at least 15 pounds''). Similarly, if the testimonialist in an ad with
those two pictures simply says, ``I lost 50 pounds with WeightAway''
without any mention of how long it took to achieve those results, and
WeightAway users generally do not lose 50 pounds, the ad should
disclose what results they do generally achieve (e.g., ``most women who
use WeightAway lose 15 pounds'').
In November 2008, the Commission also proposed a new Example 7 to
Section 255.2, in which theater patrons express their views about a
movie they have just seen. The example stated that 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 this advertisement is not likely to convey a typicality
message.''The Commission is revising this example to explain that the
reason no typicality message would be conveyed is that the patrons'
statements would be understood to be the subjective personal opinions
of only three people.
F. Section 255.3 - Expert Endorsements
Although no comments addressed this particular example, the
Commission has decided to revise proposed new Example 6 to Section
255.3 because it could erroneously be read to suggest that a medical
doctor or comparably qualified expert could properly make performance
claims for a cholesterol-lowering drug based solely on consumer letters
and the results of a study using an animal model. As revised, the
example states that the doctor's endorsement would likely be deceptive
because those materials are not what others with the same level of
expertise would consider adequate to support those claims.
G. Comments Addressing Section 255.4 of the Guides - Endorsements by
Organizations
Although the Commission's November 2008 Federal Register notice did
not propose any changes to Section 255.4 of the Guides, one commenter
asked a question about that provision, which states that ``an
organization's endorsement must be reached by a process sufficient to
ensure that the endorsement fairly reflects the collective judgment of
the organization'' (emphasis added).\76\ Specifically, the commenter
requested confirmation that action by an organization's governing body,
such as its Board of Directors, is not the kind of ``collective
judgment'' required, and that ``an objective evaluation by a qualified
and competent organization staff person, or group of staff members, is
sufficient.''\77\
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\76\NAR, at 2.
\77\ Id.
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The Commission agrees that an organization's governing body need
not necessarily participate in the process; however, the decision of a
single staff person might not be sufficient to ensure that the process
reflects the organization's ``collective judgment'' and certainly might
not be ``generally free of the sort of subjective factors that vary
from individual to individual.'' 16 C.F.R Sec. 255.4.
The organization should have a process in place to ensure that its
endorsements reflect the ``collective judgment of the organization.''
For example, the organization's management could adopt specific
procedures and standards to be applied in the review process,
including, for example, clear statements concerning the qualification
of the individual(s) conducting the review,\78\ the criteria against
which products are to be judged, and any other requirements or
prohibitions management deems appropriate (e.g., prohibitions against
staff members reviewing products in which they have a financial
interest).
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\78\Because of the specialized nature of some of the products
that this organization might review, readers of its membership
publication might view it as having expertise in these products. In
that case, the organization would have to use an expert (who could
be a staff member), or ``standards previously adopted by the
organization and suitable for judging the relative merits of such
products.''16 CFR 255.4.
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The Commission is also deleting an unnecessary cross-reference to
Section 255.3 that previously appeared at the end of the example to
Section 255.4.
H. Comments Addressing Revisions to Section 255.5 of the Guides -
Disclosure of Material Connections Between Advertisers and Endorsers
The comments filed in response to the November 2008 Federal
Register notice raise a number of issues concerning the disclosure of
material connections between advertisers and endorsers: (1) whether, in
the case of new, consumer-generated media, the disclosure obligation
falls upon the advertiser or the endorser, and to the extent that the
disclosure obligation falls on the endorser, whether the advertiser is
potentially liable if the endorser fails to make that disclosure; (2)
whether simply receiving a product, without any accompanying monetary
payment, triggers a disclosure obligation; and (3) the potential
implications of the Commission's proposed new Example 3 concerning
celebrity endorsements in nontraditional media, and proposed new
Examples 7-9, in which the obligation to disclose material connections
is applied to endorsements made through certain new media.
1. Obligation to Disclose Material Connections in Endorsements Conveyed
Through New Consumer-Generated Media
When the Commission adopted the Guides in 1980, endorsements were
disseminated by advertisers - not by the endorsers themselves - through
such traditional media as television commercials and print
advertisements. With such media, the duty to disclose material
connections between the advertiser and the endorser naturally fell on
the advertiser.
[[Page 53134]]
The recent creation of consumer-generated media means that in many
instances, endorsements are now disseminated by the endorser, rather
than by the sponsoring advertiser. In these contexts, the Commission
believes that the endorser is the party primarily responsible for
disclosing material connections with the advertiser. However,
advertisers who sponsor these endorsers (either by providing free
products - directly or through a middleman - or otherwise) in order to
generate positive word of mouth and spur sales should establish
procedures to advise endorsers that they should make the necessary
disclosures and to monitor the conduct of those endorsers.\79\
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\79\The Commission's view that these endorsers have an
obligation to disclose material connections with their sponsoring
advertisers should not be seen as reflecting a desire on the part of
the Commission either to deter consumers from sharing their views
about products they like with others or as an indication the
Commission intends to target consumer endorsers who use these new
forms of consumer-generated media. As with traditional media, the
Commission's law enforcement activities will continue to focus on
advertisers.
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The Commission notes in this regard that the Word of Mouth
Marketing Association's (``WOMMA'') code of ethics says that word of
mouth advocates should disclose their relationship with marketers in
their communications with other consumers; and that marketers should
effectively monitor disclosure of their word of mouth advocates.\80\
The WOMMA Code also requires advocates to disclose the source of
product samples or incentives received from marketers.\81\
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\80\WOMMA, at 7.
\81\ Id. at 8.
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The development of these new media has, however, highlighted the
need for additional revisions to Section 255.5, to clarify that one
factor in determining whether the connection between an advertiser and
its endorsers should be disclosed is the type of vehicle being used to
disseminate that endorsement - specifically, whether or not the nature
of that medium is such that consumers are likely to recognize the
statement as an advertisement (that is, as sponsored speech). Thus,
although disclosure of compensation may not be required when a
celebrity or expert appears in a conventional television advertisement,
endorsements by these individuals in other media might warrant such
disclosure.
2. Does Receipt of a Product, Without Monetary Compensation, Constitute
a Material Connection That Must Be Disclosed?
Several commenters asked whether an advertiser's provision of a
free sample to a consumer in and of itself was a material connection
that would have to be disclosed by that consumer and, if so, whether
there was a monetary value associated with that item below which that
obligation would not be triggered.\82\ One commenter asserted that
modern companies that distribute product samples to promote word of
mouth are analogous to companies that distribute free samples in
grocery stores.\83\ That commenter further asserted that the Guides, as
written, might cover both situations, even though neither distributor
controls what is said about the products being distributed and the
consumers are not compensated in either case.\84\
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\82\BzzAgent, at 9 (stating that if consumers are under no
obligation to say anything about the products they have received,
the provision of those free samples might not be material to other
consumers in evaluating that person's opinion); PCPC, at 2
(acknowledging that receipt of product with high value, such as a
car, would be material).
\83\BzzAgent, at 7.
\84\ Id. at 7-8.
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The threshold issue is whether the speaker's statement qualifies as
an ``endorsement,'' under the Guides. If not, no disclosure need be
made. However, if the statement does qualify as an ``endorsement''
under the construct set forth above for determining when statements in
consumer-generated media will be deemed ``sponsored'' (see Section
II.A.2 of this notice), disclosure of the connection between the
speaker and the advertiser will likely be warranted regardless of the
monetary value of the free product provided by the advertiser.\85\ For
example, an individual who regularly receives free samples of products
for families with young children and discusses those products on his or
her blog would likely have to disclose that he or she received for free
the items being recommended. Although the monetary value of any
particular product might not be exorbitant, knowledge of the blogger's
receipt of a stream of free merchandise could affect the weight or
credibility of his or her endorsement - the standard for disclosure in
Section 255.5 - if that connection is not reasonably expected by
readers of the blog. Similarly, receipt of a single high-priced item
could also constitute a material connection between an advertiser and a
``sponsored'' endorser.
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\85\If the blogger is actually paid by the advertiser or a third
party acting on its behalf, disclosure certainly will be warranted.
---------------------------------------------------------------------------
Participants in network marketing programs are also likely to be
deemed to have material connections that warrant disclosure. The
Commission disagrees with the assertion that modern network marketing
programs are just updated versions of traditional supermarket sampling
programs. The primary goal of those programs was to have the shopper
who tasted the advertiser's product continue down the grocery store
aisle and purchase the product. The primary goal of the new viral
marketing programs is to have these individuals ``spread the word''
about the product, so that other consumers will buy it.
The Commission recognizes that, as a practical matter, if a
consumer's review of a product disseminated via one of these new forms
of consumer-generated media qualifies as an ``endorsement'' under the
construct articulated above, that consumer will likely also be deemed
to have material connections with the sponsoring advertiser that should
be disclosed. That outcome is simply a function of the fact that if the
relationship between the advertiser and the speaker is such that the
speaker's statement, viewed objectively, can be considered
``sponsored,'' there inevitably exists a relationship that should be
disclosed, and would not otherwise be apparent, because the endorsement
is not contained in a traditional ad bearing the name of the
advertiser.\86\
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\86\Letter from Mary K. Engle, Associate Director for
Advertising Practices, to Gary Ruskin, Commercial Alert, at 4 (Dec.
7, 2006) (``[I]n some word of mouth marketing contexts, it would
appear that consumers may reasonably give more weight to statements
that sponsored consumers make about their opinions or experiences
with a product based on their assumed independence from the
marketer,'' and that in those circumstances, ``it would appear that
the failure to disclose the relationship between the marketer and
the consumer would be deceptive unless the relationship were
otherwise clear from the context.'') (footnote omitted).
---------------------------------------------------------------------------
3. New Examples Applying Guide Principles Concerning Disclosure of
Material Connection
a. New Example 3 - Celebrity Endorsements in Nontraditional
Contexts
Several comments addressed proposed new Example 3, which applied
the principles set forth in Section 255.5 to the situation in which a
celebrity who has entered into a contract with a surgical clinic that
calls for her to speak publicly about her own surgical experience
praises that clinic during a television interview. The commenters
stated that an advertiser cannot control what a celebrity says in
[[Page 53135]]
a given interview, or whether the celebrity (or the interviewer) will
make the necessary disclosure; therefore, they argue, the advertiser
should not be liable either for misstatements made by the celebrity or
for the failure of the relationship between the endorser and the
advertiser to be disclosed.\87\ One commenter also noted that the
disclosure of the connection between the advertiser and the celebrity
is unnecessary because ``if most people understand that celebrities are
paid for touting products in advertisements, it stands to reason they
also understand the nature of a paid spokesperson's relationship with
advertisers.''\88\ Commenters also noted that even if the celebrity
disclosed his or her relationship with the advertiser, the show's
producers could edit that disclosure out of the final version of the
program that was ultimately aired. Imposing liability on the advertiser
in such a situation, they contend, would be unfair.\89\
---------------------------------------------------------------------------
\87\PMA, at 15 (stating that celebrity may make statement that
is unsubstantiated or unauthorized by contract).
\88\PMA, at 16; see also AAAA/AAF, at 14-15 (stating that it is
inexplicable and unfair to impose a different disclosure requirement
on celebrities in a non-traditional context than in traditional
advertising context).
\89\PMA, at 15; AAAA/AAF, at 15-16.
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The Commission disagrees with the contention that disclosure in new
Example 3 of the relationship between the celebrity and the clinic is
unnecessary. Disclosure is appropriate because given the medium in
which the celebrity praises the clinic - a talk show, not a
conventional advertisement - consumers might not realize that the
celebrity was a paid endorser, rather than just a satisfied customer.
The commenters are correct, however, that an advertiser does not
have control over what a celebrity says in an interview. Nor can the
advertiser prevent the producers of that program from editing out of
the final version of the interview a disclosure that would have been
sufficient to inform viewers of the celebrity's contractual
relationship with the advertiser. However, if the advertiser has
decided that it is advantageous to have the celebrity speak publicly
about its product or service, the Commission believes that the
advertiser has the concomitant responsibility to advise the celebrity
in advance about what he or she should (and should not) say about that
product or service, and about the need to disclose their relationship
in the course of the interview.
Evidence that the advertiser did so would provide a strong argument
for the exercise of the Commission's prosecutorial discretion in the
event the celebrity failed to disclose his or her relationship with the
advertiser or made unauthorized claims about the advertiser's
product,\90\ or if the celebrity properly disclosed the relationship
but that disclosure was ultimately edited out of the program. Because
the Commission considers each advertisement on a case-by-case basis,
the particular facts of each situation would be considered in
determining whether law enforcement action would be appropriate.
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\90\The celebrity, however, could still be liable for any
misleading statements she made, or for her failure to disclose her
relationship with the advertiser.
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b. Examples 7-9 - New Media
Several commenters raised questions about, or suggested revisions
to, proposed new Examples 7-9 in Section 255.5, in which the obligation
to disclose material connections is applied to endorsements made
through certain new media.\91\ Two commenters argued that application
of the principles of the Guides to new media would be inconsistent with
the Commission's prior commitment to address word of mouth marketing
issues on a case-by-case basis.\92\ Others urged that they be deleted
in their entirety from the final Guides, either because it is premature
for the Commission to add them, or because of the potential adverse
effect on the growth of these (and other) new media.\93\ Two commenters
said that industry self-regulation is sufficient.\94\
---------------------------------------------------------------------------
\91\DMA, at 5; ANA, at 6-8; C of C, at 4-6; AAA/AAF, at 16
(stating that it is unfair to put the burden of potential liability
on bloggers and other viral marketers); ERA/CRN, at 36-38.
\92\ANA, at 2; ERA/ERN, at 33-34.
\93\IAB, at 2 (stating that the FTC should not adopt them, in
light of ``the evolving nature of the marketing industry and the
need for further inquiry''; ``[e]stablishing new legal liabilities
for marketers, publishers, and platform providers could restrict the
supply of advertising revenue that is just beginning to flow into
this nascent marketplace''); C of C, at 5 (stating that new Examples
7, 8, and 9 ``raise significant issues regarding the scope of
advertiser liability for third party activity in the context of new
media and word-of-mouth marketing.''); ERA/CRN, at 33 (stating that
more discussion of these issues is needed first); see also ANA, at 5
(stating that the examples increase uncertainty by raising more
questions than they answer); PMA, at 19 (stating that the Commission
should not adopt them); BzzAgent, at 11-12 (suggesting revisions);
DMA, at 5 (stating that new media channels should be considered in
separate proceeding that takes into account their unique
characteristics); ERA/CRN, at 33, 35.
\94\AAAA/AAF, at 18 (citing WOMMA guidelines); ERA/CRN, at 34
(same); see also ANA, at 1, 5 (stating that the new examples
interfere with self-regulation in this area).
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The Commission's inclusion of examples using these new media is not
inconsistent with the staff's 2006 statement that it would determine on
a case-by-case basis whether law enforcement investigations of ``buzz
marketing'' were appropriate.\95\ All Commission law enforcement
decisions are, and will continue to be, made on a case-by-case basis,
evaluating the specific facts at hand. Moreover, as noted above, the
Guides do not expand the scope of liability under Section 5; they
simply provide guidance as to how the Commission intends to apply
governing law to various facts. In other words, the Commission could
challenge the dissemination of deceptive representations made via these
media regardless of whether the Guides contain these examples; thus,
not including the new examples would simply deprive advertisers of
guidance they otherwise could use in planning their marketing
activities.\96\
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\95\Letter from Mary K. Engle, Associate Director for
Advertising Practices, to Gary Ruskin, Commercial Alert, at 5 (Dec.
7, 2006)(noting that petitioners define ``buzz marketing'' as that
in which marketers compensate consumers for disseminating messages
to other consumers, without disclosing the marketer's relationship
with the consumer). Indeed, the references to the Guides in the
staff's letter suggested that the Guides' principles are applicable
to these new marketing tools.
\96\The Commission's views as to the vibrancy of these new media
and the importance of having law enforcement to support industry
self-regulation are discussed in Part II.A.2 above.
---------------------------------------------------------------------------
The Commission is not restating here all of the individual
questions and criticisms raised by the commenters with respect to these
three examples. As noted above, a marketer presumably would not have
initiated the process that led to endorsements being made in these new
media had it not concluded that a financial benefit would accrue from
doing so. Therefore, it is responsible for taking the appropriate
measures to prevent those endorsements from deceiving consumers. The
Commission is revising Example 7, however, to clarify two points.
First, the reason this endorser should disclose that he received the
video game system for free - even though he is known as an expert in
the video gaming community - is that his consumer-generated endorsement
appears in a medium that does not make his association with the
advertiser apparent to consumers. Second, as revised, Example 7 states
more clearly that although the blogger has primary responsibility for
disclosing that he received the video game system for free, the
manufacturer has an obligation to advise the blogger at the time it
provides the gaming system that he should make the disclosure in any
positive reviews of the system. The manufacturer also
[[Page 53136]]
should have procedures in place to attempt to monitor the blogger's
statements about the system to ensure that the proper disclosures are
being made and take appropriate steps if they are not (e.g., cease
providing free product to that individual).
One commenter asked whether, if the blogger in Example 7 should
disclose that he received the video game system for free, must every
critic disclose that a reviewed item was provided for free?\97\
According to the commenter, reviewers in traditional media do not have
to disclose this information, and reviewers in nontraditional media
platforms such as blogs, online discussion boards, and street teams
should not be treated any differently.\98\ This commenter also noted
that given marketers' lack of control over ``what employees say on
online discussion boards, or what street team members say to their
friends,'' it would be impracticable for them to ensure that material
connections are disclosed in endorsements made using these media, and
unclear what steps marketers would have to take to prevent endorsers
from failing to disclose material connections with the marketer.\99\
---------------------------------------------------------------------------
\97\C of C, at 6.
\98\ Id.
\99\ Id.
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The Commission acknowledges that bloggers may be subject to
different disclosure requirements than reviewers in traditional media.
In general, under usual circumstances, the Commission does not consider
reviews published in traditional media (i.e., where a newspaper,
magazine, or television or radio station with independent editorial
responsibility assigns an employee to review various products or
services as part of his or her official duties, and then publishes
those reviews) to be sponsored advertising messages. Accordingly, such
reviews are not ``endorsements'' within the meaning of the Guides.\100\
Under these circumstances, the Commission believes, knowing whether the
media entity that published the review paid for the item in question
would not affect the weight consumers give to the reviewer's
statements.\101\ Of course, this view could be different if the
reviewer were receiving a benefit directly from the manufacturer (or
its agent).
---------------------------------------------------------------------------
\100\ See Example 1 to Section 255.0 (movie review becomes an
endorsement only when it is used by the motion picture studio in its
own advertisement).
\101\The Commission's view would be the same if the employee
worked for an Internet news website with independent editorial
responsibility, rather than a traditional brick-and mortar
periodical.
---------------------------------------------------------------------------
In contrast, if a blogger's statement on his personal blog or
elsewhere (e.g., the site of an online retailer of electronic products)
qualifies as an ``endorsement'' -i.e., as a sponsored message - due to
the blogger's relationship with the advertiser or the value of the
merchandise he has received and has been asked to review by that
advertiser, knowing these facts might affect the weight consumers give
to his review.
With respect to Example 8, one commenter asserted that if the
employer has instituted policies and practices concerning ``social
media participation'' by its employees, and the employee fails to
comply with such policies and practices, the employer should not be
subject to liability.\102\ The Commission agrees that the establishment
of appropriate procedures would warrant consideration in its decision
as to whether law enforcement action would be an appropriate use of
agency resources given the facts set forth in Example 8. Indeed,
although the Commission has brought law enforcement actions against
companies whose failure to establish or maintain appropriate internal
procedures resulted in consumer injury, it is not aware of any instance
in which an enforcement action was brought against a company for the
actions of a single ``rogue'' employee who violated established company
policy that adequately covered the conduct in question.\103\
---------------------------------------------------------------------------
\102\WOMMA, at 9-10.
\103\ Cf. Eli Lilly, 133 F.T.C. 763, 767 (2002) (consent order)
(although the disclosure of consumers' personal information resulted
from the actions of one employee, the Commission's complaint makes
it clear that the underlying cause was ``[Lilly's] failure to
maintain or implement internal measures appropriate under the
circumstances to protect sensitive consumer information.'').
---------------------------------------------------------------------------
The Commission does not believe, however, that it needs to spell
out the procedures that companies should put in place to monitor
compliance with the principles set forth in the Guides; these are
appropriate subjects for advertisers to determine for themselves,
because they have the best knowledge of their business practices, and
thus of the processes that would best fulfill their responsibilities.
4. Example 1 (sponsorship of clinical trials)
In response to the Commission's January 2007 Federal Register
notice seeking comment on the overall costs, benefits, and regulatory
and economic impact of the Guides, 72 FR 2214 (Jan. 18, 2007), the
Attorneys General of 33 States and Territories and Hawaii's Office of
Consumer Protection (collectively, the ``Attorneys General'') suggested
that a new provision be added stating that when an ad relies on a study
that was sponsored by the advertiser itself, the ad should clearly
disclose this information. 73 FR at 72390. The Attorneys General also
pointed out that although the Guides require disclosure of material
connections between endorsers and advertisers, Example 1 to Section
255.5 stated that an advertiser's payment of expenses to an outside
entity that conducted a study subsequently touted by the advertiser as
the findings of a research organization need not be disclosed, an
outcome the Attorneys General thought was inconsistent with the general
principles of Section 255.5.
Although the Commission did not propose substantive changes to
Example 1 in November 2008, it now has reconsidered its previous
conclusion that knowledge of the advertiser's sponsorship of the
research would not materially affect the weight consumers would place
on the reported results. Consumers reasonably can be more skeptical
about research conducted by outside entities but funded by the
advertiser than about studies that are both conducted and funded
independently, because financial interest can create bias (intentional
or unintentional) in the design of a study.\104\ Accordingly, the
Commission now is revising Example 1 to call for disclosure of the
relationship between the advertiser and the research organization.
---------------------------------------------------------------------------
\104\ See John Abramson & Barbara Starfield, ``The Effect of
Conflict of Interest on Biomedical Research and Clinical Practice
Guidelines: Can We Trust the Evidence in Evidence-Based Medicine?,''
J. Amer. Bd. Fam. Pract., Vol. 18 No. 5, 414-18 (Sept.-Oct. 2005);
see also Cary P. Gross, Yale Univ. Sch. Med., ``Conflict of Interest
and Clinical Re$earch: Ethical and Regulatory Aspects of Clinical
Research'' (2009), (http://www.bioethics.nih.gov/hsrc/slides/Gross%20NIH%20COI%202009%20draft%201.pdf)
(last visited Oct. 1, 2009).
---------------------------------------------------------------------------
III. SECTION-BY-SECTION REVIEW OF ADDITIONAL CHANGES TO PROPOSED GUIDES
PUBLISHED IN NOVEMBER 2008
A. Section 255.0
The Commission is adding the following new Example 8 to Section
255.0:
Example 8: 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. She writes in her personal blog that the
change in diet has made her dog's fur noticeably softer and shinier,
and that in her opinion, the new food definitely is worth the extra
money. This posting would not be deemed an endorsement under the
Guides.
[[Page 53137]]
Assume that rather than purchase the dog food with her own money,
the consumer gets it for free because the store routinely tracks her
purchases and its computer has generated a coupon for a free trial bag
of this new brand. Again, her posting would not be deemed an
endorsement under the Guides.
Assume now that the consumer joins a network marketing program
under which she periodically receives various products about which she
can write reviews if she wants to do so. If she receives a free bag of
the new dog food through this program, her positive review would be
considered an endorsement under the Guides.
B. Section 255.1
The Commission is deleting from Section 255.1(a) the proposed
cross-reference to the proposed new Example 3 in Section 255.3. The
Commission is also revising the proposed new Example 3 in Section 255.1
by adding the following cross-reference: ``[See Section 255.3 regarding
the product evaluation that an expert endorser must conduct.]''
The Commission is revising the fifth and sixth sentences in
proposed new Example 5 to clarify that the advertiser and the blogger
both are subject to liability for misleading or unsubstantiated
representations made in the course of the blogger's endorsement.
C. Section 255.2
The Commission is adding the phrase ``or service'' before the
phrase ``in actual, albeit variable, conditions of use'' in the first
sentence of Section 255.2(b).
The Commission also is replacing the proposed new Example 4 with
the following:
Example 4: An advertisement for a weight-loss product features a
formerly obese woman. She 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
woman'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 she achieved her
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 her 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).
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
her experience is representative of what consumers will generally
achieve. Therefore, if consumers cannot generally expect to achieve
such results, the ad should clearly and conspicuously disclose what
they can expect to lose in the depicted circumstances (e.g., ``most
women who use WeightAway for six months lose at least 15 pounds'').
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., ``most women who use WeightAway lose
15 pounds'').
The Commission is also revising the third sentence of the first
paragraph of the proposed new Example 7 in Section 255.2 to read as
follows: ``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.''
C. Section 255.3
In the second sentence of the proposed new Example 6, the
Commission is revising the phrase ``the endorsement would be deceptive
assuming those materials are not'' to ``the endorsement would likely be
deceptive because those materials are not. . . .''
D. Section 255.4
The Commission is deleting the cross-reference to Section 255.3
that previously appeared at the end of the example to Section 255.4.
E. Section 255.5
The Commission is revising Section 255.5 to make it clear that the
duty to disclose material connections between advertisers and endorsers
may depend on the particular medium used to disseminate that
endorsement.
The Commission is revising the proposed new Example 3 by replacing
the phrase ``Consumers would not expect'' with ``Consumers might not
realize,'' and by adding a new hypothetical, in which the tennis player
endorses the clinic via a posting on a social networking service.
The Commission is also revising the proposed new Example 7, first
to clarify that in the case of endorsements disseminated via consumer-
generated media, the relationship between the advertiser and the
endorser may not be apparent, thereby requiring disclosure by experts
that might not otherwise be necessary, and second to make the
advertiser's obligations more apparent.
Example 7: A college student who has earned a reputation as a video
game expert maintains a personal weblog or ``blog'' where he posts
entries about his gaming experiences. Readers of his blog frequently
seek his opinions about video game hardware and software. As it has
done in the past, the manufacturer of a newly released video game
system sends the student a free copy of the system and asks him to
write about it on his blog. He tests the new gaming system and writes a
favorable review. Because his review is disseminated via a form of
consumer-generated media in which his relationship to the advertiser is
not inherently obvious, readers are unlikely to know that he has
received the video game system free of charge in exchange for his
review of the product, and given the value of the video game system,
this fact likely would materially affect the credibility they attach to
his endorsement. Accordingly, the blogger should clearly and
conspicuously disclose that he received the gaming system free of
charge. The manufacturer should advise him at the time it provides the
gaming system that this connection should be disclosed, and it should
have procedures in place to try to monitor his postings for compliance.
Finally, the Commission is revising the last two sentences of
Example 1 to provide that an advertiser should disclose its payment of
expenses to an outside entity that conducts a study subsequently touted
by the advertiser: ``Although the design and conduct of the 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 this advertisement.''
[[Page 53138]]
IV. REVISED ENDORSEMENT AND TESTIMONIAL GUIDES
List of Subjects in 16 CFR Part 255
Advertising, Consumer protection, Trade practices.
0
Accordingly, for the reasons set forth in the preamble, the Federal
Trade Commission revises 16 CFR part 255 of the Code of Federal
Regulations 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.
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. Whether a particular endorsement or
testimonial is deceptive will depend on the specific factual
circumstances of the advertisement at issue.
(b) For purposes of this part, an endorsement means any advertising
message (including verbal statements, 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 may 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 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, 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.
Example 1: A film critic's review of a movie is excerpted in an
advertisement. When so used, the review meets the definition of an
endorsement because it is viewed by readers as a statement of the
critic's own opinions and not those of the film producer, distributor,
or exhibitor. Any alteration in or quotation from the text of the
review that does not fairly reflect its substance would be a violation
of the standards set by this part because it would distort the
endorser's opinion. [See Sec. 255.1(b).]
Example 2: A TV commercial depicts two women in a supermarket
buying a laundry detergent. The women are not identified outside the
context of the advertisement. One comments to the other how clean her
brand makes her family's clothes, and the other then comments that she
will try it because she has not been fully satisfied with her own
brand. This obvious fictional dramatization of a real life situation
would not be an endorsement.
Example 3: In an advertisement for a pain remedy, an announcer who
is not familiar to consumers except as a spokesman for the advertising
drug company praises the drug's ability to deliver fast and lasting
pain relief. He purports to speak, not on the basis of his 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.
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. Even
though the message is not expressly declared to be the personal opinion
of the driver, it may nevertheless constitute an endorsement of the
tires. Many consumers will recognize this individual as being primarily
a racing driver and not merely a spokesperson or announcer for the
advertiser. Accordingly, they may well believe the driver would not
speak for an automotive product unless he actually believed in what he
was saying and had personal knowledge sufficient to form that belief.
Hence, they would think that the advertising message reflects the
driver's personal views. This attribution of the underlying views to
the driver brings the advertisement within the definition of an
endorsement for purposes of this part.
Example 5: A television advertisement for a particular brand of
golf balls shows a prominent and well-recognized professional golfer
practicing numerous drives off the tee. This would be an endorsement by
the golfer even though she makes no verbal statement in the
advertisement.
Example 6: An infomercial for a home fitness system is hosted by a
well-known entertainer. During the infomercial, the entertainer
demonstrates the machine and states that it is the most effective and
easy-to-use home exercise machine that she has ever tried. Even if she
is reading from a script, this statement would be an endorsement,
because consumers are likely to believe it reflects the entertainer's
views.
Example 7: A television advertisement for a housewares store
features a well-known female comedian and a well-known male baseball
player engaging in light-hearted banter about products each one intends
to purchase for the other. The comedian says that she will buy him a
Brand X, portable, high-definition television so he can finally see the
strike zone. He says that he will get her a Brand Y juicer so she can
make juice with all the fruit and vegetables thrown at her during her
performances. The comedian and baseball player are not likely to be
deemed endorsers because consumers will likely realize that the
individuals are not expressing their own views.
Example 8: 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. She writes in her personal blog that the
change in diet has made her dog's fur noticeably softer and shinier,
and that in her opinion, the new food definitely is worth the extra
money. This posting would not be deemed an endorsement under the
Guides.
[[Page 53139]]
Assume that rather than purchase the dog food with her own money,
the consumer gets it for free because the store routinely tracks her
purchases and its computer has generated a coupon for a free trial bag
of this new brand. Again, her posting would not be deemed an
endorsement under the Guides.
Assume now that the consumer joins a network marketing program
under which she periodically receives various products about which she
can write reviews if she wants to do so. If she receives a free bag of
the new dog food through this program, her positive review would be
considered an endorsement under the Guides.
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. Sec. 255.2(a)
and (b) regarding substantiation of representations conveyed by
consumer endorsements.
(b) The endorsement message need not be phrased in the exact words
of the endorser, unless the advertisement affirmatively so represents.
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 on 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 false or
unsubstantiated statements made through endorsements, or for failing to
disclose material connections between themselves and their endorsers
[see Sec. 255.5]. Endorsers also may be liable for statements made in
the course of their endorsements.
Example 1: A building contractor states in an advertisement that he
uses the advertiser's exterior house paint because of its remarkable
quick drying properties and durability. This endorsement must comply
with the pertinent requirements of Section 255.3 (Expert Endorsements).
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 specify the paint and to subscribe to the views presented
previously.
Example 2: A television advertisement portrays a woman seated at a
desk on which rest five unmarked computer keyboards. An announcer says,
``We asked X, an administrative assistant for over ten years, to try
these five unmarked keyboards and tell us which one she liked
best.''The advertisement portrays X typing on each keyboard and then
picking the advertiser's brand. The announcer asks her why, and X gives
her reasons. This endorsement would probably not represent that X
actually uses the advertiser's keyboard at work. In addition, the
endorsement also may be required to meet the standards of Section 255.3
(expert endorsements).
Example 3: An ad for an acne treatment features a dermatologist who
claims that the product is ``clinically proven'' to work. Before giving
the endorsement, she 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. The dermatologist is subject to liability for
the false statements she made in the advertisement. The advertiser is
also liable for misrepresentations made through the endorsement. [See
Section 255.3 regarding the product evaluation that an expert endorser
must conduct.]
Example 4: A well-known celebrity appears in an infomercial for an
oven roasting bag that purportedly cooks every chicken perfectly in
thirty minutes. During the shooting of the infomercial, the celebrity
watches five attempts to cook chickens using the bag. In each attempt,
the chicken is undercooked after thirty minutes and requires sixty
minutes of cooking time. In the commercial, the celebrity places an
uncooked chicken in the oven roasting bag and places the bag in one
oven. He then takes a chicken roasting bag from a second oven, removes
from the bag what appears to be a perfectly cooked chicken, tastes the
chicken, and says that if you want perfect chicken every time, in just
thirty minutes, this is the product you need. A significant percentage
of consumers are likely to believe the celebrity's statements represent
his own views even though he is reading from a script. The celebrity is
subject to liability for his statement about the product. The
advertiser is also liable for misrepresentations made through the
endorsement.
Example 5: A skin care products advertiser participates in a blog
advertising service. The service matches up advertisers with bloggers
who will promote the advertiser's products on their personal blogs. The
advertiser requests that a blogger try a new body lotion and write a
review of the product on her blog. Although the advertiser does not
make any specific claims about the lotion's ability to cure skin
conditions and the blogger does not ask the advertiser whether there is
substantiation for the claim, in her review the blogger writes that the
lotion cures eczema and recommends the product to her blog readers who
suffer from this condition. The advertiser is subject to liability for
misleading or unsubstantiated representations made through the
blogger's endorsement. The blogger also is subject to liability for
misleading or unsubstantiated representations made in the course of her
endorsement. The blogger is also liable if she fails to disclose
clearly and conspicuously that she is being paid for her services. [See
Sec. 255.5.]
In order to limit its potential liability, the advertiser should
ensure that the advertising service provides guidance and training to
its bloggers concerning the need to ensure that statements they make
are truthful and substantiated. The advertiser should also monitor
bloggers who are being paid to promote its products and take steps
necessary to halt the continued publication of deceptive
representations when they are discovered.
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 such claims made through endorsements in the same
manner the advertiser would be required to do if it
[[Page 53140]]
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 also 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.\105\
---------------------------------------------------------------------------
\105\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.
Nonetheless, the Commission cannot rule out the possibility that
a strong disclaimer of typicality could be effective in the context
of a particular advertisement. 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.
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(c) Advertisements presenting endorsements by what are represented,
directly 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.
Example 1: A brochure 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.
The ad 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.
Example 2: 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 company's heat pump can
generally expect. The advertiser does not have substantiation for that
representation because, in fact, less 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. The ad is less likely to be deceptive
if it clearly and conspicuously discloses the generally expected
savings and the advertiser has 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.''
Example 3: An advertisement for a cholesterol-lowering product
features an individual who claims that his serum cholesterol went down
by 120 points and does not mention 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 the advertiser does not have
adequate substantiation that the product can produce the specific
results claimed by the endorser (i.e., a 120-point drop in serum
cholesterol without any lifestyle changes).
Example 4: An advertisement for a weight-loss product features a
formerly obese woman. She 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
woman'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 she achieved her
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 her 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).
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
her experience is representative of what consumers will generally
achieve. Therefore, if consumers cannot generally expect to achieve
such results, the ad should clearly and conspicuously disclose what
they can expect to lose in the depicted circumstances (e.g., ``most
women who use WeightAway for six months lose at least 15 pounds'').
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., ``most women who use WeightAway lose
15 pounds'').
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 actually
[[Page 53141]]
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.
Example 6: An advertisement purports to portray a ``hidden camera''
situation in a crowded cafeteria at breakfast time. A spokesperson for
the advertiser asks a series of actual patrons of the cafeteria for
their spontaneous, honest opinions of the advertiser's recently
introduced breakfast cereal. Even though the words ``hidden camera''
are not displayed on the screen, and even though none of the actual
patrons is specifically identified during the advertisement, the net
impression conveyed to consumers may well be that these are actual
customers, and not actors. If actors have been employed, this fact
should be clearly and conspicuously disclosed.
Example 7: 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.
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, that arrangement should be
clearly and conspicuously disclosed. [See Sec. 255.5.]
Sec. 255.3 Expert endorsements.
(a) Whenever an advertisement represents, directly 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 he or she is represented as
possessing with respect to the endorsement.
(b) Although the expert may, in endorsing a product, take into
account factors not within his or her expertise (e.g., matters of 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 he or she is expert and which are relevant to an
ordinary consumer's use of or experience with the product and are
available to the ordinary consumer. 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, 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 he or she 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(d) regarding the liability of endorsers.]
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 he 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.
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 exercise physiology) or a physician without substantial experience
in the area of hearing can endorse the product, but if the endorser is
referred to as ``doctor,'' the advertisement must make clear the nature
and limits of the endorser's expertise.
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.
Example 4: A manufacturer of a non-prescription drug product
represents that its product has been 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.
Example 5: A woman 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 to the
advertised cleanser, the service must, in fact, have such experience,
and, on the basis of its expertise, it must have determined that the
cleaning ability of the endorsed cleanser is at least equal (or
superior, if such is the net impression conveyed by the advertisement)
to that of leading competitors' products with which the service has had
experience and which remain reasonably available to it. 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
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accumulated experience in evaluating cleansers without having performed
side-by-side or scientific comparisons.
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
what others with the same degree of expertise would consider adequate
to support this conclusion about the product's safety and efficacy.
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 (expert endorsements), 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(d) regarding the liability of
endorsers.]
Example: A mattress seller 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.
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 (i.e., the connection is not reasonably
expected by the audience), such connection must be fully disclosed. For
example, when an endorser who appears in a television commercial is
neither represented in the advertisement as an expert nor is known to a
significant portion of the viewing public, then the advertiser should
clearly and conspicuously disclose either the payment or promise of
compensation prior to and in exchange for the endorsement or the fact
that the endorser knew or had reason to know or to believe that if the
endorsement favored the advertised product some benefit, such as an
appearance on television, would be extended to the endorser. Additional
guidance, including guidance concerning endorsements made through other
media, is provided by the examples below.
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
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 this advertisement.
Example 2: A film star endorses a particular food product. 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.
Example 3: 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 her career and during this time she has
risen to her highest level ever in the rankings. She responds by
attributing the improvement in her game to the fact that she is seeing
the ball better than she used to, ever since having laser vision
correction surgery at a clinic that she identifies by name. She
continues talking about the ease of the procedure, the kindness of the
clinic's doctors, her speedy recovery, and how she can now engage in a
variety of activities without glasses, including driving at night. The
athlete does not disclose that, even though she does not appear in
commercials for the clinic, she has a contractual relationship with it,
and her contract pays her for speaking publicly about her surgery when
she can do so. 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 that the athlete has been engaged as a
spokesperson for the clinic, this endorsement is likely to be
deceptive. Furthermore, if consumers are likely to take away from her
story that her experience was typical of those who undergo the same
procedure at the clinic, the advertiser must have substantiation for
that claim.
Assume that instead of speaking about the clinic in a television
interview, the tennis player touts the results of her surgery -
mentioning the clinic by name - on a social networking site that allows
her fans to read in real time what is happening in her life. Given the
nature of the medium in which her endorsement is disseminated,
consumers might not realize that she is a paid endorser. Because that
information might affect the weight consumers give to her endorsement,
her relationship with the clinic should be disclosed.
Assume that during that same television interview, the tennis
player is wearing clothes bearing the insignia of an athletic wear
company with whom she also has an endorsement contract. Although this
contract requires that she wear the company's clothes not only on the
court but also in public appearances, when possible, she does not
mention them or the company during her appearance on the show. No
disclosure is required because no representation is being made about
the clothes in this context.
Example 4: An ad for an anti-snoring product features a physician
who says that he has seen dozens of products come on the market over
the years and, in his opinion, this is the best ever. Consumers would
expect the physician to be reasonably compensated for his appearance in
the ad. Consumers are unlikely, however, to expect that the physician
receives a percentage of gross product sales or that he owns part of
the company, and either of these facts
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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.
Example 5: An actual patron of a restaurant, who is neither known
to the public nor presented as an expert, is shown seated at the
counter. He is asked for his ``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 TV promotion of its new soy protein ``steak.'' This
notification would materially affect the weight or credibility of the
patron's endorsement, and, therefore, viewers of the advertisement
should be clearly and conspicuously informed of the circumstances under
which the endorsement was obtained.
Assume, in the alternative, that the advertiser had not posted a
sign on the door of the restaurant, but had informed all interviewed
customers of the ``hidden camera'' only after interviews were completed
and the customers had no reason to know or believe that their response
was being recorded for use in an advertisement. Even if patrons were
also told that they would be paid for allowing the use of their
opinions in advertising, these facts need not be disclosed.
Example 6: An infomercial producer wants to include consumer
endorsements for an automotive additive product featured in her
commercial, but because the product has not yet been sold, there are no
consumer users. The producer's staff reviews the profiles of
individuals interested in working as ``extras'' in commercials and
identifies several who are interested in automobiles. The extras are
asked to use the product for several weeks and then report back to the
producer. They are told that if they are selected to endorse the
product in the producer's infomercial, they will receive a small
payment. Viewers would not expect that these ``consumer endorsers'' are
actors who were asked to use the product so that they could appear in
the commercial or that they were compensated. Because the advertisement
fails to disclose these facts, it is deceptive.
Example 7: A college student who has earned a reputation as a video
game expert maintains a personal weblog or ``blog'' where he posts
entries about his gaming experiences. Readers of his blog frequently
seek his opinions about video game hardware and software. As it has
done in the past, the manufacturer of a newly released video game
system sends the student a free copy of the system and asks him to
write about it on his blog. He tests the new gaming system and writes a
favorable review. Because his review is disseminated via a form of
consumer-generated media in which his relationship to the advertiser is
not inherently obvious, readers are unlikely to know that he has
received the video game system free of charge in exchange for his
review of the product, and given the value of the video game system,
this fact likely would materially affect the credibility they attach to
his endorsement. Accordingly, the blogger should clearly and
conspicuously disclose that he received the gaming system free of
charge. The manufacturer should advise him at the time it provides the
gaming system that this connection should be disclosed, and it should
have procedures in place to try to monitor his postings for compliance.
Example 8: An online message board designated for discussions of
new music download technology is frequented by MP3 player enthusiasts.
They exchange information about new products, utilities, and the
functionality of numerous playback devices. Unbeknownst to the message
board community, an employee of a leading playback device manufacturer
has been posting messages on the discussion board promoting the
manufacturer's product. Knowledge of this poster's employment likely
would affect the weight or credibility of her endorsement. Therefore,
the poster should clearly and conspicuously disclose her relationship
to the manufacturer to members and readers of the message board.
Example 9: A young man signs up to be part of a ``street team''
program in which points are awarded each time a team member talks to
his or her friends about a particular advertiser's products. Team
members can then exchange their points for prizes, such as concert
tickets or electronics. These incentives would materially affect the
weight or credibility of the team member's endorsements. They should be
clearly and conspicuously disclosed, and the advertiser should take
steps to ensure that these disclosures are being provided.
By direction of the Commission.
Donald S. Clark
Secretary
[FR Doc. E9-24646 Filed 10-14-09: 1:26 pm]
Billing Code: 6750-01-S