[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR255.5]

[Page 177-178]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 255_GUIDES CONCERNING USE OF ENDORSEMENTS AND TESTIMONIALS IN 
ADVERTISING--Table of Contents
 
Sec. 255.5  Disclosure of material connections.

    When there exists a connection between the endorser and the seller 
of the advertised product which 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. An 
example of a connection that is ordinarily expected by viewers and need 
not be disclosed is the payment or promise of payment to an endorser who 
is an expert or well known personality, as long as the advertiser does 
not represent that the endorsement was given without compensation. 
However, when the endorser 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

[[Page 178]]

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 reasons to know or to believe that if the 
endorsement favors the advertised product some benefit, such as an 
appearance on TV, would be extended to the endorser.

    Example 1: A drug company commissions research on its product by a 
well-known research organization. The drug company pays a substantial 
share of the expenses of the research project, but the test design is 
under the control of the research organization. A subsequent 
advertisement by the drug company mentions the research results as the 
``findings'' of the well-known research organization. The advertiser's 
payment of expenses to the research organization need not be disclosed 
in this advertisement. Application of the standards set by Guides 3 and 
4 provides sufficient assurance that the advertiser's payment will not 
affect the weight or credibility of the endorsement.
    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 even though the 
compensation paid the endorser is substantial, neither the fact nor the 
amount of compensation need be revealed.
    Example 3: 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.


[Guide 5]

[45 FR 3873, Jan. 18, 1980]