FTC Approved Its Final Guide on Endorsements and Testimonials for Products and Services

Written by ProIMer News 20 Comments

Jason Parker's Internet Marketing Show

The U.S. Federal Trade Commission announced on Monday, October 5, 2009 that it has finally approved the last revisions on the guide it will give to advertisers on how to keep endorsements and testimonials in compliance with the FTC Act. The guide will affect Advertisers, Bloggers, and Celebrity endorsers. It will take effect on December 1, 2009.

The FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising which were last updated in 1980 will now also address endorsements by consumers, experts, organizations, and celebrities, including the disclosure of important connections between advertisers and endorsers.

According to the updated guide, ads that feature a positive testimonial from satisfied customers are now required to clearly indicate the typical results that other consumers should expect. In other words the FTC is now making sure that positive testimonials are indeed generally positive and true.

Under the revised guide, advertisers can no longer hide typical results using the old practice of simply including a disclaimer that tells consumers that “results are not typical”. The revised Guide removed this “safe harbor”.

Advertisers are required to feature real testimonials while also indicating the typical results that can be expected by consumers. If 7 out 10 people who used a product or service experienced failure, advertisers can still use the testimonials of the rest that succeeded. However, they must clearly indicate that 7 out of 10 consumers would probably experience negative results.

The revised Guides also elaborated on the principle of “material connections” between advertisers and endorsers, and the disclosure of such “connection” to consumers. Examples were provided to address what constitute an endorsement when it is made by Bloggers or other “word-of-mouth” marketers. The guide implied that when a Blogger is paid or handed a product to make a review, it is considered an endorsement.

So, Bloggers who write endorsements must disclose the direct beneficial relationship they have with the promoter of the product or service.

Endorsements also covers companies who feature research results in their advertisements, they are expected to comply with the revised guide by disclosing the connection between them and the research organization where the findings originated. Featuring the results of a paid research will be classified as endorsement, and will be identified as deceptive if it makes false or misleading claims.

The revised Guides also addresses celebrity endorsers and states that along with the advertisers, celebrity endorsers may be liable for false or unsubstantiated claims made in an endorsement or for failure to disclose material connections between the advertisers and endorsers. Celebrities are expected to disclose material connections with advertisers every time they endorse a product on whatever media, whether talk shows, traditional ads, or any other social media.

However, this should not cause advertisers and endorsers to lose sleep. The press release from FTC said that in any law enforcement action regarding deceptive use of testimonials or endorsements, the Commission would have the burden or proof that the FTC Act was indeed violated.

According to the same press release, the Commission vote approving the issuance of the Federal Register notice indicating the changes was 4-0. The notice will be published in the Federal Register and is available on the FTC’s Website. Copies can also be obtained from FTC’s Consumer Response Center in Pennsylvania Avenue, Washington, DC.

What is your opinion about the revised FTC guide? Do you think it will affect your sales? Put your opinions here.

UPDATE: Top internet Attorney Mike Young may have a solution for internet marketers with the new changes. This isn’t legal advice. However, I picked up a copy of the updated legal forms and information the a couple days ago and plan on using them on my sites.

More at:

http://www.ftc.gov/opa/2009/10/endortest.shtm

Share and Enjoy:

Jason Parker

- 7th Oct, 09 04:10pm

Here’s a link to their new 81 page document.

Meirav

I wonder how they will reinforce these new regulations. With all the insane amounts of review sites, it will be very difficult to reinforce, unless the customers make claims.

I think sites like ezinearticles.com and squidoo may go on a rampage and delete all the reviews they can find.

Alan Tutt

- 7th Oct, 09 05:10pm

Does this mean that all Fortune 500 companies are all required to reveal the connections they have with all their subsidiaries and affiliates? How large of a document will Walmart have to give every customer that shops their stores?

The other major question is what about businesses which have customers who don’t share their results? How can we report on what is average if we don’t know ourselves?

I understand what they are trying to do, and it’s a laudable goal. However, we already have laws in place that make it a crime to misrepresent a product or service. All they really need to do is add a few provisions to make those breaking such laws responsible for all legal fees involved in bringing the case to fruition.

Scott

I suppose it could make things a bit more difficult for a while. But speaking strictly as a consumer, it sounds like a good thing. Truth in advertising is something we can all use more of. I only hope they will hold the politicians to the same standards (but I won’t hold my breath).

@Alan-Interesting though about the Fortune 500 Companies.

…As for me, I’m probably just going to stay completely away from using testimonials and endorsements and doing any reviews. And I’ll also disclose at the bottom of every webpage (as I have already) that I will receive a commission for any product promoted on my websites because I believe you must disclose your relationship.

NOTE: This isn’t legal advice at all. I’m a 25-year-old college dropout. This is just what I’m looking at doing so far.

I’m not worried about not complying with the FTC because I make every effort to, but I just don’t want to be hassled with an investigation.

Some marketers are saying that you will be able to use testimonials and endorsements that aren’t specific with results. Which may have some use, but it’s funny because result-specific testimonials are what we’re trained to use in advertising. If you decide to use result-specific ones, it seems you’ll need data about your average customers to know exactly what results they’ve gotten so you can disclose it. If you don’t have that data, it seems like you can get nailed.

…I don’t know… I think this issue will be discussed a lot in the next couple months and the entire IM community will know what they need to do to be compliant by Dec 1st.

@Scott-I agree. It’s good in a way. But then again, I don’t know who is going to be able to live up to the demand because how is any merchant supposed to find out the results of their average client without investing lots of money in market research to make them fill out some kind of survey? I know I’ll at least won’t take my time to fill out any surveys offered after I purchase anything.

Paul

- 7th Oct, 09 06:10pm

I’m glad I live in the UK. Don’t have this FTC here, but I guess, as America’s got new rules, they’ll eventually come across here anyway. It’s a big American thing to use testimonials and massively long sales pages; over here my pages are short, no testimonials – ever – so I guess I comply anyway. British pages are always short – and the Data Protection Act over here means we shouldn’t reveal customers names or locations anyway!

Jim

- 7th Oct, 09 07:10pm

More ethics in internet marketing is really good for our business. After spending hundreds of hours reading and researching on the net, the BS scams become obvious. I am in this business to make money and to try to help a few folks at the same time. There is enough business for us all.

The free things that are not free. The JV partners endorsments for each others products. Some of the traffic methods are less than ethical.
More regulations will leave more money for the honest marketers to share.

@Jim-Do you think joint ventures are unethical?

Yousef SOLIMAN

- 7th Oct, 09 08:10pm

Seeing as most of my trade is based within the U.K. market and I’m a U.K. citizen I should pretty much be exempt from the FTC, not that my trade is in breach of future or current FTC rulings.

I’d like to just watch the amount of CLICKBANK sales plummet .

Ethan

Interesting. Does this include television?

Dale

- 8th Oct, 09 01:10am

This will affect all on line if they are Affiliates, have affiliate web site pages or use eBooks with the authors name on them as you are recommending them. If you have found them useful you may say so but do not go & say someone else has said so.

I do not agree with all the endorsements that they put on web pages anyway, it takes up to much time in downloading the pages and uses so much band width. (Money)

If you are selling something you should only be selling things you use or know a lot about as the people are trusting you to sell them the item of worth; don’t you agree?

Down load the complete paper and read it for yourself and then you can be sure of the rules and you will be safe.

@Dale- “If you are selling something you should only be selling things you use or know a lot about as the people are trusting you to sell them the item of worth; don’t you agree?”

Absolutely…

I also think it’s ethical and fair game to promo someone’s products in general who has had an impact on your business or your life, depending on the niche.

I don’t know about all other people, but I enjoy feeling good about the value I’m adding to the marketplace even if it’s by recommending someone else’s product.

Robert

- 8th Oct, 09 05:10am

I welcome this new legislation and believe that honest Internet marketers have nothing to fear from it. For far too long now the scammers have been allowed to get away with putting bogus testimonials from their friends on their websites. The result is that a false impression was given about the product with the sole intention of parting the less savvy from their money in return for a dud product. Some of the tarnish has rubbed off onto honest Internet marketers like us.

For a long time now I have included a statement on the “about me” page of my websites telling visitors that I may be paid a commission if they purchase a product by following any of the links on the site. This has not stoped me making affiliate commissions.

Being open about this will give visitors to our websites confidence in us. Buyers do not object to us being paid a commission for our honest pre-selling efforts. They object to being scammed, and so do I.

Guy

- 8th Oct, 09 04:10pm

Regarding niche affiliate review sites, does anybody know if a statement of “me getting a commission when you buy” is required on every page, only pages that promote stuff, or once in the “about/privacy/TOS” page (providing that every page has a footer link to about/TOS)?

@Jason – you said you disclose on every page – did you mean a footer link to TOS, or having on page a paragraph explaining your relationship with the merchant?

Anybody else cares to reveal exactly what they do/intend to do?

Thanks

Doug Kercher

- 14th Oct, 09 02:10pm

I hope this is retrospective so I can get my money back from internet marketing scammers.

Tammy

- 14th Oct, 09 03:10pm

I’m wondering how a general testimonial will be affected, one that cannot be proved or evaluated by numbers; i.e. your article really helped me with xyz, or your book was superb, etc.

I’m also wondering how this will affect past testimonials; in other words, the ones that I’ve given BEFORE this FTC regulation. I don’t keep track of them, and even though all of them have been honest, some might have included a concept now ruled against by the FTC… I have given many and don’t keep track of them… do you think people in my situation will be in trouble, or will the FTC consider old testimonials as a done deal and start from scratch with theri regulation from Dec 1st on?

Lot’s of questions… hope somebody can answer them clearly, as most of us want to steer clear out of trouble.

- 14th Oct, 09 06:10pm

I have no idea Tammy. I don’t think anyone on this blog can legally give legal advice. I think that’s what makes this whole deal tough to talk about in the IM community… No one really seems to know exactly what to do except for internet attorneys like Mike Young.

Peter Davies

- 10th Nov, 09 08:11pm

What I dont get is how this will be enforced across borders. In the UK you have the Data Protection Act but I guess if you ask the permission of the people giving testimonials who provide links email addresses so they can be tracked you are covered.