On June 29, 2023, the Federal Trade Commission (“FTC”) published the final version of its revised “Guides Concerning the Use of Endorsements and Testimonials in Advertising”[1], hereinafter (“Guides”). For the purposes of the Guides, it is important to note that endorsements and testimonials are treated identically.[2]
The revised Guides contain a number of significant changes to the prior version of the Guides, including several additional real-world examples that serve to illustrate the application of the Guides’ general principles.
Importantly, the Guides now explicitly state that for online disclosures to be effective, they must be “unavoidable.”[3] As further explained in the Guides, if the endorsement is visible without having to click on the link labeled “more,” it will be deemed “unavoidable.”[4] However, if the disclosure is not visible without the viewer taking an additional step, i.e., clicking on the link, then the disclosure will not be considered “unavoidable,” and thus will not be found to be “clear and conspicuous.”[5]
The Guides also clarify the scope of liability as it pertains to deceptive endorsements. The Guides state that endorsers may be liable for statements made in the course of their endorsements, including when an endorser makes a representation that the endorser knows or should know is deceptive, such as when an endorser falsely communicates that they personally used a product.[6] The Guides clarify the definition of “endorser” to expressly include tags and certain other types of communications “can be” endorsements, such as fake positive reviews used to promote a product.[7] Also, an endorser who is not an expert can be liable for misleading or unsubstantiated representations regarding a product’s performance or effectiveness and may also be liable for failing to disclose unexpected material connections between themselves and an advertiser.[8] To qualify as material, the connection must affect the weight or credibility given by the audience to the endorsement and a “material connection needs to be disclosed when a significant minority of the audience for an endorsement does not understand or expect the connection.”[9]
The FTC changed the subsection addressing the potential liability of advertisers as well. The prior language read “advertisers are subject to liability for misleading or unsubstantiated statements made through endorsements when there is a connection between the advertiser and the endorser”.[10] The revised Guides remove “when there is a connection between the advertiser and the endorser” from the definition because, as defined, an endorsement must be an advertising, marketing, or promotional message.[11] The Guides also clarify that an advertiser’s liability may extend to “deceptive endorsements” and not merely whether an endorser’s statement is true.[12]
Moreover, the use of an endorsement with the image or likeness of a person other than the actual endorser is deemed deceptive if it misrepresents a material attribute of the endorser.[13] The revised Guides also state that an advertiser must possess and rely upon adequate substantiation, including, when appropriate, competent and reliable scientific evidence, to support claims made through endorsements in the same manner the advertiser would be required to do if it had made the representation directly, applies to both express and implied claims.[14]
The Guides also address how consumer reviews should be handled. More specifically, the Guides address how consumer reviews are procured, suppressed, boosted, organized, edited, upvoted, downvoted, reported, and published.[15] The revised Guides prohibit companies from treating reviews in any manner that distorts or misrepresents consumers’ opinions.[16] Examples include deleting or suppressing negative reviews, offering incentives in exchange for positive reviews, and falsely reporting negative consumer reviews as “fake”. Companies may edit unlawful, harassing, abusive, obscene, vulgar, or sexually explicit content from consumer reviews, but such editing criteria must be applied uniformly to both negative and positive reviews.[17] In the event a company does incentivize consumers to provide ratings and then includes those incentivized ratings in the average ratings, such conduct may be found to be deceptive if the incentivized ratings materially increase the average rating.[18] Additionally, companies that utilize incentivized ratings will likely be required to provide clear and conspicuous disclosures.[19]
The previous version of the Guides stated that, if an advertiser does not possess substantiation that an endorser’s experience represents what consumers will generally achieve, the advertisement should clearly and conspicuously disclose the generally expected performance in the depicted circumstances. The revised Guides have added two additional sentences to the prior version. First, the disclosure of the generally expected performance should be presented in a manner that does not, itself, misrepresent what consumers can expect.[20] Second, “to be effective, such disclosure must alter the net impression of an advertisement so it is not misleading.”[21]
The revised Guides have added a new subsection focused upon endorsements directed to children.[22] This new subsection states that endorsements in advertisements directed to children may be of special concern because of the character of the audience; practices that would not ordinarily be questioned in ads directed to adults might be questioned when directed to children.[23]
Overall, the many revisions to the Guides will undoubtedly impact the manner in which endorsements, consumer reviews, advertising, and disclosures are handled moving forward. Those who may be affected by these changes should review their current practices to ensure they are in line with the new changes.
It is important to note that a violation of the Guides does not necessarily constitute a violation of the law. However, “[p]ractices 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 under the statute.”[24]
Wiggin and Dana possesses extensive knowledge and experience in navigating both federal and state consumer protection laws and regulations, including the many Guides and Trade Regulation Rules adopted by the Federal Trade Commission.
[1] 16 CFR § 255.0(b); see https://www.ftc.gov/news-events/news/press-releases/2023/06/federal-trade-commission-announces-updated-advertising-guides-combat-deceptive-reviews-endorsements.
[2] 16 CFR § 255.0(c).
[3] 16 CFR § 255.0(g)(9)(ii).
[4] Id.
[5] Id.
[6] 16 CFR § 255.1(e).
[7] 16 CFR § 255.0(g)(12).
[8] 16 CFR § 255.0(e).
[9] 16 CFR § 255.5(a).
[10] 16 CFR § 255.1(d).
[11] Id.
[12] Id.
[13] 16 CFR § 255.1(g).
[14] 16 CFR § 255.2(a).
[15] 16 CFR § 255.2(d).
[16] Id.
[17] 16 CFR § 255.2(e)(8)(ii).
[18] 16 CFR § 255.5(b)(6)(ii).
[19] Id.
[20] 16 CFR § 255.2(b).
[21] Id.
[22] 16 CFR § 255.6.
[23] Id.
[24] 16 CFR § 255.0(a)