Earlier this year, the Federal Trade Commission (“FTC”) released a set of revisions to its Guides Concerning Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”) which instruct businesses on how to navigate the FTC Act and how to avoid engaging in unfair or deceptive trade practices. These revisions were intended to modernize the Endorsement Guides to address new advertising channels such as social media, online influencers and artificial intelligence and were released alongside an update to the FTC’s Frequently Asked Questions webpage (FTC’s Endorsement Guides: What People Are Asking) and a proposed Rule on the Use of Consumer Reviews and Testimonials.
Of the numerous changes made in the revised Endorsement Guides, the FTC called out six as meriting special attention:
- The introduction of a new principle regarding not procuring, suppressing, organizing, upvoting, downvoting, or editing consumer reviews in ways that likely distort what consumers really think of a product.
- Clarification incentivized reviews, reviews by employees, and fake negative reviews by competitors.
- Adding a definition of “clear and conspicuous” and warning that a platform’s built-in disclosure tool might not be adequate.
- Updating the definition of “endorsements” to clarify that it can include fake reviews, virtual influencers, and social media tags.
- Providing a clearer explanation of the potential liability that advertisers, endorsers, and intermediaries face for violating the law.
- Emphasizing special concerns with child-directed advertising.
What does this mean for you?
If you are displaying customer reviews or exerting any control over third-party hosted reviews, you should make efforts to ensure that your presentation of these reviews accurately captures and that your actions in no way distort the full scope of customer reported experiences. In this vein, you should avoid pruning or suppressing negative reviews, creating fake positive reviews, or artificially inflating online engagement by any means such as view, follow or subscriber purchasing.
To the extent your business utilizes endorsements or paid or incentivized reviews, ensure that the nature of the endorsement or incentive is clearly and conspicuously disclosed. The revised Endorsement Guides define “clear and conspicuous” as difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers.” Similarly, take steps to ensure that your endorsers make all necessary disclosures and otherwise comply with the FTC guides, and, to the extent you have a contractual relationship, require they do so in their agreement.
While this post has touched on what the FTC called out as most important among the revisions to the Endorsement Guides and a few recommended compliance responses, this summary is far from exhaustive. That being the case, we recommend consulting with your marketing team and your attorney to discuss any questions you might have and to ensure compliance with the changing landscape of online marketing. Please contact John Kellam or one of our attorneys at Manning Fulton & Skinner, to discuss in further detail.