The document summarizes key points from a presentation by the Federal Trade Commission (FTC) on endorsement guidelines. It outlines what constitutes an endorsement and when relationships between advertisers and endorsers must be disclosed, such as when the endorser is paid or employed by the advertiser. It also discusses FTC enforcement of these guidelines and liability for misleading endorsements.

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. Section 5 of the FTC Act broadly prohibits “unfair or deceptive acts or practices in commerce” 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 The Guides aren’t law, and they don’t change the law or anyone’s responsibilities under the law There are no fines for violating the Guides If FTC challenges practices inconsistent with the Guides, the FTC still has to prove a violation of Section 5 Endorsement Guides

3. What Is an Endorsement? An advertising message that consumers perceive to represent the personal views of a speaker other than the sponsoring advertiser If there’s not a sponsoring advertiser, there’s no endorsement under the Guides

4. The Revised Guides: Principal Changes Requiring disclosure when advertiser has paid for study touted in ad Deletion of “results not typical” safe harbor Addition of examples of disclosing material connections in social media marketing

5. Material Connections Between Advertisers & Endorsers When an advertiser and an endorser have a relationship that the audience wouldn’t reasonably expect (a “material connection”), relationship should be disclosed Examples of such connections include: Seller is compensating endorser Endorser is employee or business associate of seller Endorser is related to seller

6. Financial Ties -- Context Matters Financial tie between seller and endorser should be disclosed, unless the tie is clear from the context 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

7. Celebrity Endorsers 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 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

8. How Should Material Connections Be Effectively Disclosed? Disclosure should be part of the message so it can’t be missed. E.g.: Acme Co. provided this product XYZ Co. sent me to Adventureland to experience its theme park On Twitter: #paid, #ad Word of Mouth Marketing Ass’n: Social Media Marketing Disclosure Guide

9. When Is Marketer Liable for Endorser’s Statement? If endorser makes false or unsubstantiated claims for product, advertiser is potentially liable. To limit potential liability: Advertiser should ensure its endorsers receive guidance/training re need to ensure statements are truthful/substantiated Advertiser should monitor sponsored bloggers/brand ambassadors and take steps to halt continued publication of deceptive claims when discovered

10. FTC Enforcement FTC has several endorsement-related investigations underway (non-public) Investigations are focusing on marketers Issues include: positive reviews posted on message boards, review sites by employees or affiliates w/o disclosure of relationship positive reviews by compensated bloggers w/o disclosure of compensation

11. Points to Remember Consumers need to know when they’re being pitched a product – advertising should be identifiable as advertising Disclose unexpected material connections Policy and training will be essential – and make sure message reaches agencies/p.r. firms used Both advertisers and consumer endorsers being sponsored by the advertiser are potentially liable, but: FTC enforcement will focus on advertisers and will look to see if reasonable policies are in place

12. Federal Trade Commission For more information, visit www.ftc.gov Send questions to [email_address]