Endorsement guides 082810


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Endorsement guides 082810

  1. 1. International Food Blogger Conference August 27-29, 2010 Seattle, Washington Current Issues with the FTC’s Endorsement Guides Presented by Bob Schroeder Director, Northwest Regional Office Federal Trade Commission
  2. 2. <ul><li>Section 5 of the FTC Act broadly prohibits “unfair or deceptive acts or practices in commerce” </li></ul><ul><li>The Endorsement Guides explain how Section 5 applies when endorsements and testimonials are used in advertising, to make it easier for advertisers to comply with Section 5 </li></ul><ul><ul><li>The Guides aren’t law, and they don’t change the law or anyone’s responsibilities under the law </li></ul></ul><ul><ul><li>There are no fines for violating the Guides </li></ul></ul><ul><ul><li>If FTC challenges practices inconsistent with the Guides, the FTC still has to prove a violation of Section 5 </li></ul></ul>Endorsement Guides
  3. 3. What Is an Endorsement? <ul><li>An advertising message that consumers perceive to represent the personal views of a speaker other than the sponsoring advertiser </li></ul><ul><ul><li>If there’s not a sponsoring advertiser, there’s no endorsement under the Guides </li></ul></ul>
  4. 4. The Revised Guides: Principal Changes <ul><li>Requiring disclosure when advertiser has paid for study touted in ad </li></ul><ul><li>Deletion of “results not typical” safe harbor </li></ul><ul><li>Addition of examples of disclosing material connections in social media marketing </li></ul>
  5. 5. Material Connections Between Advertisers & Endorsers <ul><li>When an advertiser and an endorser have a relationship that the audience wouldn’t reasonably expect (a “material connection”), relationship should be disclosed </li></ul><ul><li>Examples of such connections include: </li></ul><ul><ul><li>Seller is compensating endorser </li></ul></ul><ul><ul><li>Endorser is employee or business associate of seller </li></ul></ul><ul><ul><li>Endorser is related to seller </li></ul></ul>
  6. 6. Financial Ties -- Context Matters <ul><li>Financial tie between seller and endorser should be disclosed, unless the tie is clear from the context </li></ul><ul><li>If audience reading product review article or visiting product review website/blog understands that the reviewer didn’t buy the products he’s reviewing, disclosure isn’t needed to avoid deception </li></ul>
  7. 7. Celebrity Endorsers <ul><li>In conventional ads, it’s not necessary for an ad to disclose that a celebrity is being paid, because in that context payment would be understood </li></ul><ul><li>Outside of conventional ads (on talk shows, social networking sites): the relationship with the advertiser should be disclosed when a celebrity talks up a product because payment isn’t obvious in that context </li></ul>
  8. 8. How Should Material Connections Be Effectively Disclosed? <ul><li>Disclosure should be part of the message so it can’t be missed. E.g.: </li></ul><ul><ul><li>Acme Co. provided this product </li></ul></ul><ul><ul><li>XYZ Co. sent me to Adventureland to experience its theme park </li></ul></ul><ul><ul><li>On Twitter: #paid, #ad </li></ul></ul><ul><li>Word of Mouth Marketing Ass’n: Social Media Marketing Disclosure Guide </li></ul>
  9. 9. When Is Marketer Liable for Endorser’s Statement? <ul><li>If endorser makes false or unsubstantiated claims for product, advertiser is potentially liable. To limit potential liability: </li></ul><ul><ul><li>Advertiser should ensure its endorsers receive guidance/training re need to ensure statements are truthful/substantiated </li></ul></ul><ul><ul><li>Advertiser should monitor sponsored bloggers/brand ambassadors and take steps to halt continued publication of deceptive claims when discovered </li></ul></ul>
  10. 10. FTC Enforcement <ul><li>FTC has several endorsement-related investigations underway (non-public) </li></ul><ul><li>Investigations are focusing on marketers </li></ul><ul><li>Issues include: </li></ul><ul><ul><li>positive reviews posted on message boards, review sites by employees or affiliates w/o disclosure of relationship </li></ul></ul><ul><ul><li>positive reviews by compensated bloggers w/o disclosure of compensation </li></ul></ul>
  11. 11. Points to Remember <ul><li>Consumers need to know when they’re being pitched a product – advertising should be identifiable as advertising </li></ul><ul><li>Disclose unexpected material connections </li></ul><ul><li>Policy and training will be essential – and make sure message reaches agencies/p.r. firms used </li></ul><ul><li>Both advertisers and consumer endorsers being sponsored by the advertiser are potentially liable, but: </li></ul><ul><li>FTC enforcement will focus on advertisers and will look to see if reasonable policies are in place </li></ul>
  12. 12. Federal Trade Commission <ul><li>For more information, visit www.ftc.gov </li></ul><ul><li>Send questions to [email_address] </li></ul>