Earlier this month, the Federal Trade Commission issued revisions to its “Guides Concerning the Use of Endorsements and Testimonials in Advertising,” which will take effect Dec. 1. The new guidelines address such issues as blogger compensation and the “Results Not Typical” safe harbor previously afforded advertisers.
Notably, the new guidelines allow for fines up to $11,000 per violation for bloggers failing to disclose material connections to companies they cover. The guidelines are so strict that merely providing a product for review is considered a form of payment under the new regulations.
While the guidelines have not even taken effect yet, they are already starting to have an impact on the blogging, marketing and advertising communities. To learn more about the guidelines and what they mean for marketers, eM+C spoke with Julie O’Neill, an attorney at the Washington, D.C. office of the law firm Morrison & Foerster and a former staff attorney for the FTC. The following are highlights from the discussion:
Perhaps the most significant apparent change for the blogosphere is that the FTC has explicitly stated that — like endorsers in other media — bloggers and other individuals who receive consideration in exchange for providing an endorsement must disclose the connection they have with the advertiser, such as a receipt of payment or a free product, for example.
Moreover, both bloggers and advertisers are liable if bloggers fail to make these disclosures. The revised guides also explain that bloggers who have a material connection to certain advertisers can’t make product claims that the advertisers couldn’t make directly themselves. Again, this reflects long-standing advertising law that says advertisers can’t use endorsers to say something they could not say directly. But, the new guides have ramifications for what bloggers say and how advertisers monitor them. Both bloggers and advertisers could be on the hook for bloggers’ false, misleading or unsubstantiated claims.
JO: I think that we’ll see some advertisers shy away from using consumer endorsements to avoid potential risks associated with bloggers they don’t think they can adequately control. Bloggers may also hesitate to provide endorsements, fearing the potential liability. However, I think that many advertisers will realize that they can continue to effectively use endorsements — even in new media — as long as they have appropriate controls in place.
JO: Advertisers should have a written agreement — or an email exchange if a full agreement isn’t feasible — that requires endorsers to clearly disclose any material connection between themselves and the advertisers. The agreement should also specify where the endorsers will post their reviews so that advertisers can monitor them. If advertisers find that endorsers do not disclose their connections and/or made claims that advertisers can’t back up, then the agreement should give advertisers the ability to require endorsers to make changes — including pulling the endorsements, if necessary. Advertisers can also ask endorsers to limit their endorsements to purely subjective statements that don’t require substantiation, such as general comments about the great price, color, flavor and so forth.