This week the FTC introduced that it finalized its revisions to the Endorsement Guides, which give advertisers steerage on guaranteeing that their use of endorsements or testimonials complies with the FTC Act. At the identical time, the FTC additionally introduced an up to date accompanying steerage doc, “FTC’s Endorsement Guides: What People are Asking.” While the revised Endorsement Guides nonetheless require advertisers to adjust to the necessities we beforehand mentioned in our On Notice sequence, they characteristic a number of key additions addressing technological adjustments in how promoting is carried out, and advertisers’ elevated reliance on on-line evaluations, social media, and influencer endorsements.
Some key updates to the Endorsement Guides are described under.
Increased Focus on Online Consumer Reviews
The up to date Endorsement Guides specify that advertisers ought to chorus from “procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, or modifying” shopper evaluations of their merchandise in a manner that distorts or in any other case misrepresents their merchandise. They additionally embrace new steerage on using incentivized shopper rankings or evaluations. Specifically, the up to date Endorsement Guides state that even when an incentivized assessment is accompanied by a sufficiently clear and conspicuous disclosure, “the observe may nonetheless be misleading if the solicited evaluations comprise star rankings which are included in a mean star ranking for the product and together with the incentivized evaluations materially will increase that common star ranking.” In such circumstances, the common star ranking would additionally want to embrace a transparent and conspicuous disclosure.
These additions replicate the FTC’s elevated focus on combating misleading on-line evaluations – a spotlight it has made clear in recent times by guides for companies publishing on-line evaluations (Guide for Marketers, Guide for Platforms) and actions towards advertisers alleging they posted false optimistic evaluations or suppressed unfavorable evaluations. For instance, earlier this month, the FTC reached a $4.2M settlement with Fashion Nova, an internet trend retailer, in a case alleging that Fashion Nova suppressed unfavorable evaluations from its web site.
Based on the FTC’s previous steerage, when soliciting and paying for on-line evaluations, corporations ought to keep away from:
(1) asking “for evaluations from individuals who haven’t used or skilled the product or providers”;
(2) asking “your employees to write evaluations for your corporation”;
(3) asking household and pals for evaluations; and
(4) conditioning any incentive to submit a assessment on the assessment being optimistic.
Further, advertisers mustn’t impose further boundaries to evaluations or discourage shoppers from submitting a unfavorable assessment as a substitute of a optimistic one. For instance, if an advertiser doesn’t require a shopper posting a optimistic assessment to embrace their date of buy, the advertiser mustn’t require a shopper posting a unfavorable assessment to embrace their date of buy both.
Expanded Definitions of “Endorser” and “Endorsement”
The revised Endorsement Guides replace the definition of “endorser” to embrace digital influencers, similar to avatars or digital characters, and replace the definition of “endorsement” to embrace faux evaluations, statements by digital influencers, and tags in social media.
These expanded definitions replicate the quickly altering technological panorama during which promoting is going down. The FTC’s inclusion of digital influencers, specifically, will possible grow to be more and more necessary as manufacturers proceed to discover using AI in advertising. While digital influencers are usually not all that frequent but, many consider this pattern could also be the way forward for social media promoting. One significantly well-known digital influencer, Lil Miquela (a model ambassador for teen retailer PacSun) at present has nearly 3 million followers on Instagram, and was named considered one of Time Magazine’s “25 Most Influential People on the Internet.”
New Definition for “Clear and Conspicuous”
As in previous variations of the Endorsement Guides, the up to date Guides additionally require that materials connections be “clearly and conspicuously” disclosed. But not like in previous variations, the up to date Guides embrace a definition for what does (and doesn’t) represent a “clear and conspicuous” disclosure. Specifically, the up to date Guides make clear that for a disclosure to be “clear and conspicuous” it should be “tough to miss (i.e., simply noticeable) and simply comprehensible by atypical shoppers.” On social media or the web, the disclosure should be “unavoidable.” The FTC additional explains that the disclosure should match the format of the accompanying endorsement. If the endorsement is made visually, the accompanying disclosure should even be made visually; if the endorsement is made audibly, the disclosure should be made audibly. And if the endorsement is made each audibly and visually, the disclosure should be made within the advert’s visible and audio parts.
The new Endorsement Guides additionally instruct that for a visible disclosure to be “clear and conspicuous,” it should stand out from accompanying textual content or different visible parts “by its dimension, distinction, location, the size of time it seems, and different traits,” in order that it’s “simply seen, learn, and understood.” For an audio disclosure to be “clear and conspicuous,” it should be “delivered in a quantity, velocity, and cadence adequate for atypical shoppers to simply hear and perceive it.”
The new Endorsement Guides additional make clear that advertisers might not merely rely on a social media platform’s constructed-in disclosure device, if the disclosure offered by that device isn’t “clear and conspicuous.”
All these necessities are in line with the FTC’s previous steerage on using endorsements on social media. For additional dialogue of what constitutes a “clear and conspicuous” disclosure below FTC steerage, see our previous submit on this subject.
Liability for Endorsers and Intermediaries
Though the earlier model of the Endorsement Guides made it clear that advertisers may very well be accountable for misleading promoting by their endorsers or influencers, the up to date Guides make clear that the endorsers or influencers, themselves, and intermediaries (like advert companies and PR companies) may be accountable for making misleading endorsements. For occasion, the FTC added an instance during which an influencer who didn’t restrict their statements to their private expertise utilizing a product and didn’t have an affordable foundation for his or her broad declare a few product’s efficacy could be topic to legal responsibility for the deceptive or unsubstantiated illustration within the endorsement.
This addition maybe doesn’t come as a shock, in mild of the FTC’s latest warning letters to particular person influencers accused of constructing misleading endorsements, which said that “[i]ndividual influencers who fail to make sufficient disclosures about their connections to entrepreneurs are topic to authorized enforcement motion by the FTC.” Nonetheless, it’s an necessary reminder that everybody concerned within the creation of an advert (entrepreneurs, companies, and influencers, alike) has a duty to ensure that materials connections have been disclosed, and that the endorsement isn’t in any other case misleading or deceptive.
Special Guidance for Endorsements Directed at Children
The up to date Endorsement Guides comprise a brand new part aimed particularly at endorsements in commercials addressed to kids. The Guides state that such endorsements could also be of “particular concern,” due to the “character of the viewers.” As a outcome, “[p]ractices that may not ordinarily be questioned in commercials addressed to adults is likely to be questioned in such circumstances.”
This addition appears to echo latest considerations concerning the potential results of social media and influencer promoting on kids and youngsters. Marketers whose adverts could also be geared toward kids (or even when not expressly or solely geared toward kids, might enchantment to kids) needs to be significantly cautious with respect to using endorsements, evaluations, and testimonials.
While the modernized Endorsement Guides do embrace many key adjustments, none are all that stunning in mild of the previous FTC steerage, warning letters, and actions now we have mentioned on this weblog. Watch this area for finest practices on utilizing endorsements and testimonials in promoting, and for updates on actions introduced below the brand new Endorsement Guides.